Nevsun Resources Ltd. (NSU) has informed the stock market through a news release published on its website that the board of directors of the company has authorized the payment of a 1-cent quarterly dividend per ordinary share on Jan. 17 to shareholders of record as of Dec. 29.
The ex-dividend date is scheduled for Dec. 28.
The quarterly dividend that Nevsun will pay its shareholders is on par with the previous one and if it is held constant by the mining company for the following three quarters, it leads to a forward annual dividend of 4 cents.
The forward dividend yield is 1.75% according to the current market value of the stock on the New York Stock Exchange, versus an industry median of 2.44%.
The trailing 12-month dividend is 7 cents for a yield of 3.2% versus an industry median of 2.17%.
CEO Peter Kukielski commented in the company’s news release, “Payment of a dividend has been an important part of Nevsun's capital allocation philosophy.”
Over the last 12 months, Nevsun has generated levered free cash flow of $10.45 million. This amount of financial resources generated by the company through the production and sale of concentrates of zinc and copper has been used by Nevsun not only to distribute dividends to its shareholders, but also to advance mineral projects such as the Timok development project.
The Timok project is an extensive mineral deposit of high grade copper and gold that Nevsun is advancing in Serbia.
The company says that “the Board of Directors has initiated a critical review of the discretionary dividend policy to align with the Company's ongoing capital needs at Timok."
Besides the Timok project, Nevsun holds mineral and mining interests in the Balkans – Serbia and Macedonia – and in the State of Eritrea.
The sale of zinc and copper concentrates accounts for approximately 80% and 15% of Nevsun's total revenue.
In the third quarter of fiscal 2017, Nevsun billed customers for $71 million, which was a 7.4% increase from the previous quarter. This was essentially a result of an improvement in the zinc recovery rates the miner experienced during the quarter at its Bisha mine.
Nevsun’s economics generated a net profit of $3.1 million in the third quarter of fiscal 2017. This was a positive turnaround from the second quarter of fiscal 2017 when – due to impairment charges of $69.7 million – Nevsun reported a loss of $70.2 million.
For the last quarter of fiscal 2017, Nevsun is expected to report an adjusted profit of 2 cents. This is an average of 4 estimates and represents a positive turnaround from a loss of 5 cents the miner reported in the fourth quarter of fiscal 2016.
Revenue is expected to be $84.25 million. This is a 132.70% increase from one year ago sales.
For the full fiscal 2017, Nevsun is expected to report a loss of 3 cents versus a year-ago EPS of 4 cents. Revenue is expected to be $306.24 million, which is a 32.70% increase from full fiscal 2016.
For the full fiscal 2017 to full fiscal 2018 period, analysts forecast 433.30% growth in the EPS to 10 cents and a 23.60% growth in sales to $378.64 million.
GuruFocus assigns Nevsun Resources a profitability & growth rating of 5 out of 10.
Nevsun Resources is a debt-free company and has approximately $171.37 million in cash on hand and securities as of the most recent quarter.
GuruFocus gives Nevsun Resources a financial strength rating of 7 out of 10.
Nevsun is trading at $2.19 per share, with a market capitalization of $655.57 million, a price-book (P/B) ratio of 0.79 versus an industry median of 2.01 and an EV-EBITDA ratio of -38.21 versus an industry median of 10.14.
For the 52-weeks through Dec. 12, Nevsun lost 29% and is trading below its 50- and 200-day simple moving average lines.
Nevsun Resources has a target price of $3.12 per share and a recommendation rating of 2.2 out of 5.
Disclosure: I have no positions in Nevsun Resources.
