Trevali Mining

The Primary Zinc Producer

This profile is part of a paid investor education campaign.*

Overview

Trevali Mining Corporation (TSX:TV) is a primary zinc producer with four mines across the American and African continents:  the Santander mine in Peru, the Caribou mine in New Brunswick, Canada, the Rosh Pinah mine in Namibia and the Perkoa mine in Burkina Faso.

A Global Top-10 Zinc Producer:

  • Four operating zinc mines
  • Pure-play producer with industry-leading leverage to zinc with 80-85 percent of revenue derived from zinc production
  • Zinc production now to take advantage of zinc deficits now
  • Production increased annually for 5 straight years

Diversified Production in Mining-Friendly Jurisdictions:

  • Perkoa (Burkina Faso) – 5th year of production
  • Caribou (Canada) – 3rd year of production
  • Rosh Pinah (Namibia) – 49th year of production
  • Santander (Peru) – 5th year of production

Significant Organic Growth Opportunities:

  • Resources at all mines remain open for expansion with exploration drill programs ongoing
  • Strong regional potential in close proximity to operations and existing infrastructure with 60,000-metre 2018 drill programs underway

Strong Financial Position and Leadership:

  • Solid cash flow profile, strong treasury and low debt level
  • Cash position of US$120.5 million (as of Mar 31, 2018)
  • Glencore – a cornerstone strategic shareholder (25.5 percent)
  • Proven management and technical teams

In 2018, Trevali is working in a consolidated zinc production guidance of 400-427 million payable pounds, 44-46 million payable pounds by-product lead and 1.4-1.5 million payable ounces of silver, with operating costs of US$60-$66 per tonne or US$0.67-$0.73 per pound of zinc cash cost (net of by-products).

The company is also supported by a strong financial profile, the highlights of which are found below.

Strong Balance Sheet:

  • Strong financial position to invest in operations and fund future growth through exploration programs
  • Strong working capital and liquidity position:
  • Cash and Cash Equivalents: US$120.5 million (as at Mar 31, 2018)
  • Working Capital: US$180 million (as at Mar 31, 2018)
  • Manageable Debt Profile – Low Debt-to-EBITDA* Ratio (<1)
  • Retired US$49 million of 12.5 percent Senior Secured Notes in 2017
  • US$160-million 5-year Term Facility payable in quarterly instalments
  • Interest Rate LIBOR + 3 percent to 4 percent
  • Debt Covenant Light
  • US$30-million Revolver – fully undrawn

Sector Leading Zinc Leverage

With approx. 85 percent of revenue derived from zinc production, Trevali has one of the highest leverage ratios to zinc price amongst zinc producers:

2018E EBITDA* Leverage to a 10 percent Increase in Spot Zinc Prices:

Trivali

Note: Base case assumes spot zinc price of $1.43/lb.

Source: Scotiabank GBM estimates – December 2017.

*EBITDA (earnings before interest, taxes, depreciation and amortization) is calculated by considering Company’s earnings before interest payments, tax, depreciation and amortization are subtracted for any final accounting of its income and expenses. The EBITDA of a business gives an indication of its current operational profitability and is a NON-IFRS measure.

Perkoa Mine – Burkina Faso

burkina-faso

Location: Burkina Faso (150 kilometers west of Ouagadougou)

Ownership: 90 percent Trevali, 10 percent Government of Burkina Faso

Type of deposit: Volcanogenic Massive Sulphide (VMS)

Primary metals: Zinc

Mining: Underground – Transversal and retreat

Processing: Concentrator plant with crushing, milling, flotation, thickening and filtration

End product: Zinc concentrate

Infrastructure: 2,000 tonnes per day (tpd) underground mining operation and tpd processing mill

Current mine life: 4 years; remains open, drilling ongoing

Perkoa 2017 Production and 2018 Guidance

2017 Preliminary Production (100 percent basis):

  • Zinc: 62.8 million payable pounds
  • Average head grade of 15 percent zinc and 93.7 percent recovery

2018 production guidance (100% basis):

  • Zinc: 165-170 million payable pounds
  • Site operating costs US$103-113/tonne milled or US$0.82-0.91 per pound zinc (net of by-products)

Perkoa Exploration Potential:

  • 233 –square-kilometer land package, additional 220 square kilometers under application
  • Mineralization remains open at depth below the orebody
  • 22,000-metres drilled in 2017 from both surface and UG
  • Regionally – 46 EM anomalies identified for follow-up; multiple clusters at 5-km intervals along prospective Perkoa Mine Horizon
  • Geologically analogous to large Canadian VMS systems (Matagami, Flin Flon, Noranda, etc.; approx. 40-100 million-tonne endowments)

