Trevali Mining Corporation (“Trevali” or the “Company”)
(TSX: TV; OTCQX: TREVF) is pleased to release preliminary
fourth quarter (“Q4”) and full year production results for 2019 and
provides 2020 operating, capital and exploration expenditure
guidance. All financial figures are in U.S. dollars.
Ricus Grimbeek, Trevali’s President and CEO
stated, “In 2019 we started the transformation of Trevali. The
Company meaningfully beat annual production guidance, the board was
refreshed, a new senior management team was assembled, and we
launched the T90 Program to modernize our operations and bring them
down the cost curve. The Company is well positioned to be a
400-million-pound annual zinc producer with a reducing cost profile
until 2022 when we intend to make a step change in production and
cost as the RP2.0 Expansion Project at Rosh Pinah in Namibia is
commissioned.”
Key 2019 Highlights
Include:
- Marked improvement to safety performance having reduced the
Total Recordable Injury Frequency Rate by 46% in 2019 compared to
2018.
- Exceeded 2019 zinc production guidance by producing a record
annual 417 million payable pounds of zinc in 2019.
- Total lead and silver production also exceeded 2019 guidance
with 50 million payable pounds of lead and 1,489 thousand payable
ounces of silver produced in 2019.
- Refreshed the board of directors and introduced a new senior
management team.
- Launched the T90 Program inclusive of the Digital
Transformation Program aimed at realizing $50 million in annual
sustainable efficiencies and reducing All-In Sustaining Cost1
(“AISC”) to $0.90 per pound of zinc by the beginning of 2022.
- Published Trevali’s inaugural annual Sustainability
Report.
- Advanced the RP2.0 Expansion Project with an investment
decision poised for Q1 2020.
- Completed the Rosh Pinah filtration & grinding upgrade
project on time and on budget.
- Discovered a third VMS lens at Perkoa below the existing mining
horizons named “T3”.
- Paid down debt of $70 million in 2019.
- Repurchased 28.6 million shares as part of the normal course
issuer bid since November 2018.
2020 Catalysts and Key
Drivers
- T90 Program: Results of the T90 Program will
be highlighted and reflected in our production and financials
throughout 2020.
- RP2.0 Expansion Project: Trevali plans on
publishing a pre-feasibility study by the end of Q1 2020 to support
the initial long lead procurement investment decision which will be
followed by the full feasibility study in Q4 2020. The feasibility
study will be used to support the full execution funding
decision.
- 2019 Mineral Resources and Reserves Statement:
The annual statement will be published by the end of Q1 2020.
- 2020 Sustainability Report: The report will be
published in Q2 2020 and will provide an update on the progress of
our sustainability programs and initiatives as part of Trevali’s
commitment to be a leader in sustainability and to providing
transparency in the areas of environment, social and
governance.
- Perkoa T3 drilling program: Drilling of the
2019 discovery of T3 – the third VMS lens at Perkoa – will advance
along with regional targets.
- Santander Pipe: Infill drilling of the
Santander Pipe in Peru will continue in 2020. An internal
preliminary economic assessment is expected to be completed by the
end of Q4 2020 which will evaluate the economic viability of
incorporating the Santander Pipe ore into the existing
operation.
Q4 2019 and Full Year 2019 Preliminary
Production Results & 2020 Production Guidance
Total zinc production from operations totaled
105 million pounds for Q4 2019 and an annual record of 417 million
pounds for the full year, exceeding the Company's annual guidance
of between 361 to 401 million pounds of zinc production. Lead and
silver production for 2019 also exceeded guidance at 50 million
pounds and 1,489 thousand ounces of production respectively.
Consolidated production guidance for 2020 is
estimated between 380 – 410 million pounds of payable zinc, 51 – 57
million pounds of payable lead and 1,440 – 1,580 thousand ounces of
payable silver.
