Trevali Mining Preliminary Economic Assessment for Caribou Zinc-Lead-Silver Mine: Post-tax IRR of 56.9%, Post-tax NPV(5%) of $106 million

Trevali Mining Corporation (TSX:TV,OTCQX:TREVF) announced Preliminary Economic Assessment results for its Caribou zinc-lead-silver mine and mill complex, located in New Brunswick, Canada. Highlights include a pre-production capital expenditure of $36.3 million, a post-tax Internal Rate of Return of 56.9%, post-tax Net Present Value of $106 million at a 5% discount rate, and average annual payable production of approximately 93 million lbs. zinc, 32.5 million lbs. lead, 3.1 million lbs. copper, 730,000 ozs. silver and 1,500 ozs. gold.

The base case PEA indicates positive economic results for the Caribou underground mining operation and mill complex with a pre-production capital expenditure of $36.3 million, a post-tax Internal Rate of Return (“IRR”) of 56.9%, post-tax Net Present Value (“NPV”) of $106 million at a 5% discount rate, and average annual payable production of approximately 93 million lbs. zinc, 32.5 million lbs. lead, 3.1 million lbs. copper, 730,000 ozs. silver and 1,500 ozs. gold (Table 1).

The Caribou Project has been valued using a discounted cash flow (DCF) approach. This method of valuation requires projecting yearly cash inflows, or revenues, and subtracting yearly cash outflows such as operating costs, capital costs, royalties, and provincial and federal taxes. Cash flows are taken to occur at the end of each period. The resulting net annual cash flows are discounted back to the date of valuation, second quarter of 2014, and totaled to determine net present values (NPVs) at the selected discount rates. The internal rate of return (IRR) is calculated as the discount rate that yields a zero NPV. The payback period is calculated as the time needed to recover the initial capital spent.

Trevali Mining President and CEO, Dr. Mark Cruise, said:

We welcome this preliminary economic assessment for our Caribou Mine with scheduled commissioning of operations in the first half of 2015. These results model a respectable return based on this initial base-case model and we believe that there is excellent potential for additional optimization given that approximately 3 million tonnes of mineralized material is presently not included in the mine plan and the deposit remains open for expansion. Given the project’s sensitivity and leverage to zinc price, positive consensus forecasts for increasing zinc (and lead) prices should have a beneficial effect on the operations economics.

Click here to read the Trevali Mining Corporation (TSX:TV,OTCQX:TREVF) press release
Click here to see the Trevali Mining Corporation (TSX:TV,OTCQX:TREVF) profile.