Trevali Mining VP of Investor Relations, Steve Stakiw, provided his insight, forecast and advice for investors interested in the base metal. He shares with INN what to look for and what catalysts to watch out for.
Last year was a strong year for zinc, with prices rising over 60 percent, but what is ahead for the base metal in 2017? At this year’s Vancouver Resource Investment Conference (VRIC), the Investing News Network (INN) caught up with Steve Stakiw, VP of Investor Relations of Trevali Mining (TSX:TV), to discuss the future of zinc.
More importantly, Stakiw provided his insight, forecast and advice for investors interested in the base metal. He talked about what investors should be looking at when it comes to investing in zinc. “I think looking at stockpiles is important–LME stockpiles. It’s important to keep in mind the LME-reported inventories, that is refined zinc.” he explained.
What’s more, he shared his thoughts about Glencore (LON:GLEN), that may reopen its mines later in the year, and how it could affect the deficit in the market. He also discussed other catalysts that could impact zinc in 2017. Stakiw said, “We don’t see any shovel-ready tier 1 zinc mines that are going to come online anytime in the near future that are going to adversely affect zinc deficits in the market.”
In addition, he spoke about Trevali’s production, as the company fared well in 2016 and recently announced record production in the fourth quarter. Stakiw shared Trevali’s upcoming plans for 2017 and shared, “[W]e seem to be in the cusp of a very bullish zinc market. Trevali is uniquely poised to benefit from that, being the only primary zinc producer out there onthe TSX with two mines in production and certainly offering a very strong growth and exposure to the commodity.”
Watch the video above for more on zinc and Trevali.
INN: Zinc prices soared last year, but there are some concerns that Glencore (LON:GLEN) may reopen its mines bringing more supply into the market. What are your thoughts?
Steve Stakiw: That’s a very good question. Probably a question best for Glencore but given our comprehension and impression of the zinc market we are really optimistic in terms of the outlook for zinc. I think going forward looking at the potential for Glencore to restart its supply, you need to look at their corporate philosophy. Their CEO and president has been very vocal on maintaining a very disciplined approach in terms of commodity production. So I think when Glencore does decide to bring those mines back online I think it’s going to be handled or done in a very orderly and disciplined manner. I don’t think they would have gone through with the pain to put their mines on care and maintenance just to turnaround and flood the market again. So I think it’s one of those scenarios ultimately you’ll see those mines sequence in in a very orderly manner going forward.
INN: And aside from Glencore what other catalyst could affect the zinc price this year? What should investors be looking at?
SS: I think looking at stockpiles is important, LME stockpiles. It’s important to keep in mind that the LME reported inventories is refined zinc, but I think what you don’t see in the background is the market for zinc concentrates. That’s a much bigger market. But what we see in a good barometer of that are the TCs or the treatment charges that smelters charge to zinc miners for their zinc concentrate. What we’ve seen is those charges have started to drop dramatically over the last year specifically the spot TCs market and into China. There are about a year ago that those TC charges were around the $200 per ton of concentrate level, and we’re currently seeing those pricing levels come down to about culpably in terms of 40 to 50 dollars per ton and in isolated instances even less than that. So that’s very encouraging. Another thing to watch is the real lack of new production out there. We don’t see any shovel ready tier one zinc mines that are going to come online anytime in the near future that are going to adversely affect the current zinc deficits in the market.
INN: As zinc Trevali fared quite well in 2016 with record production announced in quarter four. Do you expect to increase production even more this year?
SS: We’ve put out a forecast for 2017 and we’re looking at producing about 160 million pounds of payables in production this year. Certainly that will be an increase from 2016, and we’re going to continue to optimize and streamline our operations to extract as much efficiency as possible and to increase production as much as possible going forward.
Outside of that we do have a lot of organic growth in the company as well. We are looking at the potential to expand our operations in our Santander Mine in Peru and we’re doing studies on that front. Also in the background we’re just getting a new engineering study finalized on our halfmile Stratmat projects in the Bathurst Mining Camp in New Brunswick and that will provide a pathway to the potential development of those two deposits which are very close proximity to our Caribou Mine they’re about 30 kilometers to the south.
INN: It seems that Trevali it’s reaching its stride at a great time. Was that timing deliberate, or was there a little luck involved?
SS: Probably a little bit of both. I would take luck all day long if I can get it. We created the company back in 2007, primarily to take advantage of what we saw as zinc deficits looming. It took a little longer than we anticipated but throughout that process we successfully financed, developed, and built two producing zinc mines. So now that zinc is actually running, and we seem to be in the cusp of a very bullish zinc market Trevali is uniquely poised to benefit from that, being the only primary zinc producer out there on the TSX with two mines in production and certainly offering a very strong growth, and very strong leverage exposure to the commodity.
INN: And finally Steve, what other company milestones should investors be watching for in 2017?
SS: I think on top of continuing to optimize our existing mines we are actively drilling at both of our projects. Both at the Santander mine in Peru, and at our Caribou mine in New Brunswick. I think what we’re seeing is both of those deposits are open for expansion. So hopefully we will be able to demonstrate some good success with the drill bit, be able to extend the resources and then ultimately look at extending the mine life for those two operations as well.
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Securities Disclosure: I, Priscila Barrera, 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.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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