VANCOUVER, BC, Nov. 4, 2020 /CNW/ - Trevali Mining
Corporation ("Trevali" or the "Company") (TSX: TV) (BVL: TV)
(OTCQX: TREVF) (Frankfurt:
4TI) today released financial and operating results for the
three and nine months ended September 30,
2020. The Company reported quarterly production of 74
million pounds of zinc at an all-in sustaining
cost1 ("AISC") of $.91 per pound. Adjusted EBITDA1 and
net income for the quarter was $11.2
million and $1.1 million
respectively, both primarily due to business improvement
initiatives and the increase in the zinc price.
FINANCIAL AND OPERATIONAL HIGHLIGHTS FOR THE
THIRD QUARTER 2020
(Compared to second quarter 2020, unless
otherwise noted)
- Excellent safety performance with 20% reduction to the Total
Recordable Injury Frequency rate year to date when
compared to the same period in 2019.
- Perkoa, Rosh Pinah and Santander are all producing at full
capacity. Santander restarted operations on July 15, 2020.
- 13% increase to zinc payable production and 13% decrease to
costs. Achieved zinc payable production of 74 million pounds at
a C1 Cash Cost1 of $0.81/lb and AISC1 of $0.91/lb.
- $17.1 million of
operating cashflows before changes in working capital,
due to the implementation of T90 initiatives and the recovery in
commodity prices with all operations contributing positively.
- Adjusted EBITDA1 of $11.2
million, an increase of $16.9M
over Q2 due to an increase in the zinc price (quarterly average
of $1.06/lb) despite reduced sales
volumes due to timing of shipments.
- Revenues increased by 17% contributing to positive earnings
for the quarter, together with a reduction in operating
costs, in particular freight rates.
- Issued positive Pre-Feasibility Study ("PFS") for the
RP2.0 Expansion project in
August. Increases production capacity at Rosh Pinah by 86%
and significantly reduces operating costs.
- Initiated a hedging program covering approximately 50% of
zinc production (72.5Mlbs) over the period October 2020 to March
2021 through a combination of forward swaps and put
options.
- Net Debt1 of $129.9
million as at September 30,
2020 reduced by $10.8 million
as at October 31, 2020, a
result of the collection of receivables largely related to sales
from Q3.
- Updated 2020 guidance confirmed. Zinc
production for H2 2020 between 148 – 163 million pounds of payable
zinc, C1 Cash Cost1 of $0.80 – $0.88/lb
and AISC1 of $0.89 –
$0.97/lb.
Ricus Grimbeek, President and CEO stated, "The team delivered a
strong turnaround quarter across the portfolio. Perkoa and Rosh
Pinah produced at full capacity while Santander had a successful
restart of operations in July. I am proud of everyone for working
safely and achieving our planned operational targets while
implementing an additional $11
million of T90 business improvement initiatives. This brings
the program total to $41 million to
date and we are closing in on our targeted AISC1 of
$0.90 per pound having achieved
$0.91 this quarter.
The price of zinc also had a significant turnaround, ending Q3
up 17%, and continuing to climb due to a tightening zinc market.
While we expect to see further gains in the zinc price, we took the
opportunity to put in place a hedging program and designed it to
protect the business against a potential downside movement while
allowing for significant exposure to the upside.
With the third quarter behind us and with tailwinds in the form
of a higher zinc price we expect the positive momentum to continue.
We are on track to deliver our revised 2020 guidance and are
projecting compliance to our financial covenants over the coming
quarters once they are reinstated at the end of Q4."
