Trevali Mining Corporation (“Trevali” or “we”,
“our”)
(TSX: TV; BVL: TV; OTCQX: TREVF; Frankfurt:
4TI) today released financial and operating results for
the three and six months ended June 30, 2019. A strong focus on
operating efficiency delivered record quarterly zinc production of
105.2 million pounds and cash cost reductions over the prior
quarter, firmly positioning Trevali to meet, or potentially exceed
2019 operating targets. All financial figures are in U.S. dollars.
Second Quarter
Highlights:(Compared to second quarter 2019, unless
otherwise noted)
- Excellent safety performance with a 67% reduction in
Total Recordable Injury Frequency in the first half of
2019 compared to prior year.
- Published our inaugural Sustainability Report
on June 24, 2019, reflecting our commitment to transparency. We
received a leading Environment, Social and Governance quality score
rating from Institutional Shareholders Services.
- Record quarterly zinc production of 105.2 million
payable pounds. Annual production trending to the high-end
of 2019 guidance, with opportunities to exceed.
- Operating efficiencies delivered meaningful cost
improvements. Costs outperformed expectations with 9%
quarterly reduction of C1 Cash Cost1, offsetting increases in
smelting & refining charges. Maintaining 2019 C1 Cash Cost1 and
AISC1 guidance, trending towards the middle of previously guided
ranges.
- Rosh Pinah 2.0 internal study completed and advancing
to next phase; indicating potential for strong IRR and up
to 50% increase in output.
- Net debt1 reduced by $26.9 million during the
quarter. Continue to maintain a strong balance sheet with
net debt reduced to $34.8 million at June 30, 2019.
- Zinc Spot Price Adjusted EBITDA1 of $7.0
million (Adjusted EBITDA1 is ($0.3) million) during the
second quarter impacted by lower sales volumes of 93.2 million
pounds of zinc payable and build-up of 5.3 million pounds of
inventory; June 30, 2019 zinc monthly average spot price = $1.18
per pound.
- Derek du Preez appointed to the new position of Chief
Technology Officer, effective July 29, 2019, and
Amber Johnston-Billings appointed to the new position of
Chief Sustainability Officer, effective September 9,
2019.
Ricus Grimbeek, Trevali’s President and CEO
commented, “With record production results for the quarter, we are
well-positioned to meet our annual operating targets. Despite the
higher-than-anticipated 2019 zinc concentrate treatment charges,
on-site costs for the quarter were below budget and we are
targeting full-year AISC1 to be in the middle of the previously
guided range – a testament to our team’s focus on operating
discipline.”
“Since joining Trevali as President and CEO in
April 2019, I have visited all four of our mines and met our
operations staff and many key stakeholders. I am convinced more
than ever that there is tremendous, unrealized potential at
Trevali. Our plan to develop Trevali into the best, medium-sized
underground mining company can be realized. We are raising our
standards and improving our operational excellence in order to
become a world-class sustainable mining company. As we proceed down
this path, we will create significant value for our shareholders,
employees, local governments and communities and our business
partners,” added Ricus.
This news release should be read in conjunction
with Trevali’s quarterly consolidated financial statements and
management’s discussion and analysis for the three months ended
June 30, 2019, which is available on Trevali’s website and on
SEDAR. Certain financial information is reported herein using
non-IFRS measures. See Non-IFRS Financial Performance Measures
below and in Trevali’s accompanying Q2-2019 Management’s Discussion
and Analysis.
Q2-2019 Results Conference
CallThe Company will host a conference call and
presentation webcast at 11:00AM Eastern Time on Thursday, August 1,
2019 to review the operating and financial results. Participants
are advised to dial in five minutes prior to the scheduled start
time of the call. A presentation will be made available on the
Company’s website prior to the conference call.
Conference call dial-in details:Date: Thursday,
August 1, 2019 at 11:00AM Eastern TimeToll-free (North America): 1
(877) 291-4570International: +1 (647) 788-4919Webcast:
http://www.gowebcasting.com/10029
Financial and Operational
Summary
The following table sets forth selected
consolidated financial and operating information for each of our
eight most recently completed quarters:
|
|
YTD Q2’19 |
YTD Q2’18 |
YoY |
|
Q2’19 |
Q1’19 |
Q2’18 |
Q2'19 vs Q1'19 |
Q2'19 vs Q2'18 |
Zinc payable production |
Mlbs |
205.8 |
|
202.6 |
2% |
|
105.2 |
|
100.6 |
103.9 |
5% |
1% |
Lead payable production |
Mlbs |
22.9 |
|
22.8 |
0% |
|
11.4 |
|
11.5 |
10.5 |
–1% |
9% |
Silver payable production |
Moz |
0.7 |
|
0.7 |
0% |
|
0.3 |
|
0.4 |
0.3 |
–25% |
0% |
Revenue |
$ |
195,203 |
|
248,632 |
–21% |
|
64,421 |
|
130,782 |
133,914 |
–51% |
–52% |
Adjusted EBITDA1 |
$ |
51,707 |
|
117,275 |
–56% |
|
(318 |
) |
52,025 |
68,197 |
–101% |
–100% |
Net (loss) income |
$ |
(15,447 |
) |
52,030 |
–130% |
|
(31,563 |
) |
16,116 |
23,454 |
–296% |
–235% |
Net (loss) income per share |
$ |
(0.02 |
) |
0.06 |
–133% |
|
(0.04 |
) |
0.02 |
0.03 |
–300% |
–233% |
C1 Cash Cost1 |
$/lb |
0.90 |
|
0.74 |
22% |
|
0.86 |
|
0.95 |
0.68 |
–9% |
26% |
AISC1 |
$/lb |
1.04 |
|
0.88 |
18% |
|
1.00 |
|
1.07 |
0.85 |
–7% |
18% |
Despite the 2% rise in quarterly average zinc
prices in the second quarter, zinc prices declined significantly
during May and June. The $0.15 per pound decline in the average
3-month future price of zinc from March to June, combined with the
timing of sales year-to-date, resulted in a second quarter
provisional pricing adjustment of ($17.1) million, of which $14.0
million is directly price-related and $3.1 million is
volume-related. The spot to 3-month backwardation in the month of
June was exceptionally large, resulting in a larger-than-expected
provisional pricing adjustment on unsettled sales. IFRS requires
the use of a forward price, however the impact of using the monthly
average spot zinc price would have increased revenues by $7.3
million for both Q2 2019 and YTD. Additionally, the increase in
2019 zinc concentrate smelting and refining benchmark terms has
already been provided for on 2019 production.
Net loss in the second quarter of 2019 was $31.6
million or $0.04 per share, compared to net income of
$23.5 million or $0.03 per share, over the same period a year
ago. While there were other offsetting movements in 2019, the
decrease of income per share in the second quarter of 2019 can be
attributed to lower sales volumes, a decline in the price of zinc
during the quarter and the compounding effect of negative
provisional pricing adjustments, as well as restructuring expenses.
The slight shortfall in sales for the quarter is already well on
track to be corrected during Q3, with a dedicated Marketing and
Logistics function strengthening logistics within the group.
Concentrate inventories at quarter end were higher than anticipated
at Rosh Pinah due to elevated moisture levels necessitating
additional drying time negatively impacting sales volumes. A new
zinc concentrate filter press at the mine continues to be on track
for installation by year end 2019 and is expected to reduce
concentrate sales volatility.
