Winston’s Growth Stock Report

Your Source for High Potential Stocks

Issue 22, June 10, 2011

Nevsun Resources (NSU, TSX) Consensus Price Target $7.40

One of our top performing picks over the last 16 months has been NSU which now has at least 8 research and brokerage firms following the story. A recent sampling of these institution’s price targets pegs Nevsun at a $7.40 consensus price target. Not bad for a stock that we featured at $2.19 just over a year ago.

Since we are holding free shares of NSU this stock certainly doesn’t owe us anything at this point though you always have to wonder when the next best time to sell might be.

So far the company is on a nice growth trajectory. In Q1 commercial gold production ran for 38 days, cranking out over 1,000 ounces per day with a cash cost of only $299 per ounce.

You may recall from my original NSU report, Issue 31, September 29, 2009 ; that NSU will end up with a 60% interest in the Bisha mining project.

The Partnership Arrangement with the Eritrea Government

The Bisha mining project is owned by the Bisha Mining Share Company in which Nevsun has a 60% interest and the state owned (ENAMCO) mining company owns 40%, 10% of which is free carried. Though ENAMCO has secured financing to cover their interest, their 30% interest has not been fully paid for. This is an interesting benefit for Nevsun in that once the mine is operational; the fair market value of the project will be determined by a third party. And of course the value of the mine will be worth a lot more once the cash is flowing. Consequently, the amount of cash the Eritrea government will need to earn in to the Bisha Project will be significantly more than its value today. ENAMCO has secured financing with the Chinese.

So far $41.6 million has been received for ENAMCO’s position. The word on the street is that the valuation of the balance owing is expected to be completed by June 30th. One analyst guesstimate is that it should be around $350 million.

With the purchase price coming from ENAMCO’s share of cash flows, the final payment should be completed by 2014.

While a finalization of the purchase price should provide some support for the share price, further exploration will strengthen the shares even more. The Bisha main deposit is still open at depth. The open pit has been designed at 260 meters deep however a recent deep drill hole extended the vertical depth to 375 meters. Additonal resources may be added in the future from developing satellite deposits called the Northwest Zone and the Harena deposit. Plus there is another mineralized zone called the Hanging Wall copper zone. So in all, four areas could provide additional reserves and strengthen the share price.

It seems Nevsun is very well positioned as a take over candidate. And it seems the management is preparing for such an eventuality by coming out with a Shareholder Rights Plan this week:

VANCOUVER, BC - Nevsun Resources Ltd. ("Nevsun" or the "Company") (TSX:NSU)(NYSE Amex:NSU) today announced that its Board of Directors (the "Board") has adopted a Shareholder Rights Plan (the "Rights Plan"), effective as of 4:00 p.m. (Toronto time) on June 8, 2011. The Rights Plan has been adopted to ensure the fair treatment of shareholders in connection with any take-over bid for the common shares of Nevsun. The Rights Plan seeks to provide shareholders with adequate time to properly assess a take-over bid without undue pressure. It also is intended to provide the Board with more time to fully consider an unsolicited take-over bid and, if considered appropriate, to identify, develop and negotiate other alternatives to maximize shareholder value.

The Rights Plan is not being adopted in response to any proposal to acquire control of the Company.

The rights issued under the Rights Plan will become exercisable if a person, including its affiliates and associates and persons acting jointly or in concert with it, acquires beneficial ownership of shares which, when aggregated with its current holdings, total 20% or more of the outstanding common shares of the Company (determined in the manner set out in the Rights Plan) without complying with the "Permitted Bid" provisions of the Rights Plan or without approval of the Board. If the rights become exercisable, they will entitle shareholders, other than the person that has exceeded the 20% ownership limit and its affiliates and associates and persons acting jointly or in concert with it, to purchase additional common shares of the Company at a substantial discount to the market price of the common shares at that time. The issuance of rights will not affect the manner in which shareholders trade their shares.

We are continuing to hold for continued growth or maybe an eventual buyout.

Stock List

AQM Copper (Apoquindo) (AQM) April 24, 2009 54 cents; holding Dec 9/10 sell $1.02 hold Free shares.

Catalyst Copper (CCY) Entered Jan 6/10 25 cents; accumulating

Donner (DON, TSXV) Dec 4/09 heads up alert 0.15 cents, Jan 17/10 doubles holding free shares

Edgewater Exploration (EDW, TSXV) Entered June 28/10 90 cents accumulating

Encanto Potash (EPO, TSXV) Entered July 31, 2009 .27 holding; Feb 11 2011 doubles Take Profits, holding free shares.

Endeavour Mining (EDV, TSX) Entered Feb 4/10 $1.73; Profits taken Ap 9@ $2.42 Holding Free Shares

Grand Colombia Gold Corp (GCM, TSX) accumulating Dec 3/10 $2.24

Hathor (HAT, TSXV) Top Uranium Pick Entered March 28, 2006 $1.32; Ap 21/08 sold $2.64, Oct 21/10 sold $2.33 holding free shares. Bottom Fishing March 17/11 @ $1.70

Nevsun (NSU, TSX) Feb 4/10 Buy Alert 2.19, profits Oct 20/10 $5.39 holding free shares

New Gold (NGD, TSXV) Dec 29/08 Best Speculative Pick $1.76; June 11/10 doubles holding free shares

Orsu Metals (OSU, TSXV) Bottom Fishing Pick July 23/10 @16 cents, Sell Oct 3 @32 cents and holding free shares

Petroamerica (PTA, TSXV) Nov 6, 2009 Speculative at 70 cents, Jan 8 new pick accumulate slowly 71 cents; Oct 16/10 buy @0. 405 cents; accumulating

Petromanas (PMI, TSXV) Feb 24/10 30 cents. Profits taken Apr 9/10 @ 72 cents; holding free shares; May 2/10 re-accumulating at 33 cents

Potash One (KCL, TSX) Top Potash Pick Entered May 14, 2008@ $3.19 holding Nov 22/10 buyout announced at $4.50 per share

Prima Colombia Hardwood (PCT, TSXV) Introduced March 7 @ 0.285 accumulating

Uracan (URC, TSXV) Speculative Uranium Pick Apr 30, 2010 Alert 18 cents; holding

Ventana Gold (VEN, TSXV) Entered Mar 18/09 $1.33, holding free shares. Buyout bid Nov 17/10 @ $12.6; Revised buyout price February 14/11 @ 13.06

Wildcat Silver (WS, TSXV) Entered July 10th, 2009 0.485 holding; Sell Alert February 14/11, Feb 15 close 88 cents. Holding Free shares