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 September 30th, 2020, 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 Q3 2020
Management's Discussion and Analysis.
|
|
|
|
|
|
|
|
|
|
YTD
Q3'20
|
YTD
Q3'19
|
YoY
|
Q3'20
|
Q2'20
|
Q3'19
|
Q3'20 vs
Q2'20
|
Q3'20 vs
Q3'19
|
Zinc payable
production
|
Mlbs
|
238.8
|
312.6
|
–24
|
%
|
74.1
|
65.8
|
106.8
|
13%
|
-31%
|
Lead payable
production
|
Mlbs
|
21.5
|
36.5
|
–41
|
%
|
6.1
|
4.7
|
13.6%
|
30%
|
-55%
|
Silver payable
production
|
Moz
|
0.6
|
1.1
|
–45
|
%
|
0.1
|
0.1
|
0.4%
|
0%
|
-75%
|
Revenue
|
$
|
144,798
|
294,644
|
–51
|
%
|
50,157
|
42,689
|
87,135
|
17%
|
-42%
|
Adjusted
EBITDA1
|
$
|
-(1,141)
|
86,500
|
–101
|
%
|
11,214
|
-(5,709)
|
-22,487
|
296%
|
-50%
|
Net (loss)
income
|
$
|
-(193,864)
|
-(31,578)
|
–514
|
%
|
1,122
|
-(19,381)
|
-(16,131)
|
106%
|
107%
|
(Loss) Income per
share
|
$
|
-(0.24)
|
(0.04)
|
–500
|
%
|
0.00
|
(0.02)
|
(0.02)
|
100%
|
100%
|
C1 Cash
Cost1
|
$/lb
|
0.91
|
0.88
|
3
|
%
|
0.81
|
0.93
|
0.84
|
-13%
|
-4%
|
AISC1
|
$/lb
|
1.03
|
1.01
|
2
|
%
|
0.91
|
1.05
|
0.96
|
-13%
|
-5%
|
Sustaining capital
expenditure1
|
$
|
26,326
|
36,253
|
–27
|
%
|
6,665
|
7,033
|
11,975
|
-5%
|
-44%
|
Exploration
expenditure
|
$
|
3,728
|
7,607
|
–51
|
%
|
143
|
421
|
2,576
|
-66%
|
-94%
|
|
Conversion of tonnes
to pounds, 1 tonne = 2,204.62 pounds or lbs
|
BUSINESS OVERVIEW
Trevali is a global base-metals mining company, headquartered in
Vancouver, Canada. The bulk of the
Company's revenue is generated from base-metals mining at its three
operational assets: the 90%-owned Perkoa Mine in Burkina Faso, the 90%-owned Rosh Pinah mine in
Namibia, and the wholly owned
Santander mine in Peru. In
addition, Trevali owns the Caribou mine, Halfmile and Stratmat
properties and the Restigouche
deposit in New Brunswick, Canada,
and the past producing Ruttan mine in northern Manitoba, Canada. The Caribou mine was placed
on care and maintenance on March 26,
2020. 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 the Company 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.
T90 PROGRAM
In November 2019, Trevali launched
the T90 business improvement program which originally targeted a
reduction in AISC1 to $0.90 per payable pound of zinc by the beginning
of 2022 through achieving annual sustainable efficiencies of
$50 million. In response to market
conditions as a result of the COVID-19 pandemic, the scope of cost
benefits under the T90 business improvement program have been
accelerated and expanded.
During Q3 2020, the Company continued on its path to
transform the business through the implementation and
acceleration of the T90 program and additional one-time cost
reduction initiatives. The result supports the acceleration of
the T90 business improvement program to reach an AISC1
of $0.90 per pound by the beginning
of 2021, a full year earlier than originally planned. As of the
date of this MD&A, the program is forecast to deliver
$43 million of recurring annualized
efficiencies in 2020, of which $41
million has already been delivered.
Improvements delivered by the T90 program during Q3 2020
reduced AISC1 by approximately $0.08 per pound and increased revenues and
Adjusted EBITDA1 by approximately $0.9 million and $6.8
million, respectively.
