RE:RE:RE:RE:Nevsun to start drilling at Serbian Cukaru Peki Upper Zone Tony, normally I would shoot this to your inbox as I am sure to take all sorts of $%#$ from the usual few, but given there are also some decent people here as well, against my better judgement I'll post it.
Had a conversation with a good friend who is an analyst in Vancouver who doesn't cover NSU because he's an oil analyst but knows the story well ( his firm doesn't cover it either). His thoughts were interesting. He said although its a great story, there is so much uncertainty on this issue, its very difficult to put an evaluation and to more importantly attach a discounted cashflow model on the stock. Proof of that is seen in the 3-4 analysts that do cover it AND project cashflow have dropped copper production completely out of the model for Bisha as far out as '18. This results in a projected mean EPS estimate drop for '17 from .10 to .06 and '18 from .17 to .07. This is a pretty staggering revision to say the least. Some here are flabergasted the stock has not participated in the base metals rally. They should be equally shocked the stock has held up given that info. You realize what most stocks do when analysts slash EPS estimates in half.....
Now its important to remember that analysts can only build numbers into their models when there is a level of certainty and that you can't blindly guess or hope things turn. They have to work with what they have and error on the side of caution. Right now they are working in an information vaccuum and what they know is the company has missed copper guidance completely and are producing 0. They also know there is no solution on the table AT THE TIME THEY REVISED THEIR MODELS TO REFLECT THAT FACT. Thats not to say their models can't drastically change with guidance released from management, but thats what they have to work with now.
We both agreed the models were stupid because even if NSU was unable to correct the issue with the transition ore, They would be into the primary ore before'18 ( unless there are more metallergy issues than we are currently aware of )
Regardless, the upcoming guidance will alter the models moving forward and hopefully give a more optimistic view of what the company can get out of the Bisha ore.