The Company’s mining activities are conducted
throughout the year, and there are no notable variations due to
seasonality. The Company saw a step up in all metrics in the fourth
quarter of 2017, which was the first full quarter of operations
following the acquisition of the Rosh Pinah and Perkoa mines. From
this point onwards, EBITDA1 and net (loss) income saw a period of
stability until the third quarter of 2018 which was negatively
impacted by a provisional pricing adjustment of $42.6 million and
the fourth quarter of 2018 when a net impairment of $263.0 million
was recorded.
EBITDA1 and net income (loss) for first quarter
of 2019 was lower than the corresponding quarter from 2018, despite
higher sales volumes, due to higher smelting and refining charges
and lower zinc prices, while the second quarter of 2019 was
additionally negatively impacted by a zinc provisional pricing
adjustment of $17.1 million, of which $14.0 million is
price-related and $3.1 million is volume-related.
|
|
YTD Q2’19 |
YTD Q2’18 |
YoY |
|
Q2’19 |
Q1’19 |
Q2’18 |
Q2'19 vs Q1'19 |
Q2'19 vs Q2'18 |
Production |
|
|
|
|
|
|
|
|
|
|
Ore mined |
t |
1,534,561 |
|
1,597,381 |
|
–4% |
|
762,189 |
|
772,372 |
|
807,166 |
|
–1% |
–6% |
Ore milled |
t |
1,573,537 |
|
1,564,149 |
|
1% |
|
803,969 |
|
769,568 |
|
820,214 |
|
4% |
–2% |
Zinc head grade |
|
8.2 |
% |
8.0 |
% |
3% |
|
8.2 |
% |
8.2 |
% |
7.9 |
% |
0% |
4% |
Lead head grade |
|
1.4 |
% |
1.4 |
% |
0% |
|
1.4 |
% |
1.5 |
% |
1.3 |
% |
–7% |
8% |
Silver head grade |
(ozs/t) |
1.4 |
|
2.7 |
|
–48% |
|
1.3 |
|
1.4 |
|
1.5 |
|
–7% |
–13% |
Zinc recovery |
|
86.7 |
% |
87.5 |
% |
–1% |
|
86.5 |
% |
86.9 |
% |
87.3 |
% |
0% |
–1% |
Lead recovery |
|
64.6 |
% |
50.1 |
% |
29% |
|
64.2 |
% |
65.0 |
% |
62.2 |
% |
–1% |
3% |
Silver recovery |
|
45.8 |
% |
15.5 |
% |
195% |
|
45.2 |
% |
46.4 |
% |
44.1 |
% |
–3% |
2% |
Zinc payable |
Mlbs |
205.8 |
|
202.6 |
|
2% |
|
105.2 |
|
100.6 |
|
103.9 |
|
5% |
1% |
Lead payable |
Mlbs |
22.9 |
|
22.8 |
|
0% |
|
11.4 |
|
11.5 |
|
10.5 |
|
–1% |
9% |
Silver payable |
Moz |
0.7 |
|
0.7 |
|
0% |
|
0.3 |
|
0.4 |
|
0.3 |
|
–25% |
0% |
Sales |
|
|
|
|
|
|
|
|
|
|
Zinc payable |
Mlbs |
218.6 |
|
203.7 |
|
7% |
|
93.2 |
|
125.4 |
|
114.2 |
|
–26% |
–18% |
Lead payable |
Mlbs |
22.1 |
|
21.1 |
|
5% |
|
12.1 |
|
10.0 |
|
13.2 |
|
21% |
-8% |
Silver payable |
Moz |
0.7 |
|
0.7 |
|
0% |
|
0.4 |
|
0.4 |
|
0.4 |
|
0% |
0% |
Cost per unit |
|
|
|
|
|
|
|
|
|
|
C1 Cash Cost1 |
$/lb |
0.90 |
|
0.74 |
|
22% |
|
0.86 |
|
0.95 |
|
0.68 |
|
–9% |
26% |
AISC1 |
$/lb |
1.04 |
|
0.88 |
|
18% |
|
1.00 |
|
1.07 |
|
0.85 |
|
–7% |
18% |
Quarterly zinc payable production was 105.2
million pounds, a record for Trevali and a 5% increase from
100.6 million pounds in the previous quarter and 1% higher
than Q2 2018. Ore tonnes milled at Perkoa, Santander and Caribou
improved sequentially, with overall grades better than planned due
to improved dilution control, primarily at Perkoa and Caribou.
Zinc payable sales in the second quarter were
93.2 million pounds, a 26% decrease from Q1 2019 that benefited
from a catch-up on sales of 2018 concentrate inventory and 18%
below Q2 2018. The lower sales volume due to a build-up during Q2
2019 of 5.2 million pounds of zinc payable valued at $6.2 million,
using June 30, 2019 spot price, combined with a reduction in the
price of zinc during the quarter and the corresponding impact on
provisional price adjustments, negatively impacted revenues in the
quarter. Cost per unit during the quarter have reduced compared to
Q1 2019 which saw higher sales volumes distributed over lower
production volumes increasing the cost per unit which are
calculated on a payable production basis, thereby normalizing the
YTD costs. YTD costs in the prior year are lower as they benefited
from lower zinc concentrate smelting and refining rates and the
release of provisions.
A reconciliation of Adjusted EBITDA1 from Q1
2019 to Q2 2019 is provided in the figure below. The negative
$23.4 million provisional sales adjustment in Figure A
represents the combined impact of a positive $5.7 million
adjustment in Q1 2019 and a negative $17.1 million adjustment in Q2
2019, driven by an average zinc price decrease of $0.15 per pound
during the quarter.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/31a2f1a0-87f6-46db-af22-760d8bc5ea61
C1 Cash Cost1 in Q2 2019 was $0.86 per pound
compared to $0.95 per pound in Q1 2019 and $0.68 per pound in Q2
2018. The significant increase from Q2 2018 mainly resulted from
the increase of industry benchmark zinc concentrate smelting and
refining charges from $147 per tonne in 2018 to $245 per tonne in
2019 (equates approximately to $0.28 per pound). Relative to Q1
2019, the improvement in C1 Cash Cost1 reflects higher production
volumes as well as fewer offsite costs associated with the lower
sales volumes and a continued focus on operating efficiency. AISC1
was $1.00 per pound, a $0.07 per pound reduction from the prior
quarter primarily for the same reasons that benefited C1 Cash
Cost1.
2019
Outlook
Commodity Markets
In addition to our operating results, financial
performance is directly affected by several factors, including
metals prices, foreign exchange rates and input costs, including
energy prices. The average LME metals prices are included below,
while the Q2 2019 average zinc price increased 2% compared to the
previous quarter, the price had been trending steadily downwards to
a low at period end.
LME Average |
|
YTD Q2’19 |
YTD Q2’18 |
YoY |
|
Q2’19 |
Q1’19 |
Q2’18 |
Q2'19 vs Q1'19 |
Q2'19 vs Q2'18 |
Zinc spot price |
$/lb |
1.24 |
1.48 |
–16% |
|
1.25 |
1.23 |
1.41 |
2% |
–11% |
Lead spot price |
$/lb |
0.89 |
1.11 |
–20% |
|
0.86 |
0.92 |
1.08 |
–7% |
–20% |
Silver spot price |
$/oz |
15.23 |
16.65 |
–9% |
|
14.89 |
15.57 |
16.53 |
–4% |
–10% |
Despite economic headwinds in recent months
weighing on global zinc demand, which is forecast by Wood Mackenzie
to contract by 1% in 2019, we believe the fundamental outlook for
the zinc market is supportive of higher prices. Refined zinc supply
continues to be constrained as smelter production in the first half
of 2019 has been well below market expectations at the start of the
year, which called for annual growth of over 6%. Zinc smelters
globally continue to underperform due to the ongoing impact of
production cutbacks in the face of the environmental regulations at
Chinese smelters and a number of production issues at smelters in
the rest of the world. As a result, 2019 global refined supply
growth is now forecast by Wood Mackenzie at just 2%. Should the
latest smelter production growth rates materialize, 2019 is still
forecast to see another deficit in the refined zinc market.