FINANCIAL AND OPERATIONAL SUMMARY
|
|
YTD
Q3'20
|
YTD
Q3'19
|
YoY
|
|
Q3'20
|
Q2'20
|
Q3'19
|
Q3'20
vs
Q2'20
|
Q3'20
vs
Q3'19
|
Production
|
|
|
|
|
|
|
|
|
|
|
Ore mined
|
t
|
1,832,860
|
2,359,496
|
–22
|
%
|
|
558,044
|
513,462
|
824,935
|
9
|
%
|
–32
|
%
|
Ore milled
|
t
|
1,815,931
|
2,412,079
|
–25
|
%
|
|
532,033
|
504,144
|
838,543
|
6
|
%
|
–37
|
%
|
Zinc head
grade
|
|
8.1%
|
8.1%
|
0
|
%
|
|
8.5%
|
7.9%
|
7.9%
|
8
|
%
|
8
|
%
|
Lead head
grade
|
|
1.2%
|
1.4%
|
–14
|
%
|
|
1.1%
|
0.0%
|
1.5%
|
100
|
%
|
–27
|
%
|
Silver head
grade
|
(ozs/t)
|
1.0
|
1.4
|
–29
|
%
|
|
0.9
|
0.8
|
1.3
|
13
|
%
|
–31
|
%
|
Zinc
recovery
|
|
88.0%
|
86.8%
|
1
|
%
|
|
88.3%
|
88.5%
|
87.1%
|
0
|
%
|
1
|
%
|
Lead
recovery
|
|
72.5%
|
66.4%
|
9
|
%
|
|
77.3%
|
75.9%
|
69.6%
|
2
|
%
|
11
|
%
|
Silver
recovery
|
|
48.8%
|
45.8%
|
7
|
%
|
|
49.9%
|
54.6%
|
45.9%
|
–9
|
%
|
9
|
%
|
Zinc
payable
|
Mlbs
|
238.8
|
312.6
|
–24
|
%
|
|
74.1
|
65.8
|
106.8
|
13
|
%
|
–31
|
%
|
Lead
payable
|
Mlbs
|
21.5
|
36.5
|
–41
|
%
|
|
6.1
|
4.7
|
13.6
|
30
|
%
|
–55
|
%
|
Silver
payable
|
Moz
|
0.6
|
1.1
|
–45
|
%
|
|
0.1
|
0.1
|
0.4
|
0
|
%
|
–75
|
%
|
Cost per
unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C1 Cash
Cost1
|
$/lb
|
0.91
|
0.88
|
3
|
%
|
|
0.81
|
0.93
|
0.84
|
–13
|
%
|
–4
|
%
|
AISC1
|
$/lb
|
1.03
|
1.01
|
2
|
%
|
|
0.91
|
1.05
|
0.96
|
–13
|
%
|
–5
|
%
|
Consolidated quarterly production increased by 13% in Q3 2020 to
74.1 million pounds of payable zinc as compared to 65.8 million
pounds in Q2 2020 primarily due to the lower zinc head grades in Q2
2020 at Perkoa as lower grade stopes were mined in accordance with
the mine plan. Zinc payable production reduced by 31% compared to
Q3 2019 as Caribou's operations were on care and maintenance during
2020.
C1 Cash Cost1 of $0.81
per pound in Q3 2020 as compared to $0.93 per pound in Q2 2020 benefited from the
cost savings and efficiencies of the T90 program, a reduction in
freight rates and an increase in zinc payable production described
above. These benefits have been offset by a reduction in by-product
credits as there were no lead concentrate sales at Rosh Pinah as
per plan. Similar to C1 Cash Cost1,
AISC1 has decreased by the same 13% when compared to Q2
2020 while the impact of the increase in capital expenditures was
fully offset by the increase in production.
