Nevsun Resources Ltd. (NSU, Financial) has informed the stock market through a news release published on its website that it will pay a 1-cent quarterly dividend per ordinary share on Oct. 17 to shareholders of record as of Sept. 29.
The quarterly dividend that Nevsun will pay its shareholders is in line with the previous one and leads to an annual dividend of 4 cents for a dividend yield of 1.79% according to the current market value.
To facilitate the progress Nevsun is making on its Timok development project, the company encourages its shareholders to adhere to the dividend reinvestment plan, or DRIP.
For the payment of the quarterly dividend, Nevsun leaves its shareholders with the option to receive either cash or a certain volume of ordinary shares the company will issue under its DRIP.
CEO Peter Kukielski commented on the company’s news release concerning the quarterly dividend: “Payment of a dividend is important to our capital allocation philosophy.”
And current operations consisting of the production and sale of base metals concentrates give the company the capability of generating annually something like $12 million to $15 million in levered free cash flow to be allotted for Nevsun's business growth purposes and for the payment of dividend.
Nevsun sells concentrates of zinc and copper that it produces at its properties which are located in the Balkans – Serbia and Macedonia – and in Eritrea. In Serbia the company holds the Timok project – an extensive mineral deposit of high grade copper and gold, in Eritrea it has licenses for extracting metals at Bisha and Harena mines, and in Macedonia the company holds permits for exploration activities. Nevsun also holds several licenses for exploration of mineral resources in Serbia and Eritrea.
The sale of zinc and copper concentrates accounts for approximately 60% and 30% of Nevsun's total revenue that at the end of the second quarter of fiscal 2017 came in at $66.09 million, down 16.5% year over year, generating a net loss of 15 cents per share, both on a basic and diluted basis. The latter was a 475% decline from a positive income of 4 cents of the comparable of fiscal 2016 due to a massive amount of $69.7 million, booked during the second quarter of fiscal 2017 as impairment charges.
For the quarter of fiscal 2017 that will end on Sept. 30, Nevsun is expected by analysts to report an adjusted loss of 1 cent – on average – and backed on a quarterly average figure of $74.6 million for revenue.
Estimates on the third quarter of fiscal 2017 earnings and revenue range between a loss of 6 cents per share and an EPS of 2 cents and between a low of $69.5 million and a high of $79.7 million.
For the fiscal 2017 to fiscal 2018 period, analysts estimate Nevsun's earnings will grow 350%, while they will decline during the next five years, according to a negative average annual rate of 16.50%. GuruFocus gives Nevsun a profitability and growth rating of 4 out of 10.
Concerning the most relevant figures of Nevsun's balance sheet, the company had approximately $171.37 million in cash on hand and securities and no debt on June 30. Total current assets and liabilities were valued $255.08 million and $83.01 million, for a current ratio of 3.07 versus an industry average of 1.31.
GuruFocus gives Nevsun a financial strength rating of 7 out of a total of 10.
Nevsun is trading at $2.15, with a market capitalization of $625.55, a price-book (P/B) ratio of 0.74 and an EV-EBITDA ratio of -23.22.
Disclosure: I have no positions in Nevsun Resources.