Additionally, the current zinc price volatility and weakness may
limit supply growth from marginal and restarting operations,
helping to remove additional supply. As a consequence, exchange
inventories of zinc are forecast to remain at depressed levels for
the remainder of the year, providing fundamental support to the
zinc price.
Sensitivity Analysis
The Company previously disclosed the effect of
changes in the zinc price on the Company’s 2019 revenue and net
income outlook, based on an assumed production of 401 million
pounds of payable zinc, in our Management Discussion and Analysis
for the year ended December 31, 2018. This sensitivity
analysis has been updated to reflect the impact of the finalized
increase in smelting and refining costs for 2019 which results in a
decrease of $29 million in each of net revenue, EBITDA1 and
net income.
Zinc concentrate industry benchmark smelting and
refining charge terms for 2019 have not been finalized. However,
terms are expected to be finalized shortly at market terms, in line
with our expectations during Q1 2019 but above our expectations at
the start of the year when 2019 cost guidance was declared. The
higher off-site costs are expected to add $0.07 per pound of zinc
payable sold. The Company has revisited the C1 Cash Cost1 and AISC1
guidance and concluded that, despite the unexpected increase, no
changes are required to the original guidance. We maintain a strong
focus on controlling operating costs, enhancing Trevali’s position
to generate cash flow despite the recent decline in zinc prices.
Given our results year-to-date, along with our expectations for the
rest of 2019, full year AISC1 results are firmly on track to be
within guidance, trending towards the middle of the ranges provided
with an enhanced focus on optimizing our operations to world-class
underground mines managed by superior skills and front-end
technology.
Operations
Overview
Consolidated Revenues
|
|
YTD Q2’19 |
YTD Q2’18 |
YoY |
|
Q2’19 |
Q1’19 |
Q2’18 |
Q2'19 vs Q1'19 |
Q2'19 vs Q2'18 |
Revenues |
|
|
|
|
|
|
|
|
|
|
Zinc revenue |
$ |
262,983 |
|
295,585 |
|
–11% |
|
108,233 |
|
154,749 |
|
162,355 |
|
–30% |
–33% |
Provisional pricing adjustments |
|
(11,390 |
) |
(20,375 |
) |
–44% |
|
(17,124 |
) |
5,733 |
|
(17,189 |
) |
–399% |
0% |
Lead and silver revenue |
|
31,863 |
|
35,128 |
|
–9% |
|
16,221 |
|
15,643 |
|
21,368 |
|
4% |
–24% |
Provisional pricing adjustments |
|
(916 |
) |
(482 |
) |
90% |
|
(752 |
) |
(164 |
) |
(490 |
) |
359% |
53% |
Smelting and refining costs |
|
(87,337 |
) |
(61,224 |
) |
43% |
|
(42,157 |
) |
(45,179 |
) |
(32,130 |
) |
–7% |
31% |
Net revenue |
$ |
195,203 |
|
248,632 |
|
–21% |
|
64,421 |
|
130,782 |
|
133,914 |
|
–51% |
–52% |
Average zinc LME price |
$/lb |
1.24 |
|
1.48 |
|
–16% |
|
1.25 |
|
1.23 |
|
1.41 |
|
2% |
–11% |
Average lead LME price |
$/lb |
0.89 |
|
1.11 |
|
–20% |
|
0.86 |
|
0.92 |
|
1.08 |
|
–7% |
–20% |
Average silver LBMA price |
$/oz |
15.23 |
|
16.65 |
|
–9% |
|
14.89 |
|
15.57 |
|
16.53 |
|
–4% |
–10% |
Sales quantities |
|
|
|
|
|
|
|
|
|
|
Payable zinc |
Mlbs |
218.6 |
|
203.7 |
|
7% |
|
93.2 |
|
125.4 |
|
114.2 |
|
–26% |
–18% |
Payable lead |
Mlbs |
22.1 |
|
21.1 |
|
5% |
|
12.1 |
|
10.0 |
|
13.2 |
|
21% |
–8% |
Payable silver |
Mozs |
0.7 |
|
0.7 |
|
0% |
|
0.4 |
|
0.4 |
|
0.4 |
|
0% |
0% |
All of Trevali’s zinc and lead concentrate sales
contracts provide final pricing in a future month (generally one to
six months from the shipment date) based primarily on quoted London
Metal Exchange (“LME”) monthly average zinc and lead prices.
Trevali recognizes revenues at the time of shipment based on
estimated final pricing, with mark-to-market adjustments made each
subsequent period until final pricing on the date of settlement.
Treatment charges and freight, included within smelting and
refining cost, are negotiated at market-related rates.
Zinc sales volumes decreased during the quarter,
but high sales in Q1 2019 due to timing and the catch-up of 2018
inventory resulted in a strong but normalized YTD. The strong sales
YTD has helped offset the lower zinc price and increased smelting
and refining rates, with YTD revenues 21% lower compared to the
prior year.
Provisional Pricing
|
|
Zinc |
Lead |
Spot 3-month future price as at March 29, 2019 |
$/lb |
1.32 |
0.92 |
Provisionally priced metal – March 31, 2019 |
Mlbs |
175.3m |
5.1m |
Average spot price for March 2019 |
$/lb |
1.29 |
0.93 |
Average 3-month future price for March 2019 |
$/lb |
1.28 |
0.94 |
Average Q2 LME price |
$/lb |
1.25 |
0.86 |
Provisionally priced metal – June 30, 2019 |
Mlbs |
150.8m |
2.8m |
Average spot price for June 2019 |
$/lb |
1.18 |
0.86 |
Average 3-month future price for June 2019 |
$/lb |
1.13 |
0.86 |
Spot 3-month future price as at June 30, 2019 |
$/lb |
1.13 |
0.87 |
Trevali estimates that each $0.05 change in the
zinc price per pound realized from the June 30, 2019 provisional
price recorded of $1.13 per pound would have an average effect of
approximately $7.0 million on 2019 revenues.
The negative $17.1 million provisional price
adjustment for zinc ($14.0 million is price-related and
$3.1 million is volume-related) in the second quarter of 2019
reflects the decrease in the estimated final pricing at June 30,
2019 compared to the average zinc price during the first quarter. A
corresponding impact of the inventory sell down in the first
quarter is a decrease in provisionally priced sales outstanding at
quarter end to 150.8 million pounds.