|
|
YTD
Q3'20
|
YTD
Q3'19
|
YoY
|
|
Q3'20
|
Q2'20
|
Q3'19
|
Q3'20
vs
Q2'20
|
Q3'20
vs
Q3'19
|
Revenues
|
$
|
144,798
|
294,644
|
-51%
|
|
50,157
|
42,689
|
87,135
|
17%
|
-42%
|
Zinc payable
sales
|
Mlbs
|
228.7
|
329.6
|
-31%
|
|
65.3
|
72.3
|
111.1
|
-10%
|
-41%
|
Average zinc LME
price
|
$/lb
|
0.97
|
1.18
|
-18%
|
|
1.06
|
0.89
|
1.06
|
19%
|
0%
|
EBITDA1
|
$
|
(163,832)
|
52,176
|
-414%
|
|
15,368
|
(4,312)
|
12,945
|
-456%
|
19%
|
Adjusted
EBITDA1
|
|
(1,141)
|
86,500
|
-101%
|
|
11,214
|
(5,709)
|
22,487
|
-296%
|
-50%
|
Net (loss)
income
|
|
(193,864)
|
(31,578)
|
-514%
|
|
1,122
|
(19,381)
|
(16,131)
|
-106%
|
-107%
|
(Loss) Income per
share
basic
and diluted
|
|
(0.24)
|
(0.04)
|
-500%
|
|
0.00
|
(0.02)
|
(0.02)
|
-100%
|
-100%
|
Adjusted (loss)
earnings
per
share1
|
$
|
(0.04)
|
0.00
|
100%
|
|
0.00
|
(0.03)
|
(0.01)
|
100%
|
100%
|
The increase in revenues in Q3 2020 to $50.2 million is attributable to the 19% increase
in zinc price as compared to Q2 2020 as well as the decrease
in freight rates, which is partially offset by the decrease in
sales volumes as a direct result of the timing of shipments.
Adjusted EBITDA1 of $11.2
million improved from negative $5.7
million in Q2 2020 due to the increase in revenues discussed
above and operating cost savings realizing the benefits of the T90
program. The $4.2 million
difference between EBITDA1 and Adjusted
EBITDA1 during Q3 2020 is primarily due to the positive
settlement mark-to-market adjustment of $9.9 million, partially offset by other
expense items which consist primarily of a non-cash loss on
extinguishment of debt as a result of the Company renegotiating its
revolving credit facility (the "Facility").
Market Outlook
The short-term outlook for the zinc market continues to be
volatile as 2020 advances. At the start of the year and prior to
COVID-19 being declared a pandemic, it was expected that the
concentrate market would be in surplus over the coming years with
demand for refined metal growing slightly in 2020 and refined
stocks remaining below historic levels, lending support to zinc
prices. Since the outbreak of COVID-19 the concentrate market is
forecast to be in deficit for the full year 2020.
The rapid rise of the COVID-19 pandemic in Asia resulted in extended shutdowns of
smelters and Chinese mine production. As Q1 2020 progressed,
Chinese smelting production and economic activity increased from
lows reached in February, while mine production curtailments
resulting from measures to combat the spread of COVID-19 in
Europe and the Americas
accelerated and reached an estimated peak in April of 25% of global
mine production.
While global smelting production was materially impacted in the
first quarter of 2020, production capacity largely recovered to
pre-COVID-19 levels early in the second quarter while mining
operations were slower to restart. It was not until the end of June
that the majority of mining operations that were suspended to
control the spread of COVID-19 were in the process of restarting,
however, flare-ups of COVID-19 at individual mines are ongoing and
continue to put strain on the concentrate supply chain. This has
led to a significant reduction in spot zinc concentrate treatment
charges which have remained significantly below the annual
benchmark reported in March at $300
per tonne. Trevali's concentrate off-take agreements reference the
annual benchmark treatment charges. In September, the average
imported zinc spot treatment charge for the month was reported to
be $115 per tonne and is an important
indicator as annual benchmark negotiations begin for 2021.
During Q3 2020, the London Metals Exchange ("LME") zinc price
averaged $1.06 per pound for the
quarter, continuing its recovery from its year low of $0.82 per pound reached back in March. The
continued disruption to mine production should continue to provide
fundamental support for zinc prices in the midterm as management
believes demand will outweigh supply as global economic activity
accelerates.
At the end of Q3 2020, total global exchange inventories
increased by 61,000 tonnes to 281,000 tonnes or an estimated
7 days of global consumption, compared to Q2 2020. This
inventory level is well below historical averages of 18 days of
global consumption and is also supportive of higher zinc
prices.
