With the implementation of several operational and commercial enhancements, as well as improved zinc market conditions, the Company expects to return to mining in early
Ricus Grimbeek, Trevali's President and CEO stated, "Our team has worked diligently to reduce the overall cost structure of the Caribou mine, and I am pleased that we are in a position to restart mine operations in a manner that we expect will generate positive cash flow. Our initial two-year plan includes several enhancements which are designed to improve the mine's economics, including the involvement of a contracted mining operator and the entry into fixed-pricing arrangements for a significant portion of the mine's forecasted production. We have benefited from the engagement of the provincial government, and with the recall of employees and the restart of production we look forward to being a more significant part of the
Enhanced Caribou Mine Economics
Trevali's production plan at Caribou is anchored on operational and commercial enhancements that improve the mine's fundamental economics and support enhanced value for Trevali shareholders:
- Improved cost performance and mining efficiency – Following ramp-up in 2021, the All-in Sustaining Cost ("AISC")1 for Caribou is forecast to be between
$0.84 –$0.90 per pound of zinc in 2022, well under the overall$0.90 per pound of zinc target in Trevali's T90 business improvement program. This cost performance will be supported by a partnership withRedpath Mining Inc. as underground mining contractor at Caribou. Redpath is a leading global mining service provider with the operational experience to safely and efficiently mine Caribou's narrow mineralization. Redpath is able to mobilize people and equipment quickly, and combined with Trevali's management team, will support a timely ramp-up of efficient mining activities. - Enhanced revenue certainty from hedged production – Trevali has reduced its exposure to commodity price fluctuations by entering into 21-month fixed pricing arrangements for a significant portion of the forecasted zinc production from the mine. Pursuant to existing offtake agreements, an affiliate of Glencore plc has agreed to purchase 115 million pounds of payable zinc, which represents approximately 80% of the forecasted zinc production from Caribou, at an average price of
$1.25 per pound. These agreements are for the period fromMarch 2021 toDecember 2022 and are in addition to Trevali's existing hedging program which covers the period fromOctober 2020 toDecember 2021 . The Company is also looking to enter into fixed-pricing arrangements for both lead and silver at meaningful levels of forecasted production from Caribou. - Future value potential – During the initial 21-month operating period, Trevali will continue to study metallurgical and operational opportunities to extend the current two-year mine plan, as well as other longer-term value enhancing initiatives in the
Bathurst mining camp.
Caribou Production and Cost Guidance
Production guidance for 2021 is estimated at between 60 – 65 million pounds of payable zinc, 21 – 23 million pounds of payable lead and 585 – 650 thousand ounces of payable silver. First payable zinc production is expected by the end of
Cost guidance for 2021 for C1 Cash Cost1 is estimated between
Table 1: Caribou Production and Costs Guidance
Units | FY 2021 | FY 2022 | |
Payable Production | |||
Zinc | Mlbs | 60 – 65 | 72 – 77 |
Lead | Mlbs | 21 – 23 | 23 – 25 |
Silver | Koz's | 585 – 650 | 575 – 635 |
Cost | |||
C1 Cash Cost1 | $/lb | 0.79 – 0.84 | 0.83 – 0.89 |
AISC1 | $/lb | 0.91 – 0.97 | 0.84 – 0.90 |
Restart costs | $m | 7 | – |
Sustaining Capital | $m | 9 | 2 |
(1) See "Non-IFRS Financial Performance Measures". |
The investment to restart the operation for the period January to
ABOUT TREVALI
Trevali is a global base-metals mining company, headquartered in
The shares of Trevali are listed on the TSX (symbol TV), the OTCQX (symbol TREVF), the
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 statement are published, and the Company assumes no obligation to update any forward-looking statement, except as required by law. 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. 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 resumption of operations at Caribou, including the anticipated costs associated therewith and the dates upon which the Company begins to expect resuming mining and production at Caribou, the Company's expectations with respect to the economics of Caribou after the re-start, including the Company's forecasted AISC, C1 Cash Cost, sustaining cost and production for fiscal year 2021 and 2022, the Company's ability to generate positive cash flow from the operation of Caribou, the benefits the Company expects from its fixed price offtake agreements and hedging program and the efficiencies the Company expects from its partnership with
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
SOURCE
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