Table 1: Preliminary Consolidated 2019
Production Results and 2020 Production Guidance
(2&3)
Production by Asset |
Q1 – Q3 2019 |
Q4 2019 |
Full Year 2019 |
2019 Guidance |
2020 Guidance |
Zinc Production (Million lbs) |
Perkoa (100%) |
133.5 |
46.4 |
179.9 |
151 – 168 |
150 – 160 |
Rosh Pinah (100%) |
71.1 |
20.9 |
92.0 |
80 – 89 |
80 – 90 |
Caribou |
56.1 |
18.9 |
75.0 |
71 – 79 |
80 – 85 |
Santander |
51.9 |
18.7 |
70.6 |
59 – 65 |
70 – 75 |
Total Zinc Production |
312.6 |
104.8 |
417.4 |
361 – 401 |
380 – 410 |
Lead Production (Million lbs) |
Rosh Pinah (100%) |
6.7 |
5.4 |
12.1 |
10 – 11 |
16 – 18 |
Caribou |
20.8 |
5.9 |
26.7 |
24 – 27 |
27 – 30 |
Santander |
8.9 |
2.6 |
11.5 |
10 – 11 |
8 – 9 |
Total Lead Production |
36.5 |
13.8 |
50.3 |
44 – 49 |
51 – 57 |
Silver Production (Thousand ozs) |
Rosh Pinah (100%) |
82 |
98 |
180 |
145 – 161 |
240 – 260 |
Caribou |
573 |
133 |
705 |
641 – 713 |
740 – 810 |
Santander |
457 |
145 |
603 |
536 - 595 |
460 – 510 |
Total Silver Production |
1,111 |
378 |
1,489 |
1,322 – 1,469 |
1,440 – 1580 |
(2) Constitutes forward-looking
information; see “Cautionary Note Regarding Forward-Looking
Statements”.(3) Trevali’s ownership interest is 90% of Perkoa and
90% of Rosh Pinah.
2020 Consolidated Cost
Guidance
Consolidated cost guidance for 2020 for C1 Cash
Costs1 is estimated between $0.85 – $0.93 per pound of zinc and
AISC1 is expected to range between $0.98 – $1.08 per pound of zinc
(see Table 2). Capital expenditures for the group is forecast at
$81 million, consisting of $57 million in sustaining capital, $12
million in exploration capital, and $12 million in expansionary
capital, which relates to initiatives under the T90 Program,
including deploying technology to improve productivity and decision
making.
Table 2: 2020 Consolidated Operating
Cost and Capital Expenditure Guidance (1,2,&3)
Asset |
C1 Cash Costs ($/lb Zn) |
AISC1($/lb Zn) |
Sustaining Capital Expenditures ($M) |
Exploration Expenditures($M) |
Expansionary Capital Expenditures ($M) |
Perkoa (100%) |
0.86 – 0.95 |
0.92 – 1.02 |
10 |
4 |
2 |
Rosh Pinah (100%) |
0.76 – 0.84 |
0.93 – 1.03 |
16 |
2 |
6 |
Caribou |
0.97 – 1.07 |
1.12 – 1.24 |
14 |
1 |
3 |
Santander |
0.79 – 0.87 |
1.00 – 1.10 |
17 |
5 |
1 |
Total |
0.85 – 0.93 |
0.98 – 1.08 |
57 |
12 |
12 |
(1) See “Non-IFRS Financial Performance
Measures”. (2) Constitutes forward-looking information; see
“Cautionary Note Regarding Forward-Looking Statements”. (3)
Trevali’s ownership interest is 90% of Perkoa and 90% of Rosh
Pinah.
2020 C1 Cash Costs1 and AISC1 guidance reflect
the currently high spot zinc concentrate treatment charges.
Included in 2020 cost guidance is an assumption of $300 per tonne
of zinc concentrate. This is up from $250 per tonne of zinc
concentrate which was the annual benchmark set for the industry in
2019. For every $30/tonne change (+/-10%) there is an impact to C1
Cash Cost1 and AISC1 of approximately $0.03 per pound of zinc.
While it is Trevali’s view that these
historically high spot treatment charges will not subsist for the
long term, management has taken a conservative approach and
included it in the 2020 cost guidance. Despite this inclusion, the
Company is on track to deliver on the T90 Program and reduce AISC1
to $0.90 per pound of zinc by the beginning of 2022.
