Trevali’s Santander Mine Keeps Expectations High

Trevali Mining (TSX:TV,BVL:TV,OTCQX:TREVF,FWB:4TI) is keeping expectations high with third-quarter production results from its Santander mine.

Across the board, payable metals production and head grades were up from Q2, with analysts from Mackie Research Capital, Raymond James and Haywood Securities all encouraged by the news.

Improved production guidance provides boost

As always, zinc production led the way for Trevali, which put out about 12.6 million payable pounds of zinc in Q3. That said, both lead and silver provided welcome contributions as well — Trevali produced 6.3 million payable pounds of the former and 217,600 payable ounces of the latter.

Metals production at the complex increased from the second quarter largely because of modifications made to underground workings within the Magistral North deposit. The deposit now incorporates portions of the recently discovered Rosa Zone.

In terms of concentrate production, average head grades of 4.4-percent zinc, 2.11-percent lead and 1.66 ounces per tonne silver produced about 13,466 tonnes of zinc concentrate averaging 50-percent zinc, as well as 5,370 tonnes of lead-silver concentrate averaging 56-percent lead and 39 ounces per tonne silver.

With the end of the year rapidly approaching, Trevali has boosted its 2014 full-year production guidance for Santander to approximately 47 to 50 million pounds of payable zinc, 20 to 23 million pounds of payable lead and 820,000 to 850,000 ounces of payable silver.

The company’s increased production guidance was a key feature of notes released by several analysts after the news broke.

Analysts unsurprised, but encouraged

Analysts from three separate research firms all took the company’s news in stride, with Mackie Research and Haywood giving “buy” recommendations and Raymond James rating Trevali as “outperform 2.”

Adam Low with Raymond James wrote that while the news is indicative of another solid quarter of production, zinc production was about 4 percent off his company’s estimate.

For his part, Mackie Research analyst Barry Allan said that while the news is positive, he sees no reason to change targets already set in previous notes. He did note that Trevali’s increased production guidance remains conservative.

Stefan Ioannou of Haywood Securities also expressed positivity for the work being done by Trevali, but was the least surprised about the good news. “We believe Trevali is poised to become a (the) marquee mid-tier pure-play zinc producer in a market facing a significant medium-term supply issue,” he wrote.

He went on to state that the company’s increased production guidance makes for a good headline, but is not surprising at all.

Three other analysts with Laurentian Bank Securities, M Partners and Dundee Research also released notes praising Trevali’s production results.

Looking ahead

Both Low and Allan gave target prices in the $1.55 to $1.60 range, with Ioannou seeing a lower target of $1.35.

Trevali performed drilling at five drill holes on the Fatima zone back in August, and they intersected lead-silver-zinc mineralization.The company said it needs to perform more drilling to see if the Fatima North and South veins merge at depth.

Financial results for the third quarter are due to be released on November 14, after the close of trading in Toronto. Despite the praise from analysts, Trevali’s share price is actually down nearly 2 percent and finished Thursday at $1.14.

Securities Disclosure: I, Nick Wells, 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: 

Analysts Still Hot for Trevali Following Q2 Results Release

Trevali Mining: Riding the Zinc Wave