Did anyone see the numbers that they released today? WOW!! At an average cost of $300 an ounce. They are making bank and the stock trades at $6.40..Anyone know why this stock is lagging besides the deal they are making with the local government?
Nevsun (NSU-TSX) just hit a 52-week low today on a rumour of sanctions U.N. sanctions on Eritrea's mining industry. Hopefully I didn't make a mistake by doubling up a few more shares of this today... but I like the risk/reward offered here. This stock is seemingly quite cheap and the risk is obviously due to Eritrea (Nevsun and the government are actually joint partners in the mine ownership). Hopefully this will blow over and we'll see the stock move back up again.
Eritrea is the country where Nevsun's lone producing mine is located ("Bisha" mine). Bisha is a real cash machine... take a look at the October 6, 2011 news release:
"Nevsun Resources Ltd. is pleased to announce strong production results of 110,000 ounces of gold for the quarter ending September 30, 2011. Year-to-date the Bisha Mine in Eritrea has produced 278,000 ounces of gold, including 41,000 ounces during the commissioning phase early this year. Cash increased to US $226 million at September 30, 2011."
Nevsun has a market cap of about of about $909-M (Canadian) and has cash in the bank of $226-M (U.S.). It looks like it is clearing $1-M / day at current gold prices and production costs... and will continue to produce this amount of gold for the next year at least. After that, the mine production will be mostly copper and zinc with some smaller amounts of gold and silver... and this will be in production for close to 20 more years at rock bottom production costs.