Caribou Mine – Bathurst Mining Camp, New Brunswick

screen-shot-2018-02-20-at-2-06-07-pm

Location: Bathurst Mining Camp, New Brunswick, Canada

Ownership: 100 percent Trevali

Type of Deposit: Volcanogenic Massive Sulphide (VMS)

Primary metals: zinc, lead, silver

Mining: Underground – Modified Avoca (cut-and-fill)

Processing: Concentrator plant with crushing, milling, flotation, thickening and filtration

End product: zinc concentrate, lead-silver concentrate

Infrastructure: 3,000 tpd underground mining operation and processing mill

Current mine life: 5 years; remains open, drilling ongoing

Caribou 2017 Production and 2018 Guidance 

2017 Preliminary Production:

  • Zinc: 79.9 million payable pounds
  • Lead: 30.9 million payable pounds
  • Silver: 890,300 payable ounces
  • Average head grade of 5.9 percent zinc and 77 percent recovery

2018 production guidance (100 percent basis):

  • Zinc – 86-90 million payable pounds
  • Lead – 27-28 million payable pounds
  • Silver – 627,000-658,000 payable ounces
  • Site operating costs US$55-61/tonne milled or US$0.68-0.74 per pound zinc (net of by-products)

Caribou Exploration Potential:

  • Deposit remains open
  • 2017 exploration program discovered additional zones (North Limb Extension)
  • Successful utilization of directional drilling to hit tight targets opens up opportunity for further definition drilling from surface
  • 2018 work program: 10,000-metre UG resource delineation drilling in “Hinge” area

Rosh Pinah Mine – Namibia

screen-shot-2018-02-20-at-2-24-24-pm

Location: Namibia (600 kilometers south of Windhoek)

Ownership: 80.08 percent Trevali, 19.92 percent Namibian Empowerment Companies

Type of Deposit: SEDEX hybrid

Primary metals: Zinc, lead, silver

Mining: Underground – Sub-level open stoping

Processing: Concentrator plant with crushing, milling, flotation, thickening and filtration

End product: Zinc concentrate, lead-silver concentrate

Infrastructure: 2,000 tpd underground mining operation and processing mill

Current mine life: 8 years; remains open, drilling ongoing

Rosh Pinah 2017 Production and 2018 Guidance

2017 Preliminary Production:

  • Zinc: 29.3 million payable pounds
  • Lead: 4.4 million payable pounds
  • Silver: 68,500 payable ounces
  • Average head grade of 8.5 percent zinc and 82 percent recovery

2018 production guidance (100 percent basis):

  • Zinc – 105-115 million payable pounds
  • Lead – 5.7-6.0 million payable pounds
  • Silver – 123,000-129,000 payable ounces
  • Site operating costs US$49-54/tonne milled or US$0.55-0.60 per pound zinc (net of by-products)

Rosh Pinah Exploration Potential:

  • Deposit remains open
  • Active mining zones remain open for significant expansion, specifically Western Orefield (WF)
  • There has never been a sustained, modern exploration program undertaken until now
  • 6,000-metre UG drill program underway with additional 6,000-metre surface drill program contingent on exploration results

Santander Mine – Peru

screen-shot-2018-02-20-at-2-24-32-pm

Location: Peru (approx. 200 kilometers northeast of Lima)

Ownership: 100 percent Trevali

Type of Deposit: Carbonate Replacement Deposit (CRD)

Primary metals: Zinc, lead, silver

Mining: Underground – Modified Avoca (cut-and-fill)

Processing: Concentrator plant with crushing, milling, flotation, thickening and filtration

End product: Zinc concentrate, lead-silver concentrate

Infrastructure: 2,000 tpd underground mining operation and processing mill

Current mine life: 5 years; remains open, drilling ongoing

Santander 2017 Production and 2018 Guidance

2017 Preliminary Production:

  • Zinc: 53.1 million payable pounds
  • Lead: 10.5 million payable pounds
  • Silver: 602,700 payable ounces
  • Average head grade of 3.9 percent zinc and 87 percent recovery

2018 production guidance (100 percent basis):

  • Zinc – 54-57 million payable pounds
  • Lead – 11-12 million payable pounds
  • Silver – 654,000-687,000 payable oucnes
  • Site operating costs US$38-42/tonne milled or US$0.49-0.53 per pound zinc (net of by-products)

Santander Exploration Potential:

  • Deposit remains open
  • 18,000-metre 2018 drill program aimed at resource upgrade and delineation to facilitate long-range mine planning
  • Historic Santander pipe mined between 1957 and 1991
  • Proof of concept drilling in 2010 confirmed historic grades / system remained prospective
  • Implementation of Directional Drilling in 2017
  • Remains open at depth
  • 2018 Work Program: complete min. 5,000-metre resource delineation drilling

Zinc: Demand and Supply

The global zinc demand continues to rise (from between 2-4 percent per year, approx. 280,000-560,000 tonnes/year) – driven by GDP growth, urbanization & infrastructure development, and as a “mid-cycle” commodity with expanding markets for consumer goods (automobiles, appliances, etc.). Mine closures and production cuts are constraining primary supply and driving the zinc price to near-decade highs.