Perkoa Mine, Burkina
Faso
|
|
YTD Q2’19 |
YTD Q2’18 |
YoY |
|
Q2’19 |
Q1’19 |
Q2’18 |
Q2'19 vs Q1'19 |
Q2'19 vs Q2'18 |
Production |
|
|
|
|
|
|
|
|
|
|
Ore mined |
t |
375,457 |
|
374,709 |
|
0% |
|
184,566 |
|
190,891 |
|
182,551 |
|
–3% |
1% |
Ore milled |
t |
360,664 |
|
355,967 |
|
1% |
|
187,191 |
|
173,473 |
|
176,027 |
|
8% |
6% |
Zinc head grade |
|
14.2 |
% |
14.8 |
% |
–4% |
|
14.8 |
% |
13.5 |
% |
15.2 |
% |
10% |
–3% |
Zinc recovery |
|
90.0 |
% |
93.7 |
% |
–4% |
|
90.3 |
% |
89.7 |
% |
93.1 |
% |
1% |
–3% |
Zinc concentrate grade |
|
49.6 |
% |
51.0 |
% |
–3% |
|
49.3 |
% |
50.0 |
% |
50.1 |
% |
–1% |
–2% |
Zinc payable |
Mlbs |
85.2 |
|
92.0 |
|
–7% |
|
46.3 |
|
39.0 |
|
46.1 |
|
19% |
0% |
Sales |
|
|
|
|
|
|
|
|
|
|
Zinc payable |
Mlbs |
95.5 |
|
91.4 |
|
4% |
|
41.1 |
|
54.4 |
|
58.8 |
|
–24% |
–30% |
C1 Cash Cost1 |
$/lb |
0.96 |
|
0.76 |
|
26% |
|
0.89 |
|
1.04 |
|
0.74 |
|
–14% |
20% |
AISC1 |
$/lb |
1.03 |
|
0.83 |
|
24% |
|
0.96 |
|
1.11 |
|
0.83 |
|
–14% |
16% |
FINANCE |
|
|
|
|
|
|
|
|
|
|
Revenues, net |
$ |
74,808 |
|
98,862 |
|
–24% |
|
23,483 |
|
51,324 |
|
62,010 |
|
–54% |
–62% |
Mine operating expenses |
|
59,288 |
|
50,055 |
|
18% |
|
25,473 |
|
33,814 |
|
26,336 |
|
–25% |
–3% |
Adjusted EBITDA1 |
|
15,520 |
|
48,807 |
|
–68% |
|
(1,990 |
) |
17,510 |
|
35,674 |
|
–111% |
–106% |
Other expense (income) and impairment |
|
1,258 |
|
(25 |
) |
–5132% |
|
(808 |
) |
2,066 |
|
8,282 |
|
–139% |
–110% |
EBITDA1 |
|
14,262 |
|
48,832 |
|
–71% |
|
(1,182 |
) |
15,444 |
|
27,392 |
|
–108% |
–104% |
Depreciation, depletion & amortization |
|
17,979 |
|
19,409 |
|
–7% |
|
8,141 |
|
9,838 |
|
16,167 |
|
–17% |
–50% |
EBIT1 |
$ |
(3,717 |
) |
29,423 |
|
–113% |
|
(9,323 |
) |
5,606 |
|
11,225 |
|
–266% |
–183% |
Payable zinc production for the second quarter
was 46.3 million pounds, in-line with the corresponding quarter in
2018, with production gains from higher plant throughput mostly
offset by lower grades and recoveries. As expected, grades in the
second quarter improved, benefiting further from improved dilution
control with payable zinc production for Q2 2019 increasing by 19%
over the previous quarter with production benefiting from a
sequential improvement in milled tonnage, grade and recovery.
Higher iron grades from the hanging wall ore continue to be
encountered and is expected to impact mill performance for at least
the remainder of the year.
C1 Cash Cost1 has increased by $0.15 per pound
when compared to the corresponding quarter in 2018 reflecting the
increase to industry benchmark zinc concentrate smelting and
refining charges, higher volumes of concentrate trucking and higher
production costs associated with increased mine production and mill
throughput. The AISC1 increase of $0.13 per pound reflects these
increased costs, offset by a decrease of $0.7 million in sustaining
capital expenditure and lease payments when compared to the same
period a year ago. C1 Cash Cost1 and AISC1 improved
quarter-over-quarter reflecting fewer costs associated with the
incremental sales that were made in the first quarter and higher
production volumes.
2019 production and cost guidance remain
unchanged. The heavy fuel oil power conversion plant has now been
completed, on budget. Cost savings from the more efficient supply
of power are anticipated to be realized from the third quarter.
Rosh Pinah Mine,
Namibia
|
|
YTD Q2’19 |
YTD Q2’18 |
YoY |
|
Q2’19 |
Q1’19 |
Q2’18 |
Q2'19 vs Q1'19 |
Q2'19 vs Q2'18 |
Production |
|
|
|
|
|
|
|
|
|
|
Ore mined |
t |
338,344 |
|
332,131 |
|
2% |
|
168,661 |
|
169,683 |
|
159,797 |
|
–1% |
6% |
Ore milled |
t |
342,753 |
|
350,919 |
|
–2% |
|
171,389 |
|
171,364 |
|
173,082 |
|
0% |
–1% |
Zinc head grade |
|
9.2 |
% |
7.8 |
% |
18% |
|
8.8 |
% |
9.6 |
% |
7.7 |
% |
–8% |
14% |
Lead head grade |
|
1.0 |
% |
1.2 |
% |
–17% |
|
1.1 |
% |
1.0 |
% |
1.1 |
% |
10% |
0% |
Silver head grade |
(ozs/t) |
0.4 |
|
0.4 |
|
0% |
|
0.4 |
|
0.4 |
|
0.3 |
|
0% |
33% |
Zinc recovery |
|
87.3 |
% |
87.1 |
% |
0% |
|
86.1 |
% |
88.5 |
% |
86.3 |
% |
–3% |
0% |
Lead recovery |
|
49.2 |
% |
67.3 |
% |
–27% |
|
50.9 |
% |
47.4 |
% |
57.6 |
% |
7% |
–12% |
Silver recovery |
|
34.8 |
% |
55.5 |
% |
–37% |
|
33.1 |
% |
36.6 |
% |
60.4 |
% |
–10% |
–45% |
Zinc concentrate grade |
|
49.3 |
% |
47.4 |
% |
4% |
|
48.5 |
% |
50.1 |
% |
45.0 |
% |
–3% |
8% |
Lead concentrate grade |
|
35.7 |
% |
40.8 |
% |
–12% |
|
38.6 |
% |
32.9 |
% |
35.0 |
% |
17% |
10% |
Zinc payable |
Mlbs |
50.8 |
|
43.7 |
|
16% |
|
24.0 |
|
26.8 |
|
20.8 |
|
–10% |
15% |
Lead payable |
Mlbs |
3.5 |
|
6.1 |
|
–43% |
|
1.9 |
|
1.6 |
|
2.1 |
|
19% |
–10% |
Silver payable |
Moz |
– |
|
0.1 |
|
–100% |
|
– |
|
– |
|
– |
|
0% |
0% |
Sales |
|
|
|
|
|
|
|
|
|
|
Zinc payable |
Mlbs |
54.7 |
|
45.6 |
|
20% |
|
17.7 |
|
36.9 |
|
17.5 |
|
–52% |
1% |
Lead payable |
Mlbs |
3.2 |
|
4.4 |
|
–27% |
|
3.2 |
|
– |
|
4.4 |
|
100% |
–27% |
Silver payable |
Moz |
– |
|
0.1 |
|
–100% |
|
– |
|
– |
|
0.1 |
|
0% |
–100% |
C1 Cash Cost1 |
$/lb |
0.78 |
|
0.70 |
|
11% |
|
0.67 |
|
0.89 |
|
0.47 |
|
–25% |
43% |
AISC1 |
$/lb |
0.96 |
|
0.88 |
|
9% |
|
0.88 |
|
1.03 |
|
0.69 |
|
–15% |
28% |
FINANCE |
|
|
|
|
|
|
|
|
|
|
Revenues,
net |
$ |
47,532 |
|
54,758 |
|
–13% |
|
11,798 |
|
35,734 |
|
21,566 |
|
–67% |
–45% |
Mine
operating expenses |
|
25,827 |
|
26,908 |
|
–4% |
|
10,582 |
|
15,246 |
|
10,870 |
|
–31% |
–3% |
Adjusted EBITDA1 |
|
21,705 |
|
27,850 |
|
–22% |
|
1,216 |
|
20,488 |
|
10,696 |
|
–94% |
–89% |
Other (income) expense and impairment |
|
1,671 |
|
1,362 |
|
23% |
|
1,204 |
|
466 |
|
1,397 |
|
158% |
–14% |
EBITDA1 |
|
20,034 |
|
26,488 |
|
–24% |
|
12 |
|
20,022 |
|
9,299 |
|
–100% |
–100% |
Depreciation, depletion & amortization |
|
11,899 |
|
7,340 |
|
62% |
|
5,598 |
|
6,302 |
|
1,821 |
|
–11% |
207% |
EBIT1 |
$ |
8,135 |
|
19,148 |
|
–58% |
|
(5,586 |
) |
13,720 |
|
7,478 |
|
–141% |
–175% |
Payable zinc production for the second quarter
was 24.0 million pounds, 15% higher than during the corresponding
quarter in 2018 as higher grades were milled. Payable zinc
production for the second quarter represents a 10% reduction from
the previous quarter as grades declined per the Company’s
expectations and prior guidance. Ore blending efforts to better
manage grade and ore type continue to be successful, improving the
process plant reliability. As per normal shipping schedules, lead
concentrate was shipped in the second quarter.
