Production At Caribou And Santander Propels Trevali Toward 'Marquee' Status

| About: Trevali Mining (TREVF)


Trevali started commercial production at its Caibou mine.

Mill throughput for the site set a new record at 209,188 tonnes.

Zinc inventories remain at multiyear lows.

The company is poised to become the marquee mid-tier pure-play zinc producer.

Announcements of increased production at Trevali Mining Corp.'s Santander mine and the start of commercial production at Caribou mine, coupled with zinc inventories that remain at multiyear lows, have helped solidify the company's growth story.


On July 11, Trevali Mining Corp. (OTCQX:TREVF) reported preliminary Santander mine production results for Q2/16 of "approximately 15.2 million (15.2M) payable pounds zinc (a new quarterly record), 5.6M payable pounds of lead and 222,121 payable ounces of silver," with recoveries averaging "89% for zinc, 87% for lead and 73% for silver." Mill throughput for the site set a new record at 209,188 tonnes.

Commercial production at Trevali's Caribou zinc mine began on July 1, and in June the mine "delivered the strongest monthly performance to date with record mine and mill tonnage and throughput, zinc recoveries and concentrate production," Trevali announced in a July 7 release.

Analysts covering the company responded positively to the news on both fronts.

In a research note issued after the Caribou announcement, analyst Stefan Ioannou of Haywood Securities wrote that, "With zinc production from two mines expected to ramp up to +170 Mlb per annum by ~2019, we believe the company is poised to become a [the] marquee mid-tier pure-play zinc producer in a market facing a significant medium-term supply issue."

"Bringing a new zinc mine online could not come at a better time, with positive fundamentals beginning to take hold and the zinc price climbing upwards," wrote analyst Joseph Gallucci of Dundee Capital Markets on July 7.

Paradigm Capital analyst Jeff Woolley noted that "the growth story is coming together for Trevali" in his July 8 research note. With the Caribou mine and mill "working in a consistent manner," Trevali's focus will shift to "optimization and cost reduction" at the site, Woolley added.

With Santander continuing "to operate well" and the onset of production at Caribou, in a July 11 note, analyst Ian Parkinson of GMP Securities wrote that "we see production and cash flow increasing for the company. . .we believe that Trevali remains one of the best Canadian companies to play a continued zinc price recovery."

"We are once again very impressed with the operating performance at Santander, where Trevali seems to set new production records every quarter," Dundee's Gallucci wrote in a July 11 note. "With commercial production declared at Caribou just three days ago, Santander's continued excellence provides a strong foundation for [the company] to focus on optimizing Caribou."

In addition to Santander, located in Peru, and Caribou, located in the Bathurst Mining Camp of northern New Brunswick, Canada, Trevali owns the Halfmile and Stratmat base metal deposits, also in New Brunswick, which are currently undergoing preliminary economic assessments.

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