Haywood Securities: Trevali Mining Santander Production Off to a Good Start This Year

A recent report by Haywood Securities highlighted Trevali Mining Corporation (TSX:TV) and their preliminary Q1/16A production results for its Santander and Caribou operations and reiterated 2016E Santander production guidance.
As quoted in the report:

Production continues to progress well at Trevali’s 100% owned Santander zinc-lead-silver mine in Peru, where commercial production was declared in February 2014. During Q1/16, the mine booked 13.7 Mlb of payable zinc production, 6.4 Mlb of payable lead production, and 221 koz of payable silver production. Corresponding Q1/16A cash- cost data has not been provided with the preliminary production results. However, Trevali’s reiterated 2016E guidance includes an onsite operating cost estimate of US$40 to US$43 per tonne milled (versus a 2015A average cost of US$42.65 per tonne milled.
Santander’s mill continues to operate at (above) design capacity. Record Q1/16A mill throughput averaged ~2,299 tpd (versus ~2,159 tpd in 2015A and a nameplate capacity at 2,000 tpd), with good metallurgical recoveries (including 89% zinc). Average zinc head grade remained below 4.0% for the second straight quarter, but is expected to increase this year—2016E Santander production guidance includes an average zinc head grade of 4.2% to 4.4% (4.3% in Haywood model; versus a 2015A average zinc head grade of 4.14%). We note the recent discovery of the Oyon Mantos at Santander’s Magistral North deposit stands to bolster head grades late this year and/or by early next year—noting drill hole assay result highlights from the new zone include 30 m grading 8.73% zinc, 6.22% lead, and 117 g/t silver (including 4.15 m grading 12.46% zinc, 9.35% lead, and 142 g/t silver; refer to Radar Screen, April 8, 2016).
Santander’s reiterated 2016E payable production guidance is headlined by 52 to 55 Mlb of zinc, 22 to 25 Mlb of lead, and 800 to 1,000 ounces of silver (compared to our modelled production profile that includes 2016E payable zinc, lead, and silver production of 53 Mlb, 24 Mlb, and 900 koz respectively). Our model reflects the midpoint of Trevali’s 2016E payable production guidance in conjunction with an arguably conservative onsite operating cost of US$50 per tonne. Our modelled 2016E Santander onsite operating cost translates into a 2016E average total zinc cash cost of US$0.45/lb net of credits (versus a 2015A average total zinc cash cost of US$0.48/lb).

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