CORPORATE DEVELOPMENTS
In Q2 2020 and on July 31, 2020,
the Company obtained waivers under the terms of its Facility to
August 31, 2020. On August 6,
2020, further amendments to the Facility and a new credit facility
with Glencore Canada Corporation, an affiliate of the
Company's largest shareholder, Glencore plc (collectively
"Glencore") were announced. See "Liquidity and Capital
Resources".
On August 25, 2020, the Company
announced a positive PFS for Rosh Pinah Mine Expansion
("RP2.0") which would increase
production capacity at Rosh Pinah by 86% and significantly reduce
operating costs.
On August 28, 2020, the Company
announced that Matthew Quinlan was
departing as Trevali's Interim Chief Financial Officer ("CFO") and
Brendan Creaney, the then Vice
President of Investor Relations, had been appointed Interim CFO.
The Company has engaged a search firm and the process to retain a
permanent CFO is progressing.
On September 4, 2020, the Company
announced the appointments of Nick
Popovic and Aline Cote to the
board of directors of the Company, replacing Chris Eskdale and Dan
Myerson as Glencore nominees.
On October 9, 2020, the Company
filed a preliminary short form base shelf prospectus related to the
sale of up to C$100.0 million in
aggregate, in one or more series or issuances of: common shares,
debt securities, subscription receipts, share purchase contracts,
warrants or units.
Q3 2020 Financial and Operational Results Conference Call and
Webcast Details
The Company will host a conference call and presentation webcast
at 1:00PM Eastern Time on Thursday,
November 5, 2020 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, November 5, 2020 at 01:00PM Eastern Time
Toll-free (North America): +1
(877) 291-4570
International: +1 (647) 788-4919
Webcast: http://www.gowebcasting.com/10951
ABOUT TREVALI
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 three operational assets: the 90%-owned Perkoa Mine in
Burkina Faso, the 90%-owned Rosh
Pinah Mine in Namibia, and the
wholly-owned Santander Mine in Peru. In addition, Trevali owns the Caribou
Mine, 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.
Cautionary Note Regarding Forward–Looking Information and
Statements
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 the impacts of the ongoing and
evolving COVID–19 pandemic, including but not limited to the
effects of COVID–19 on the Company's liquidity position, ability to
continue as a going concern as described herein, financial
condition, and results of operations. Forward-looking statement
also include statements with respect to the intended use of
proceeds from the Revolving Credit Facility and the Glencore
Facility, financial guidance for the fiscal year 2020, expectations
and timing regarding the T90 business improvement program, the
Company's growth strategies, expected annual savings from capital
projects, anticipated effects of commodity prices on revenues,
estimation of mineral reserves and mineral resources, the
realization of mineral reserve estimates, the timing and amount of
estimated future production, costs of production and 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 exploration programs and life of mine
expectancies. The potential effects of COVID–19 on the Company's
business are unknown at this time, including the Company's ability
to manage restrictions and other challenges in the jurisdictions in
which it operates and continue to safely operate and, in due
course, return to normal operating status. The impact of COVID–19
is dependent on many factors outside the Company's control,
including measures taken by public health and government
authorities, global economic uncertainties and outlook due to the
pandemic, and evolving restrictions relating to mining activities
and to travel and transport of goods in certain jurisdictions where
the Company operates. 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;
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; risks relating to epidemics or pandemics such as
COVID–19 including the impact of COVID–19 on our business,
financial condition and results of operations; corruption and
bribery; limitations inherent in our insurance coverage; compliance
with financial covenants; our ability to raise capital; 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 "Risks
and Uncertainties" section of the corresponding Q2 2020 MD&A
and the "Risk Factors" section of our most recently filed Annual
Information Form. 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.
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,
2020.
1 See "Use of
Non-IFRS Financial Performance Measures".
|
SOURCE Trevali Mining Corporation