Table 3: Sensitivity Guidance on 2020
Zinc Concentrate Treatment Charges (1)
Zinc Concentrate Treatment Charge per tonne |
Sensitivity |
Cash Cost1 |
AISC1 |
$250 |
–17% (2019 annual benchmark) |
0.80 – 0.88 |
0.93 – 1.03 |
$270 |
–10% |
0.82 – 0.90 |
0.95 – 1.05 |
$300 |
2020 Guidance |
0.85 – 0.93 |
0.98 – 1.08 |
$330 |
+10% |
0.88 – 0.96 |
1.01 – 1.11 |
(1) See “Non-IFRS Financial Performance
Measures”.
Quarterly Variability of 2020 Full Year
Guidance
- Production: While production guidance has been
provided on an annual basis, we do expect moderate fluctuations on
a quarter-to-quarter basis due to mine scheduling. Zinc production
overall is forecast to be slightly higher in the second half of
2020 as Caribou and Santander are scheduled to deliver higher
production rates relative to the first half of 2020.
- Operating costs (“C1 Cash Cost1 and AISC1”):
The Company expects costs to begin the year at the higher end of
the guided range and trend lower as the year advances as
initiatives from the T90 Program are implemented and their benefits
are realized in the business.
- Sustaining and expansionary capital: Quarterly
variability of the capital program is not expected to be material.
Note that 2020 expansionary capital guidance currently excludes the
RP2.0 Expansion Project as timing and costs will be determined and
guided as part of the pre-feasibility study to be published by the
end of Q1 2020.
- Exploration expenditures: The 2020 exploration
program will continue to focus on advancing near-mine exploration
targets towards the development of new mineral resources located
within trucking distance of existing mines, while also maintaining
a necessary level of expenditures on regional programs to make new
discoveries. Timing of expenditures is contingent on positive
exploration results and additional funds beyond guidance may be
allocated.
T90 Program
At the end of Q3 2019, Trevali launched the T90
Business Improvement Program which targets $50 million of annual
sustainable efficiencies and a reduction in AISC1 to $0.90 per
pound of zinc by the beginning of 2022. As of the end of 2019, $42
million in sustainable efficiencies have been identified and $14
million in sustainable efficiencies have been implemented and will
be realized on an ongoing annual basis. Highlights of the T90
Program will be discussed in detail in the Q4 2019 and Full Year
Results.
Q4 2019 and Full Year Results Conference
Call and Webcast Details
Trevali will release the Q4 2019 and full year
financial and operating results before the market opens on Friday,
February 21, 2020. The Company will hold a conference call on
Friday, February 21,2020 for management to discuss the Q4 2019
financial and operating results.
Conference call dial-in details: |
Date: Friday, February 21, 2020 at 01:00PM Eastern Time |
Toll-free (North America): 1 (877) 291-4570 |
International: +1 (647) 788-4919 |
Webcast: http://www.gowebcasting.com/10472 |
|
About Trevali Mining
Corporation
Trevali is a global base-metals mining company,
headquartered in Vancouver, Canada. The bulk of Trevali’s revenue
is generated from base-metals mining at its four operational
assets: the 90%-owned Perkoa Mine in Burkina Faso, the 90%-owned
Rosh Pinah Mine in Namibia, the wholly-owned Caribou Mine in
northern New Brunswick, Canada and the wholly-owned Santander Mine
in Peru. In addition, Trevali owns the Halfmile and Stratmat
Properties and the Restigouche Deposit in New Brunswick, Canada,
and the past-producing Ruttan Mine in northern Manitoba, Canada.
Trevali also owns an effective 44%- interest in the Gergarub
Project in Namibia, as well as an option to acquire a 100% interest
in the Heath Steele deposit located in New Brunswick, Canada. 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.