There is a consensus forecast of further strengthening zinc prices in reaction to continued supply deficits. Additionally, zinc smelters are scaling back/curtailing refined zinc metal production due to concentrate shortages. Benchmark zinc smelter treatment charges dropped to US$172/tonne in 2017, with no smelter price participation (0 percent escalators), a 10-year low. Forecasts for 2018 are even lower.

Zinc: Growing market/new uses

Trivali

Approximately 14 million tonnes of zinc is produced and consumed annually. 60 percent of this is utilized for its corrosion resistance (galvanized steel, rebar, autos, structural steel) and the remainder is mostly used in die-casting, production of brass and bronze, and into oxides and chemicals.

Developing and emerging economies are anticipated to increase zinc usage as their middle classes expand.

Initiatives propelling new uses of zinc include:

  • Zinc nutrient/fertilizer application: The Zinc Nutrient Initiative addresses global zinc deficiency in soils and how addition of zinc fertilizer can both significantly increase crop yield and boost nutrient value (Zinc Saves Kids)
  • Zinc energy technology: Advances in Zinc-Air battery technology in renewable power storage applications and fuel cells

By its anti-corrosion nature, zinc acts as a “sacrificial” metal and has one of the lowest rates of recycling of all the base metals. It is difficult to substitute and typically forms a minor cost component in its applications.

Management:

Dr. Mark Cruise – President & CEO

Base metal deposit specialist with over 20-years project experience from exploration and resource definition to permitting and production in Europe and the America’s on behalf of Pasminco Exploration, Anglo American and TSX-listed companies. Co-founded Trevali in 2007 to position the Company for anticipated global Zn deficits.

Bryant Schwengler – Chief Operating Officer

30 years of mine operations experience in Canada and Peru. Bryant commenced his career with Mount Isa Mines Ltd at Ernest Henry Mine (Cu-Au), then transitioned to Xstrata Zinc and ultimately Glencore at the world-class Mt Isa Zinc operations. He became GM at the Caribou Mine in early 2016.

Gerbrand van Heerden – Chief Financial Officer

Gerbrand joined Trevali in 2017 and most recently served as Trevali’s Senior Vice President – Business Initiatives/Development. He is both a Chartered Accountant from the Institute of Chartered Accountants of South Africa and a Chartered Professional Accountant in British Columbia (CPABC) and has over 18 years of experience in various senior management roles in the mining industry. He commenced his career with Deloitte in South Africa, after which he joined Metorex Limited, a listed mining company as Group Financial Controller in 2004. He assumed increasing levels of responsibility over time, including involvement in numerous green and brownfield projects through commissioning and into operational readiness. In 2013, Gerbrand was appointed as Chief Financial Officer of Rosh Pinah Zinc Corporation and was instrumental in the turn-around and modernization of the operation, with a focus on establishing a continuous improvement culture.

Daniel Marinov – VP of Exploration

Over 24 years of international experience in exploration and underground mining, and has held senior management roles with Rio Tinto and Anglo American (including project manager at Anglo’s Michiquillay porphyry Cu-Au-Mo deposit in Peru).

Steve Stakiw – VP Investor Relations & Corporate Communications

Over 25 years of geology/mining industry and research/finance market experience. Steve has held a senior management role with a leading mining research and investment publication and has consulted to resource-focused investment funds.


 

*Disclaimer: The profile provides information which was sourced and approved by Trevali Mining Corporation in order to help investors learn more about the company. Trevali Mining Corporation is a client of the Investing News Network (INN). The company’s campaign fees pay for INN to create and update this profile page, to which links are placed on Investingnews.com and channel newsletters.

The company description, investment highlights and catalysts were sourced by INN and approved by the company. INN does not guarantee the accuracy or thoroughness of the information contained on this page.

INN does not provide investment advice and the information on Investingnews.com profile should not be considered a recommendation to buy or sell any security.

INN does not endorse or recommend the business, products, services or securities of any company profiled.