Trevali Moves Forward as Zinc Prices Hold Steady

While many traders adhere to the “sell in May and go away” philosophy, taking the opportunity to exit the market and head to the beach at the approach of the summer doldrums, Trevali Mining (TSX:TV,OTCQX:TREVF) is giving investors a reason to stick around for the next few months.

Zinc Investing News last reported on Trevali at the beginning of May, when the zinc-focused base metals miner received an operations permit for its New Brunswick-based Caribou mine and concentrate plant. Since then, the company has released a slew of news, mostly related to its Santander zinc-lead–silver mine in Peru.

The first piece of news hit on May 21, when Trevali provided an update on the Santander mine, noting that following delays in April, the final and initial commissioning phases at the mine were progressing well. The company also said that underground development was moving forward, “with a total of eight levels currently developed on the Magistral North and Central deposits.”

Another update on Santander came on June 10, with Trevali announcing the commencement of the crushing of mill feed and stating that “initial zinc and lead-silver concentrate production is anticipated to commence later this month with the first shipments expected in July.”

Just two days later, the company closed a bought-deal private placement for aggregate proceeds of C$10,903,020. Originally announced midway through May, the deal saw Trevali issue 18,171,700 common shares priced at $0.60 each; the offering was led by Dundee Securities and included Raymond James, the company’s press release states.

Trevali plans to use the proceeds to “advance mine commissioning and production start-up” at the Santander mine and move its New Brunswick projects forward. Some money will also go toward “general corporate purposes including working capital.”

Since then, the company has released another update on underground development at Santander — there are now “eight levels in place in addition to 12 sub-levels in the Magistral North and Central deposits, four levels – 7 sub-levels and four levels and 5 sub-levels respectively. The ninth level will open the Magistral South zone for exploitation and is scheduled to be in place by month end,” according to the company. It also provided initial grade comparison results from the Magistral North and Central deposits.

Joseph Gallucci, a mining research analyst at Dundee Capital Markets, told Resource Investing News that while starting up a new mill is always challenging, he believes that “one thing that makes [him] content is [Trevali has] three months of material already stockpiled and ready for processing. So there won’t be a bottleneck on the mining side, which is excellent. It’s just a question of getting the mill up and running.”

The company’s latest news brought its share price up by 10 percent; Trevali is currently trading at $0.59 per share.

More bright news

Looking at the zinc market as a whole, the picture also looks bright for Trevali. While gold, silver and copper prices were hit hard this week after US Federal Reserve Chairman Ben Bernanke suggested that the central bank may slow its bond-buying program this year and ultimately end it next year, Mineweb reported that zinc has escaped the bloodbath. Prices remain steady, Adam Low, an analyst at Raymond James, and Haywood Securities’ Stefan Ioannou told the publication on Thursday, as a result of four main factors:

1. London Metal Exchange zinc stockpiles sit at around 1 million metric tons (MT), down from the level of 1.2 million MT that they hit several months ago.
2. Those stockpiles are “optically high” in Ioannou’s words, but they are located in places that are not close to zinc-consuming centers.
3. In April, zinc production was lower than consumption “for the first time in quite awhile,” according to Low.
4. Several major zinc mines have either closed or are set to close. While not everyone agrees that production lost from these mines will create a shortage of zinc supply, Low and Ioannou think that will be the case.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Trevali Mining is a client of the Investing News Network. This article is not paid-for content.

Related reading:

PROJECT UPDATE: Trevali Receives Operations Permit for Caribou Mine, Concentrate Plant

Are New Mines Threatening Zinc’s Positive Price Outlook?

Trevali Mining — Benefiting from Rising Prices