TO OUR STAKEHOLDERS:
Nevsun’s past year was transformational. We executed a value enhancing acquisition of one of the best copper-gold assets in the world at an opportune time for Nevsun and Reservoir shareholders.
We have an excellent asset in the Bisha Mine that has provided significant cash flow to allow us to create even more value through the acquisition of Timok in Serbia. At a macro level, in a relatively few years Nevsun has transformed from explorer to producer and now to producer/developer. The development part of the business is now a significant focus for the Company because we believe our biggest opportunity lies in our newly acquired asset.
The successful expansion of the business has occurred because we have been very financially focused, and were careful to make the right acquisition. As a company, we are about asset quality, which provides return to shareholders, and security to our wide range of stakeholders. High-grade carefully managed assets allow one to produce cash, which in turn can be re-invested or returned to shareholders. It’s a simple philosophy but not easy to execute, nor easy to choose to be so selective. Frankly, we were fortunate to have positioned Nevsun to be so opportunistic. It was through careful and precise planning, extensive cost controls and reduction, the expertise and dedication of our personnel, and the acquisition of a new, world-class asset that we were able to successfully weather the recent turbulence of the commodity markets storm.
Our focus was to continue to build on the core foundation of sustainable growth with positive results; benefits we continue to deliver for our shareholders and stakeholders.
Our success is premised on the stability of our balance sheet which retains its clean bill of health; we carry no debt and our financial performance continues to remain strong. We successfully completed our zinc capital project in 2016 – on time, and as expected, under the anticipated capital budget. We are pleased to report that the construction of the zinc processing facility had been entirely self-funded by cash from our operations.
Our successful exploration expanded our land package from the initial 41 sq. km. to 814 sq. km. – amounting to an increase of 1,891%. We intend to continue our Eritrean drilling program in 2017 and at the target sites of Harena and Asheli while undertaking large airborne surveys over the new land package to identify additional mineralised targets.
In addition, we are pleased to report that the company acquired a copper-gold project (Timok Project) in eastern Serbia and that this acquisition was a milestone for the Company’s projected development and growth through diversification and risk.
As a responsible mining company, we maintain high standards of operations as directly evidenced by our stellar safety record. In collaboration with Eritrean National Mining Corporation (ENAMCO), we approved formal training on the Voluntary Principles on Security and Human Rights for our Bisha mine security providers. These principles are designed to guide companies in maintaining the safety and security of their operations in a manner that encourages respect for human rights. We have instilled the importance of worker rights through our evolving corporate policies and accompanied programs. This includes sustained results in training and the associated promotion of local Eritrean workers into roles with greater levels of authority and responsibility. Further, the Company and ENAMCO approved a process to allocate monies from the Bisha Mine to nearby communities to support local sustainable infrastructure. We were therefore able to complete the Community Assistance Program (CAP) project in Tekeret, and progressed on two other CAP projects around water and irrigation to support local self-reliance efforts, including the provision of enhanced food supply and associated business opportunities for local residents. The Company has undertaken one human rights impact assessment with a follow-up audit and plans to conduct another audit in 2017. We plan to bring these same principles of safety and respect to the development of Timok in Serbia, inclusive of an undertaking of human rights due diligence prior to mine construction.
We have undertaken several independent human rights studies and have been fully transparent with the results and our ongoing efforts. In Serbia, Nevsun adopted a community investment policy and initiated our CSR work by supporting a local NGO that is rolling out an extensive IT training program for unemployed and underemployed residents in Bor, Serbia.
In 2016 we expanded our reach to capture feedback through a substantive CSR Materiality exercise involving a sample of close to 100 diverse stakeholders in Canada, Eritrea, Serbia and Europe. This feedback is playing a key role in identifying and prioritizing key CSR objectives for the Company and associated priorities for 2017.
We recognize the importance of taking our values with us, as well as those of the host country, wherever we operate in the world. What is significant to note is that we have been operating in Eritrea since 1998 and we have done so with transparency, with integrity and with no experienced corruption; that is, we have, as a Corporation and as required by emerging international norms, ensured compliance with our corporate duty to respect the mining laws and codes of Eritrea and thereby assist the Government of Eritrea nation building aspirations through responsible mining practices. Such efforts complement and support their focus on the economic and social development of the country through the implementation of the millennium (MDGs) and sustainable development goals (SDGs).
We believe it is important to be committed to good corporate conduct and citizenship and as an essential component of any social license to operate in any jurisdiction in the world. This includes adopting IFC Performance Standards for environmental and social performance (despite private placement funds), independent human rights audits, and the Voluntary Principles for Security & Human Rights to name a few.
On behalf of myself and the Company, I would like to take this opportunity to express my gratitude to our employees, contractors, ENAMCO, State of Eritrea and the Government of Serbia for supporting and implementing our corporate principles of good conduct and citizenship.
Chief Executive Officer
May 4, 2017