C1 Cash Cost1 and AISC1 increased by $0.20 per
pound and $0.19 per pound, respectively, when compared to the
corresponding quarter in 2018 and reflects 62% lower by-product
revenues due to a combination of price and volume decrease and the
increase to industry benchmark zinc concentrate smelting and
refining charges, offset by lower sustaining capital expenditures.
C1 Cash Cost1 and AISC1 improved quarter-over-quarter, reflecting
reduced offsite costs associated with the reduction in sales made
during the second quarter, offset by higher sustaining capital
expenditures.
2019 production and cost guidance remain
unchanged. Zinc grades for the remainder of 2019 are expected to be
approximately 8%, in-line with guidance disclosed at the start of
the year. The new zinc concentrate filter press continues to be on
track for installation by the end of the year and is expected to
not only reduce concentrate moisture content, but also reduce
concentrate re-handling costs and variability. The Rosh Pinah 2.0
(“RP2.0”) optimization feasibility study completion is targeted for
Q2 2020. Opportunities for Trevali’s longest life mine to increase
production, reduce unit costs, improve recoveries and concentrate
grades continue to be evaluated as part of the RP2.0 study for up
to a 50% increase in output.
Caribou Mine,
Canada
|
|
YTD Q2’19 |
YTD Q2’18 |
YoY |
|
Q2’19 |
Q1’19 |
Q2’18 |
Q2'19 vs Q1'19 |
Q2'19 vs Q2'18 |
Production |
|
|
|
|
|
|
|
|
|
|
Ore mined |
t |
425,478 |
|
505,150 |
|
–16% |
|
211,389 |
|
214,089 |
|
266,500 |
|
–1% |
–21% |
Ore milled |
t |
432,413 |
|
482,753 |
|
–10% |
|
221,628 |
|
210,785 |
|
247,222 |
|
5% |
–10% |
Zinc head grade |
|
5.8 |
% |
5.9 |
% |
–2% |
|
5.6 |
% |
5.9 |
% |
5.9 |
% |
–5% |
–5% |
Lead head grade |
|
2.4 |
% |
2.3 |
% |
4% |
|
2.3 |
% |
2.4 |
% |
2.2 |
% |
–4% |
5% |
Silver head grade |
(ozs/t) |
2.3 |
|
2.0 |
|
15% |
|
2.2 |
|
2.5 |
|
2.0 |
|
–12% |
10% |
Zinc recovery |
|
78.3 |
% |
75.6 |
% |
4% |
|
78.6 |
% |
78.0 |
% |
76.4 |
% |
1% |
3% |
Lead recovery |
|
63.7 |
% |
61.0 |
% |
4% |
|
63.0 |
% |
64.4 |
% |
59.8 |
% |
–2% |
5% |
Silver recovery |
|
38.5 |
% |
38.3 |
% |
1% |
|
38.0 |
% |
38.9 |
% |
35.2 |
% |
–2% |
8% |
Zinc concentrate grade |
|
46.7 |
% |
46.9 |
% |
0% |
|
47.1 |
% |
46.3 |
% |
47.8 |
% |
2% |
–1% |
Lead concentrate grade |
|
39.0 |
% |
37.5 |
% |
4% |
|
39.0 |
% |
38.9 |
% |
38.0 |
% |
0% |
3% |
Zinc payable |
Mlbs |
35.8 |
|
39.6 |
|
–10% |
|
18.0 |
|
17.8 |
|
20.5 |
|
1% |
–12% |
Lead payable |
Mlbs |
13.3 |
|
13.7 |
|
–3% |
|
6.6 |
|
6.7 |
|
6.5 |
|
–1% |
2% |
Silver payable |
Moz |
0.4 |
|
0.4 |
|
0% |
|
0.2 |
|
0.2 |
|
0.2 |
|
0% |
0% |
Sales |
|
|
|
|
|
|
|
|
|
|
Zinc payable |
Mlbs |
35.3 |
|
39.5 |
|
–11% |
|
18.0 |
|
17.3 |
|
21.7 |
|
4% |
–17% |
Lead payable |
Mlbs |
12.9 |
|
13.7 |
|
–6% |
|
6.1 |
|
6.8 |
|
6.9 |
|
–10% |
–12% |
Silver payable |
Moz |
0.4 |
|
0.4 |
|
0% |
|
0.2 |
|
0.2 |
|
0.2 |
|
0% |
0% |
C1 Cash Cost1 |
$/lb |
1.07 |
|
0.68 |
|
57% |
|
1.09 |
|
1.06 |
|
0.64 |
|
3% |
70% |
AISC1 |
$/lb |
1.21 |
|
0.85 |
|
42% |
|
1.23 |
|
1.19 |
|
0.81 |
|
3% |
52% |
FINANCE |
|
|
|
|
|
|
|
|
|
|
Revenues,
net |
$ |
37,759 |
|
57,778 |
|
–35% |
|
15,304 |
|
22,455 |
|
29,706 |
|
–32% |
–48% |
Mine
operating expenses |
|
34,062 |
|
30,285 |
|
12% |
|
16,553 |
|
17,509 |
|
15,723 |
|
–5% |
5% |
Adjusted EBITDA1 |
|
3,697 |
|
27,493 |
|
–87% |
|
(1,249 |
) |
4,946 |
|
13,983 |
|
–125% |
–109% |
Other (income) expense and impairment |
|
764 |
|
(2,022 |
) |
–138% |
|
262 |
|
502 |
|
(906 |
) |
–48% |
–129% |
EBITDA1 |
|
2,933 |
|
29,515 |
|
–90% |
|
(1,511 |
) |
4,444 |
|
14,889 |
|
–134% |
–110% |
Depreciation, depletion & amortization |
|
7,779 |
|
6,399 |
|
22% |
|
4,010 |
|
3,770 |
|
2,940 |
|
6% |
36% |
EBIT1 |
$ |
(4,846 |
) |
23,116 |
|
–121% |
|
(5,521 |
) |
674 |
|
11,949 |
|
–919% |
–146% |
Payable zinc production for the second quarter
was 18.0 million pounds, 12% lower than the corresponding quarter
in 2018 because of lower mill throughput and grades, but in-line
with the prior quarter as higher mill throughput and recoveries
offset a slight reduction in grade. While milled tonnage improved
quarter-over-quarter, the strike at the Belledune lead smelter
temporarily impacted concentrate trucking capacity during the month
of May, removing on-site storage capacity and necessitating a
reduction in concentrate production. Mining activities in the
quarter focused on completing rehabilitation, ensuring all active
ore drives are safe and supported for the long term. The planned
preventative maintenance strategy in the mill is proving to be
successful, with every month in 2019 except for June a record month
for zinc recovery when compared to previous years.
