Trevali Mining has added a portfolio of zinc
assets to its already impressive resource list with the purchase of
Glencore's producing Rosh Pinah and Perkoa zinc mines.
Trevali
Mining Corp. (TV:TSX; TV:BVL; TREVF:OTCQX) announced on March 13th
its agreement to purchase a portfolio of zinc assets from Glencore
International Plc (GLEN:LSE), "which includes "80% interest in
the Rosh Pinah mine in Namibia, a 90% interest in the Perkoa mine in Burkina
Faso, an effective 39% interest in the Gergarub project in Namibia and an
option to acquire 100% interest in the Heath Steele property in Canada."
Dr. Mark Cruise, president and Chief Executive Officer of Trevali stated,
"The acquisition of Rosh Pinah and Perkoa is a historic event and unique
opportunity for Trevali shareholders, and sets the stage for a multi-asset,
low-cost global zinc producer."
Glencore will increase its stake in Trevali to 25% from 4% and will gain
an additional seat on Trevali's board, bringing Glencore's seats to two.
Glencore will also have the offtake from all four of Trevali's mines.
The acquisitions extend Trevali's zinc reach globally, adding mines in
Africa to its ongoing operations in Canada at Caribou and in Peru at
Santander.
In a Mar. 13 report, Paradigm Capital analyst Jeff Woolley stated that the
Santander mine is "generating positive cash flow and its second mine,
Caribou, now commercial," is moving Trevali into a path for growth.
Woolley's 2017 forecast has Trevali's "payable production of 178Mlb
Zn (+19% y/y) and 216Mlb ZnEq (+10%y/y) at a cash cost of US $0.53/lb Zn or
US $0.72/lb ZnEq." Woolley concluded that "Trevali remains our most
leveraged name to benefit from the improving zinc and lead pricing
environment and a Top Pick for those seeking financial exposure to these
commodities."
In Paradigm's Mar. 7 report, Woolley detailed the production increases
taking place at Santander, highlighting that "the zinc grade appears to
be increasing at depth in the Magistral Deposits with the anticipated head
grades mined/milled rising to 5.0�6.0% Zn by 2018 from the current 4.0�4.5%.
The higher head grade translates into an increase in our 2018/2019 production
forecasts to 75�80Mlb Zn (payable) versus 65Mlb in 2017."
Cormark Securities analyst Stefan Ioannou outlined high expectations for
the company in 2017. In a Mar. 13 report, he stated, "With zinc
production from two established mines expected to ramp up to ~200 MMlb per
annum by 2020, we believe Trevali is poised to become a (the) marquee
'pure-play' zinc producer in a market facing a significant near-to
medium-term supply issue. Bottom line, we believe Trevali should be
considered as a core position underpinning any investment strategy looking
for zinc exposure."
Ioannou went on to support his position with some numbers from Santander
and Caribou, highlighting that "the Magistral deposits at Santander
remain open at depth, where zinc grade appears to be increasing. Additional
drilling in 2017 will facilitate longer-range mine planning, including a potential
mill expansion." He also pointed out that "Caribou's H2/16
operating cost profile, in the context of ongoing ramp-up considerations,
caught us by surprise�an average onsite operating cost of US$56.39/t milled
(including US$54.79/t in Q4/16) came in well below our expectations (+US$75/t
milled) and Trevali's H2/16E guidance (US$64-68/t)."
