Trevali Mining Corp. (TV:TSX; TV:BVL; TREVF:OTCQX) announced the latest results from its Health Steele project in Canada. According to the July 25 press release, the company "drill tested the E-zone at Heath Steele, an advanced-stage, near-surface target with a historic, non-National Instrument 43-101-compliant resource."
· Highlights include: 30.7 metres at 7.56% Zn, 2.34% Pb, 0.29% Cu, 72.00 g/t Ag and 0.48 g/t Au;
· including: 10.0 metres at 15.32% Zn, 4.50% Pb, 0.07% Cu, 90.45 g/t Ag and 0.22 g/t Au; and
· 22.3 metres at 7.86% Zn, 2.63% Pb, 0.32% Cu, 82.46 g/t Ag and 0.82 g/t Au
The Heath Steel project was acquired as part of a "definitive agreement" between Glencore International Plc (GLEN:LSE) and Trevali. Heath has a long history of extractions between 1957 and 1999, which include zinc, lead, copper, silver and gold.
Trevali also recently announced preliminary Q2/17 production results, including results from the Rosh Pinah mine in Namibia and Perkoa mine in Burkina Faso that are being acquired from Glencore.
In a July 24 report, analyst Jacques Wortman with Eight Capital commented that Trevali had a "mixed quarter, but generally better than expected." He highlights Trevali's "Q2 production results of 18.88 mm payable Zn-eq lbs, approximately 2% higher than our estimate of 116.88mm payable lbs. Two of the four mines (Perkoa, Santander) exceeded expectations by a good margin." He pointed out, however, that Santander had exceeded Q2 results after "guidance for zinc production was adjusted lower as heavy rainfall encountered in Q2 necessitated mine rescheduling." Regarding Santander, Wortman stated, "We are not overly concerned regarding TV lowering Santander's zinc production guidance for this year, as it represents a partial deferral of mining in the higher grade Magistral North and Oyon zones to later this year and into 2018." Perkoa, Wortman noted, had its "best operating quarter to date."
Wortman concluded with a Buy recommendation and a target price of $1.85, stating, "Our target price is based on an equal-weighting between our net asset value (NAV, 8% discount rate) and a 5.0x target multiple to our 2018 EBITDA estimate. Our 5.0x target multiple reflects the discount that zinc stocks typically trade at relative to copper stocks (6.0x - 7.0x target multiples)."
Pierre Vaillencourt with Haywood Securities, in a July 21 report, rated Trevali a Buy, highlighting that although the Santander mine was behind in zinc production, due to heavy rains, Trevali "is on target to reach its objectives for the year." He concluded that with the Perkoa and Rosh Pina mines, recently purchased from Glencore, Trevali is the "largest pure-play zinc producer in the world" and Haywood's target price of $2.00 is based on "a multiple of 4.3xEV/2018E Operating Cash Flow, and is supported by a NAV of C$1.08."
Trevali is currently trading at around $1.32 per share.
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Disclosures from Eight Capital, Trevali Mining Corp., Comment, July 24, 2017
Conflicts of Interest: Eight Capital has written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research and other businesses. The compensation of each Research Analyst/Associate involved in the preparation of this research report is based competitively upon several criteria, including performance assessment criteria, the quality of research and the value of the services they provide to clients of Eight Capital. The Research Analyst compensation pool includes revenues from several sources, including sales, trading and investment banking. Research analysts and associates do not receive compensation based upon revenues from specific investment banking transactions.
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Disclosures from Haywood Securities Inc., Trevali Mining Corp., Radar Flash, July 21, 2017
Haywood Securities, or certain of its affiliated companies, may from time to time receive a portion of commissions or other fees derived from the trading or financings conducted by other affiliated companies in the covered security. Haywood analysts are salaried employees who may receive a performance bonus that may be derived, in part, from corporate finance income.
Haywood Securities, Inc., and Haywood Securities (USA) Inc. do have officers in common however, none of those common officers affect or control the ratings given a specific issuer or which issuer will be the subject of Research coverage. In addition, the firm does maintain and enforce written policies and procedures reasonably designed to prevent influence on the activities of affiliated analysts.
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The following Important Disclosures apply to Trevali Mining Corp.:
--Haywood Securities, Inc. has reviewed lead projects of this company and a portion of the expenses for this travel have been reimbursed by the issuer.
-- Haywood Securities Inc. or one of its subsidiaries has managed or co-managed or participated as selling group in a public offering of securities for this company in the past 12 months.