C1 Cash Cost1 and AISC1 increased when compared
to the corresponding quarter in 2018, reflecting increased
underground development and contractor costs, lower by-product
revenues as a result of lower lead and silver prices and the
increase to industry benchmark zinc concentrate smelting and
refining charges. C1 Cash Cost1 and AISC1 were higher
quarter-over-quarter due to extension of mining contractor services
as well as the impact to production of the Belledune strike.
2019 production and cost guidance remain
unchanged. Mill throughput is expected to improve in the third
quarter, benefiting production and unit costs. A sound
understanding of the geotechnical challenges has been established.
The ground control failure modes have been quantified and actions
plans are in place to mitigate these together with a focus on
advancing development which was achieved during the quarter. Plans
are now underway to commence trial mining of an alternative
sublevel caving mining method. The trials will be conducted in
areas currently not in the mine plan to ensure sufficient feed to
keep the mill at full capacity. In addition to the trials, the
extraction of sill pillars currently excluded from the reserves
will be tested. As current mining rates are generating excess mill
capacity of approximately 300 tonnes per day, alternative ore
sources to utilize the spare capacity are being evaluated.
Santander Mine,
Peru
|
|
YTD Q2’19 |
YTD Q2’18 |
YoY |
|
Q2’19 |
Q1’19 |
Q2’18 |
Q2'19 vs Q1'19 |
Q2'19 vs Q2'18 |
Production |
|
|
|
|
|
|
|
|
|
|
Ore mined |
t |
395,281 |
|
385,391 |
|
3% |
|
197,573 |
|
197,708 |
|
198,318 |
|
0% |
0% |
Ore milled |
t |
437,707 |
|
374,511 |
|
17% |
|
223,761 |
|
213,946 |
|
223,884 |
|
5% |
0% |
Zinc head grade |
|
4.8 |
% |
4.5 |
% |
7% |
|
4.8 |
% |
4.9 |
% |
4.5 |
% |
–2% |
7% |
Lead head grade |
|
0.8 |
% |
0.5 |
% |
60% |
|
0.7 |
% |
0.9 |
% |
0.5 |
% |
–22% |
40% |
Silver head grade |
oz/t |
1.2 |
|
0.9 |
|
33% |
|
1.1 |
|
1.3 |
|
0.9 |
|
–15% |
22% |
Zinc recovery |
|
87.6 |
% |
89.2 |
% |
–2% |
|
86.5 |
% |
88.7 |
% |
89.3 |
% |
–2% |
–3% |
Lead recovery |
|
82.4 |
% |
79.0 |
% |
4% |
|
82.8 |
% |
82.1 |
% |
78.5 |
% |
1% |
5% |
Silver recovery |
|
62.7 |
% |
59.6 |
% |
5% |
|
62.5 |
% |
62.9 |
% |
60.8 |
% |
–1% |
3% |
Zinc concentrate grade |
|
47.4 |
% |
47.5 |
% |
0% |
|
47.0 |
% |
47.8 |
% |
47.5 |
% |
–2% |
–1% |
Lead concentrate grade |
|
50.7 |
% |
49.6 |
% |
2% |
|
48.1 |
% |
53.1 |
% |
49.6 |
% |
–9% |
–3% |
Zinc payable |
Mlbs |
33.9 |
|
27.3 |
|
24% |
|
16.9 |
|
17.0 |
|
16.4 |
|
–1% |
3% |
Lead payable |
Mlbs |
6.1 |
|
3.1 |
|
97% |
|
2.8 |
|
3.3 |
|
1.9 |
|
–15% |
47% |
Silver payable |
Moz |
0.3 |
|
0.2 |
|
50% |
|
0.1 |
|
0.2 |
|
0.1 |
|
–50% |
0% |
Sales |
|
|
|
|
|
|
|
|
|
|
Zinc payable |
Mlbs |
33.0 |
|
27.2 |
|
21% |
|
16.3 |
|
16.7 |
|
16.2 |
|
–2% |
1% |
Lead payable |
Mlbs |
6.0 |
|
3.0 |
|
100% |
|
2.7 |
|
3.2 |
|
1.9 |
|
–16% |
42% |
Silver payable |
Moz |
0.3 |
|
0.2 |
|
50% |
|
0.1 |
|
0.2 |
|
0.1 |
|
–50% |
0% |
C1 Cash Cost1 |
$/lb |
0.77 |
|
0.81 |
|
–5% |
|
0.81 |
|
0.73 |
|
0.64 |
|
11% |
27% |
AISC1 |
$/lb |
0.97 |
|
1.11 |
|
–13% |
|
1.05 |
|
0.89 |
|
0.90 |
|
18% |
17% |
FINANCE |
|
|
|
|
|
|
|
|
|
|
Revenues,
net |
$ |
35,104 |
|
37,234 |
|
–6% |
|
13,836 |
|
21,269 |
|
20,632 |
|
–35% |
–33% |
Mine operating expenses |
|
19,920 |
|
20,028 |
|
–1% |
|
10,368 |
|
9,552 |
|
10,618 |
|
9% |
–2% |
Adjusted EBITDA1 |
|
15,184 |
|
17,206 |
|
–12% |
|
3,468 |
|
11,717 |
|
10,014 |
|
–70% |
–65% |
Other (income) expense and impairment |
|
(727 |
) |
137 |
|
–631% |
|
(157 |
) |
(570 |
) |
359 |
|
–72% |
–144% |
EBITDA1 |
|
15,911 |
|
17,069 |
|
–7% |
|
3,625 |
|
12,287 |
|
9,655 |
|
–70% |
–62% |
Depreciation, depletion & amortization |
|
6,221 |
|
5,474 |
|
14% |
|
2,299 |
|
3,922 |
|
3,315 |
|
–41% |
–31% |
EBIT1 |
$ |
9,690 |
|
11,595 |
|
–16% |
|
1,326 |
|
8,365 |
|
6,340 |
|
–84% |
–79% |
Payable zinc production for the second quarter
was 16.9 million pounds, a 3% improvement over the corresponding
quarter in 2018 as higher grades were processed and in-line with
the previous quarter. Higher iron content and harder ore from the
Magistral Central zone impacted recoveries in the quarter and are
expected to persist for the remainder of 2019.
