Nevsun Resources (NYSEMKT:NSU) seems to be on a roll of releasing good news. After it was able to restart the mill after a temporary power-related hiccup and a 14% dividend hike, it has now released another batch of extremely exciting drill results at its Harena mineralized zone in Eritrea, just 6 miles away from its existing production facility.
I'm very impressed by hole 40 which pulled in excess of 30 meters at 1.78% copper, 5.78% zinc, 0.53g/t gold and 1 ounce of silver per tonne of rock out of the ground. This translates into a copper-equivalent grade of in excess of 4% using the current commodity prices. More importantly, this intercept is better than the historical data has been indicating as the grade is higher than anticipated. Additionally, the Harena mineralized zone remains open at depth and along strike, so there's still a very realistic change to increase the tonnage on this property. Drilling is on-going and I hope to see more of this type of results very soon as this would effectively rebuff the Nevsun-haters who use the relatively short mine life against the company, conveniently forgetting its extremely high operating margin and strong free cash flow numbers.
I will update my opinion on a lot of companies between Christmas and New Year, and Nevsun Resources is on top of my 'to review' list as I'm actually tempted to buy more shares and average up on a position, which is something I very rarely do. 2015 will be full of great things for Nevsun and with an increased dividend and a cash balance, which is increasing at an even faster rate, this company will be my top copper pick for 2015. Additionally, given the fact that Nevsun's management has been really great at doing what it's promising, I have little doubt that it will bring the zinc-phase of the project into production on time and within budget.
Disclosure: The author is long NSU.
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