Nevsun Resources (USA) (NSU) has significant exploration upside in Africa, according to Adam Low, Analyst with Raymond James & Associates, Inc. Low says Nevsun operates its Bisha mine in Eritrea, a country in Northeast Africa.
“While that may scare some potential investors off, I do find that the perception of where the mine is located is much worse than the reality. The company has been in the country for, I think, something like 15 years now,” Low says. “So they have got a long, well-established history in the country. The government of the country is itself a 40% owner of the mine. So it’s a partnership with the government and it’s a partnership that’s gone exceedingly well.”
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Low says Nevsun’s Bisha mine is one the highest-grade open pit mines in the world. As a result, he says the company is able to generate strong cash flow. Low says he also finds the deposit at the Bisha mine to be interesting.
“It’s a polymetallic deposit that had a gold oxide-rich cap, and then it’s got supergene copper followed by primary copper-zinc mineralization,” Low says. “It’s a VMS deposit. And so, not only do you have multi-metals, but as a VMS deposit, these tend to occur in clusters.”
If Nevsun finds additional deposits, Low says the company will be able extend the life of the mine without a lot of incremental capital expenditure because they will be able to feed any additional iron ore that they find through the existing mill. Additionally, Low says Nevsun is the only company operating in the Bisha mine, which is why he believes there is significant opportunity ahead for the stock.
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