C1 Cash Cost1 and AISC1 increased compared to
the corresponding quarter in 2018 mainly due to the higher
benchmark zinc concentrate smelting and refining charges and lower
by-product revenues because of lower lead and silver prices. The
quarter-over-quarter increase in C1 Cash Cost1 reflects lower
by-product revenue due to lower lead and silver grades and prices
while the incremental increase in AISC1 over the same period is
attributed to higher sustaining capital expenditures.
2019 production and cost guidance remain
unchanged. Slightly higher-than-expected zinc grades are
anticipated to offset the impact of elevated iron levels and ore
hardness. With the dry season now underway, underground water
pumping requirements are forecast to remain below budgeted
levels.
Exploration and Development
The primary goal of Trevali’s 2019 exploration
program is to focus on near-mine exploration targets with the
objective to discover new resources in proximity to existing mine
infrastructure. The Company has committed to invest a minimum of
$8.4 million which includes ground geophysical surveys, geochemical
surveys, first pass air-core drilling and approximately 36,000
metres of diamond drilling from surface and underground primarily
focused on the Perkoa and Santander mineral systems.
Exploration expenditures to the end of Q2
amounted to $5.0 million. The remaining budgeted $3.4 million will
be spent in the second half of the year. A total of approximately
17,000 meters of exploration drilling has been completed year to
date. Trevali expects to drill the full budgeted amount of 36,000
metres with additional drilling programs planned to start in the
third quarter at Santander where drilling permits have now been
received and at Rosh Pinah.
Perkoa Exploration, Burkina
Faso
A new volcanogenic massive sulfide (“VMS”)
horizon was discovered at Perkoa during Q2. Two underground holes
intersected a VMS horizon referred to as T3, which is located
approximately 200 metres in the hanging wall of the main Footwall
lens as illustrated in the figure on the following page. The T3
horizon represents the third VMS horizon discovered at the Perkoa
Mine. The discovery was made using a combination of geochemical and
alteration vectoring and downhole electromagnetic (“EM”) survey.
Drill hole PUX013 intersected the T3 VMS horizon, which consists of
banded disseminated sphalerite, from a drill depth of 547m to 593m
(46 metres intercept, 32 metres true width) while drill hole PUX020
intersected the T3 horizon from a drill depth of 551m to 573m (22
metres intercept, 16 metres true width). Assay results are pending.
Both holes were collared from the deepest level of the mine which
is currently located at 520m below surface and intersected the T3
horizon at a depth of approximately 900m below surface.
An additional 2,300 metres underground drilling
program is currently underway to test the up-plunge extension of
the T3 horizon and infill drill the hanging wall zone down to a
depth of approximately 820 metres below the surface. A second
underground drill rig is currently being sourced to drill test the
down plunge extension of the T3 horizon. This additional drilling
is expected to begin during the third quarter.
Regionally, exploration in the second quarter
focused on targets located along the approximately 25-kilometre
strike Perkoa Mine Horizon using a combination of geophysics
(surface and downhole), geochemistry (air-core drilling) and
diamond drilling. Several anomalies were targeted during the
quarter. To the North-East of the Perkoa Mine, a series of
geophysical anomalies referred to as L2T were drill tested with
air-core and diamond drilling. To the South-West of the Perkoa
Mine, the AF1, AF1 South and South-West anomalies were also drill
tested with air-core and diamond drilling. The air-core programs
and surface Fluxgate EM surveys were still on-going at the end of
the quarter and are expected to provide more regional targets to be
tested once the rainy season subsides in Q4.
Several zones of alteration hosted in
volcaniclastic sequences interpreted to be the same horizon as the
Perkoa Mine were intersected at multiple anomalies so far during
the 2019 exploration program, including narrow VMS horizons at L2T1
and AF1. Along with the T3 discovery, these two regional
discoveries bring the total known VMS systems at Perkoa to five,
showing the potential of the region and Boromo belt to develop into
a major VMS district.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/658109fe-34e4-41c4-a40c-bb44990b2bd4
Rosh Pinah Exploration,
Namibia
Drilling from underground continued during the
second quarter at the Western Orefield and the AAB orebody
targeting areas at depth for resource conversion. This resource
conversion program will continue during the third quarter.
Surface Fluxgate EM surveys were conducted
during the second quarter along the Northern Extension of the
Western Orefield and along the Eastern Limb of the Rosh Pinah
deposit. Both surveys have identified conductive plates which
warrant more investigation. More EM surveys are planned for the
third quarter on the Eastern portion of the Rosh Pinah deposit and
surface drilling is scheduled to begin drill testing the Northern
extension of the Western Orefield.
Santander Exploration, Peru
During the second quarter, surface Fluxgate EM
surveys were conducted over previously identified anomalies located
along strike of the Magistral deposit, with data compilation
ongoing and new targets being generated ahead of the Q3 drilling
programs. At the Santander Pipe, where a 2.8 million tonne, 6.8%
zinc Indicated Mineral Resource is defined, drilling will resume in
the third quarter to drill test the down-plunge and lateral extents
of both flanks of the deposit. Exploration at the Santander Pipe is
targeting an increase in Mineral Inferred Resources and converting
additional Mineral Resources to an Indicated level in support of
the ongoing evaluation of the deposit’s potential to contribute to
production in future years.
Additional geophysical surveys are planned to be
undertaken during Q3 at Santander to start probing the deeper
potential of the property for potential porphyry and skarn type
mineralization, including an air drone magnetic survey and a
magneto-telluric survey.
Additionally, several high-priority drill-ready
exploration targets (Puajanca, Blato and Blanquita) will also be
tested during H2 2019.
Caribou Mine Exploration,
Canada
A surface Resource conversion drilling program
is scheduled to begin in Q3 to drill test the Northern Extension of
the Caribou North Limb below the current development. The Northern
Extension is currently estimated to contain grades higher than the
Mineral Reserves cut-off grade. The Resource conversion drilling
program combined with on-going cost reduction efforts could extend
the mine life of the Caribou Mine.
About Trevali Mining
Corporation
Trevali is a global base-metals mining company
with four mines: the 90% owned Perkoa Mine in Burkina Faso, the 90%
owned Rosh Pinah Mine in Namibia, the wholly-owned Caribou Mine in
the Bathurst Mining Camp of northern New Brunswick in Canada, and
the wholly-owned Santander Mine in Peru.
The shares of Trevali are listed on the TSX
(symbol TV), the OTCQX (symbol TREVF), the Lima Stock Exchange
(symbol TV), and the Frankfurt Exchange (symbol 4TI). For further
details on Trevali, readers are referred to the Company’s website
(www.trevali.com) and to Canadian regulatory filings on SEDAR at
www.sedar.com.
Contact
Information
Alex Terentiew – Senior Vice President,
Corporate Development & Investor RelationsEmail:
aterentiew@trevali.comPhone: +1 (604) 638-5623
USE OF NON-IFRS FINANCIAL PERFORMANCE
MEASURES
This new release refers to the following
non-IFRS financial performance measures: Earnings before interest,
taxes, depreciation and amortization (“EBITDA”), Earnings before
interest and taxes (“EBIT”), Adjusted EBITDA, Adjusted Earnings per
Share, Net debt, C1 Cash Cost and All-In Sustaining Cost
(“AISC”).
These measures are not recognized under IFRS as
they do not have any standardized meaning prescribed by IFRS and
are therefore unlikely to be comparable to similar measures
presented by other issuers. We use these measures internally to
evaluate the underlying operating performance of the Company for
the reporting periods presented. The use of these measures enables
us to assess performance trends and to evaluate the results of the
underlying business of the Company. We understand that certain
investors, and others who follow the Company’s performance, also
assess performance in this way.