Investor Relations and Media
contact:Brendan Creaney – Vice President, Investor
RelationsEmail: bcreaney@trevali.comPhone: +1 (778) 655-6070
Cautionary Note Regarding
Forward-Looking Information
This news release contains “forward-looking
information” within the meaning of Canadian securities legislation
and “forward-looking statements” within the meaning of the United
States Private Securities Litigation Reform Act of 1995
(collectively, “forward-looking statements”). Forward-looking
statements are based on the beliefs, expectations and opinions of
management of the Company as of the date the statements are
published, and the Company assumes no obligation to update any
forward-looking statement, except as required by law.
Forward-looking statements relate to future events or future
performance and reflect management’s expectations or beliefs
regarding future events including, but not limited to, statements
with respect to the Company’s growth strategies, the continued
success of mineral exploration, Trevali’s ability to fund future
exploration activities, the timing and amount of estimated future
production, costs of production and capital expenditures and
success of mining operations. In certain cases, forward-looking
statements can be identified by the use of words such as “plans”,
“expects”, “outlook”, “guidance”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates” or “believes”,
or variations of such words and phrases or statements that certain
actions, events or results “may”, “could”, “would”, “might”, “will
be taken”, “occur” or “be achieved” or the negative of these terms
or comparable terminology. By their very nature, forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. Such factors include, among others,
risks related to actual results of current exploration activities,
including the inherent uncertainty of mineral exploration and
estimations of exploration targets; changes in project parameters
as plans continue to be refined; future prices of zinc, lead,
silver and other minerals and the anticipated sensitivity of our
financial performance to such prices; possible variations in ore
reserves, grade or recoveries; dependence on key personnel;
potential conflicts of interest involving our directors and
officers; labour pool constraints; labour disputes; availability of
infrastructure required for the development of mining projects;
delays or inability to obtain governmental and regulatory approvals
for mining operations or financing or in the completion of
development or construction activities; counterparty risks;
increased operating and capital costs; foreign currency exchange
rate fluctuations; operating in foreign jurisdictions with risk of
changes to governmental regulation; compliance with governmental
regulations; compliance with environmental laws and regulations;
land reclamation and mine closure obligations; challenges to title
or ownership interest of our mineral properties; maintaining
ongoing social license to operate; impact of climatic conditions on
the Company’s mining operations; corruption and bribery;
limitations inherent in our insurance coverage; compliance with
debt covenants; competition in the mining industry; our ability to
integrate new acquisitions into our operations; cybersecurity
threats; litigation; and other risks of the mining industry
including, without limitation, other risks and uncertainties that
are more fully described in the Company’s annual information form,
interim and annual audited consolidated financial statements and
management’s discussion and analysis of those statements, all of
which are filed and available for review under the Company’s
profile on SEDAR at www.sedar.com. Although the Company has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be as anticipated,
estimated or intended. Trevali provides no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events may differ from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements.
Compliance with NI 43-101
Unless otherwise indicated, Trevali has prepared
the technical information in this news release ("Technical
Information") based on information contained in the technical
reports, news releases and MD&A's (collectively the "Disclosure
Documents") available under the Company’s company profile on SEDAR
at www.sedar.com. Each Disclosure Document was prepared by, or
under the supervision of, a qualified person (a "Qualified Person")
as defined in National Instrument 43-101 Standards of
Disclosure for Mineral Projects of the Canadian Securities
Administrators ("NI 43-101"). Readers are encouraged to
review the full text of the Disclosure Documents which qualifies
the Technical Information. Readers are advised that mineral
resources that are not mineral reserves do not have demonstrated
economic viability. The Disclosure Documents are each intended to
be read as a whole, and sections should not be read or relied upon
out of context. The Technical Information is subject to the
assumptions and qualifications contained in the Disclosure
Documents. The disclosure of Technical Information in this news
release was reviewed and approved by Yan Bourassa, P. Geol., Vice
President, Mineral Resource Management, a Qualified Person under NI
43-101.
Note to United States
Investors
In 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 NI 43-101, 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.
Non-IFRS Financial Performance
Measures
The items marked with a “1” are non-IFRS
measures and readers should refer to “Use of Non-IFRS Financial
Performance Measures” in the Company’s Management’s Discussion and
Analysis for the three and nine months ended September 30,
2019.
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