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Nevsun Resources Ltd. Message Board

  • clintblack100 clintblack100 Feb 12, 2013 1:33 PM Flag

    Can someone explain why this has trouble holding $4?

    This message board seems like it's barely alive...anyone on here?

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    • Since thousands of able-bodied men flee Eritrea regularly, maybe the mobsters who run the so-called government and contractularly supply free labor are running out of slaves.

    • The mining sector has been extremely difficult to make money on since 2011 so this board has been quiet.

      The knock on the company is the comps over the next 3 quarters (one completed) are going to be weak and the market is so short term orientated. I really don't buy the political risk argument that can easily be solved by paying a 10% recurring dividend. ( see mart resources since they paid a fat dividend) Paying a recurring quarterly dividend that large also makes the stock expensive to short sell..

      I agree with you this stock price is getting an attractive value again if you look forward and I have started my scale on the buy side again after selling my position here near the double top.

      By the end of 2015 I project the cash balance will be equal to the current market cap. So at current throughput you are technically getting one year and maybe 2 yrs of high grade copper production and approximately 30 years of Zn/Cu production if you include Bisha/Harena and use a 3%Zn cutoff at Hambok for absolutely nothing.

      Sentiment: Strong Buy

      • 3 Replies to legendary_bobvee
      • All,

        This question has received some answers that are helpful but I think it might be useful to simply point out that you can combine a number of possible reasons and come up with a better answer. Nevsun has the following characteristics: not very transparent; operations in a thoroughly third world country; membership in the ugly girls club otherwise known as the junior miners and has been in one business, gold mining but about to enter another, copper mining so they're a bit of a grasshopper.

        If you had one or two of those issues, you'd expect a low multiple stock--say 5X discretionary cash flow. In this instance you have 4 no-no's for many sophisticated investors so the stock is significantly owned by folks like us--a group of wandering, heartless gypsies (with apologies to the Roma).

        Because they operate in Eritrea, this is always going to be a "cheap" stock. When they have an established pattern of earnings from the new CU business, so long as they are able to convince the investment community that the potential runs out many years with stability, investors here will see the multiple rise. The more important question is: "what would be the actual discretionary cash flow or the profit that would be the basis for the multiple calculation?" That is an important point to remember because it relates to the transparency idea. Investors here don't need to guess themselves at what profits might be next year because the company has published a fairly clear presentation on their website that suggests absolutely that profits will grow this calendar year and that they are likely to exceed $1 per share if pricing holds up.

        Clearly, the market is skeptical but that skepticism may be unwarranted.

        One other thought: Nevsun has been accumulating cash at a pretty good pace even though they've got $100 mm or so already tucked into the new copper idea. Once they stop spending money on the copper operation, which will happen pretty soon after the expenditure of another $25 mm or so, they told us in the press release today that they only have plans to spend $9 million on exploration. That means that there should be small mountains of free cash flow coming in every quarter through all of 2013 after Q1. What will they do with all of those small mountains of cash?

        Regards,

        Peter

      • I'm starting to lose faith in this stock. It's gone down every single day for the past week.

      • Absolutely agree while adding that, IMO, end of Q1 will begin an upward trend based on positive business advancements. Nevsun is strong in every way possible. I started a position back in December at 3.90 and been accumulating ever since every time it hits in the low 3.90s.

        Sentiment: Strong Buy

    • Because there is a bad odor about Nevsun partnering with totally-corrupt government that provides conscripted labor at the mine. Moreover it has been slapped with shareholder suits alleging overstatement of gold reserves.
      Why should anyone accept their projections?

 
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