We believe that these measures reflect our
performance and are useful indicators of our expected performance
in future periods. This data is intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS.
EBITDA and EBIT
EBITDA provides insight into our overall
business performance (a combination of cost management and growth)
and is the corresponding flow drivers towards the objective of
achieving industry-leading returns. This measure assists readers in
understanding the ongoing cash generating potential of the business
including liquidity to fund working capital, servicing debt, and
funding capital expenditures and investments opportunities. EBITDA
is profit attributable to shareholders before net finance expense,
income taxes and depreciation, depletion, and amortization. EBIT is
EBITDA after depreciation, depletion, and amortization. Other
companies may calculate EBIT and EBITDA differently.
Adjusted EBITDA, Zinc Spot Price
Adjusted EBITDA and Adjusted Earnings per Share
Adjusted EBITDA consists of EBITDA less the
impact of impairments or reversals of impairment and other non-cash
expenses or recoveries. The non-cash expenses and recoveries are
removed from the calculation of EBITDA as the Company does not
believe they are reflective of the Company's ability to generate
liquidity and its core operating results.
Due to incongruence of the 3-month forward zinc
price in relation to the spot LME zinc price, particularly in
situations where backwardation and contango exist, the below Zinc
Spot Price Adjusted EBITDA provides a better reflection of the
valuation of the provisionally priced metal. It is calculated as
Adjusted EBITDA plus/ minus the impact on revenue using the monthly
average zinc spot price to mark the provisionally priced zinc metal
rather than the monthly average 3-month forward zinc price.
C1 Cash Cost
This measures the cash costs to produce a pound
of payable zinc. This measure includes mine operating production
expenses such as mining, processing, administration, indirect
charges (including surface maintenance and camp), and smelting,
refining and freight, distribution, royalties, and by-product metal
revenues divided by pounds of payable zinc produced. C1 Cash Cost
per pound does not include depreciation, depletion, and
amortization, reclamation expenses, capital sustaining and
exploration expenses.
AISC
This measures the cash costs to produce a pound
of payable zinc plus the capital sustaining costs to maintain the
mine and mill. This measure includes the C1 Cash Cost per pound and
capital sustaining costs divided by pounds of payable zinc
produced. All-In Sustaining Cost per pound does not include
depreciation, depletion, and amortization, reclamation and
exploration expenses.
See “Cautionary Notes Regarding Forward-Looking
Statements” below as well as “Use of Non-IFRS Financial Performance
Measures” in our Management’s Discussion and Analysis for the three
months ended June 30, 2019.
Cautionary Note Regarding
Forward-Looking StatementsThis news release contains
“forward-looking information” within the meaning of the Canadian
securities legislation and “forward-looking statements” within the
meaning of Section 27A of the United States Securities Act of 1933,
as amended, Section 21E of the United States Exchange Act of 1934,
as amended, and the United States Private Securities Litigation
Reform Act of 1995, all as may be amended from time. Statements
containing forward-looking information express, as at the date of
this news release, the Company’s plans, estimates, forecasts,
projections, expectations, or beliefs as to future events or
results. Such forward-looking statements and information include,
but are not limited to statements as to the Company’s growth
strategies, expected annual savings from capital projects, demand
for commodities, reduced interest payments, anticipated effects of
commodity prices on 2019 revenues, expectations of positive
operating cash flow and sufficient resources, estimation of Mineral
Reserves and Mineral Resources, the realization of Mineral Reserve
estimates, the timing and amount of estimated future production,
costs of production, capital expenditures, success of mining
operations, environmental risks, unanticipated reclamation
expenses, title disputes or claims, future anticipated property
acquisitions, the content, cost, timing and results of future
anticipated exploration programs, life of mine expectancies and
limitations on insurance coverage.
These statements reflect the Company’s current
views with respect to future events and are necessarily based upon
a number of assumptions and estimates that, while considered
reasonable by the Company, are inherently subject to significant
business, economic, competitive, political and social uncertainties
and contingencies. If any assumptions are untrue, it could cause
actual results, performance or achievements to be materially
different from future results, performance or achievements
expressed or implied by such statements. Assumptions have been made
regarding, among other things, present and future business
strategies and the environment in which the Company will operate in
the future, including commodity prices, anticipated costs and
ability to achieve goals.
Forward-looking statements are subject to known
and unknown risks, uncertainties and other important factors that
may cause the Company’s actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking statements, including
but not limited to: risks related to joint venture operations;
fluctuations in spot and forward markets for silver, zinc, base
metals and certain other commodities (such as natural gas, fuel oil
and electricity); fluctuations in currency markets; risks related
to the technological and operational nature of the Company’s
business; changes in national and local government, legislation,
taxation, controls or regulations and political or economic
developments in Canada, the United States, Peru, Namibia, Burkina
Faso, or other countries where the Company may carry on business in
the future; risks and hazards associated with the business of
mineral exploration, development and mining (including
environmental hazards, industrial accidents, unusual or unexpected
geological or structural formations, pressures, cave-ins and
flooding); risks relating to the credit worthiness or financial
condition of suppliers, refiners and other parties with whom the
Company does business; inadequate insurance, or inability to obtain
insurance, to cover these risks and hazards; employee relations;
relationships with and claims by local communities and indigenous
populations; availability and increasing costs associated with
mining inputs and labour; the speculative nature of mineral
exploration and development, including the risks of obtaining
necessary licenses and permits and the presence of laws and
regulations that may impose restrictions on mining; diminishing
quantities or grades of Mineral Resources as properties are mined;
global financial conditions; business opportunities that may be
presented to, or pursued by, the Company; the Company’s ability to
complete and successfully integrate acquisitions and to mitigate
other business combination risks; challenges to, or difficulty in
maintaining, the Company’s title to properties and continued
ownership thereof; the actual results of current exploration
activities, conclusions of economic evaluations, and changes in
project parameters to deal with unanticipated economic or other
factors; increased competition in the mining industry for
properties, equipment, qualified personnel, and their costs, as
well as other risks as more fully described in the Company’s annual
information form for the year ended December 31, 2018, which is
available on the Company’s website (www.trevali.com) and filed
under our profile on SEDAR (www.sedar.com). Investors are cautioned
against attributing undue certainty or reliance on forward-looking
statements.
Although the Company has attempted to identify
important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be
as anticipated, estimated, described or intended. The Company does
not intend, and does not assume any obligation, to update these
forward-looking statements or information to reflect changes in
assumptions or changes in circumstances or any other events
affecting such statements or information, other than as required by
applicable law.
Note to United States
InvestorsIn accordance with applicable Canadian securities
regulatory requirements, all Mineral Resource estimates of the
Company disclosed or incorporated by reference in this news release
have been prepared in accordance with Canadian National Instrument
43-101 - Standards of Disclosure for Mineral Projects, classified
in accordance with Canadian Institute of Mining Metallurgy and
Petroleum's “CIM Standards on Mineral Resources and Reserves
Definitions and Guidelines”.
The Company uses the terms "Measured Mineral
Resources", "Indicated Mineral Resources" and "Inferred Mineral
Resources". While these terms are recognized by Canadian securities
regulatory authorities, they are not recognized by the United
States Securities and Exchange Commission. US investors are
cautioned not to assume that any part or all of the material in
these categories will ever be converted into reserves.
1 See “Use of Non-IFRS Financial Performance
Measures”.
Source: Trevali Mining Corporation
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