Bisha Copper Mine

Nevsun Resources (NSU.T) is out with fourth quarter results this morning, producing 52.5 million pounds of copper, bringing 2014 production to a total of 196 million pounds. Nevsun has successfully transitioned from a gold producer to a copper miner and has achieved the high end of management's 2014 guidance of between 180-200 million pounds in the first year of commercial production.

Financial results are yet to be reported but Nevsun has announced a cash balance of $442 million ($2.21 per share) as of Dec. 31, 2013. As a result of the strong cash position and continuing cash flow from Bisha a dividend increase was announced in December and is now 4 cents per quarter.

One item of note in the quarter was the increased throughput and lower grade. Ore milled in the fourth quarter jumped to 573 million tonnes of 4.9% copper from 473 million tonnes in the third quarter of 6.3% copper. The end result was a drop in production of 4 million pounds.

Even with the drop in grade this is still one of the highest grade producing copper mines in the world.

In consideration of these numbers I expect higher operating costs and a lower Q4 profit when financials are released. Nevsun made a net profit of $44.6 million ($US) in Q3.

Cliff Davis, Nevsun CEO, commented,

""We are very pleased to have delivered on our 2014 guidance. The entire operating team at Bisha managed the transition to copper very well and they have delivered an incredible first year of commercial copper production. It was critical to ensure we maximized the high-grade phase of the supergene ore in 2014. With a solid year of operating experience in the copper phase under our belts, we are poised for a strong 2015. We were very pleased to see higher mining and milling rates during Q4 2014 which give confidence throughput rates can increase when feed grades gradually decline."

nsu1yrchart

Nevsun stock saw a nice bump in the fourth quarter.

Strong operating results and rumors of a potential takeover bid helped the share price. (The bid never materialized.) There are rumors, given its current cash position, that Nevsun will be making an acquisition of its own to diversify the current asset base.

Investors in Nevsun will be watching the copper and zinc prices in 2015 as the mine transitions into a zinc producer in 2016. Zinc expansion is progressing on schedule and budget.

Nevsun will be presenting at our Subscriber Investment Summit (Feb 28) in Toronto and we look forward to hearing a company update.

Symbol: NSU.T

Share price: $4.55
Shares outstanding: 199.35 M
Market cap: $907 M

Cash: $442 M

Read: Nevsun delivers top end of 2014 production guidance

I have no position in any of the stocks mentioned. This is not investment advice. All facts are to be verified by reader.As always please do your own due diligence