On July 11, Trevali Mining Corp. (TV:TSX; TV:BVL; TREVF:OTCQX) reported preliminary Santander mine production results for Q2/16 of "approximately 15.2 million (15.2M) payable pounds zinc (a new quarterly record), 5.6M payable pounds of lead and 222,121 payable ounces of silver," with recoveries averaging "89% for zinc, 87% for lead and 73% for silver." Mill throughput for the site set a new record at 209,188 tonnes.
Commercial production at Trevali's Caribou zinc mine began on July 1, and in June the mine "delivered the strongest monthly performance to date with record mine and mill tonnage and throughput, zinc recoveries and concentrate production," Trevali announced in a July 7 release.
Analysts covering the company responded positively to the news on both fronts.
In a research note issued after the Caribou announcement, analyst Stefan Ioannou of Haywood Securities wrote that, "With zinc production from two mines expected to ramp up to +170 Mlb per annum by ~2019, we believe the company is poised to become a (the) marquee mid-tier pure-play zinc producer in a market facing a significant medium-term supply issue."
"Bringing a new zinc mine online could not come at a better time, with positive fundamentals beginning to take hold and the zinc price climbing upwards," wrote analyst Joseph Gallucci of Dundee Capital Markets on July 7.
Paradigm Capital analyst Jeff Woolley noted that "the growth story is coming together for Trevali" in his July 8 research note. With the Caribou mine and mill "working in a consistent manner," Trevali's focus will shift to "optimization and cost reduction" at the site, Woolley added.
With Santander continuing "to operate well" and the onset of production at Caribou, in a July 11 note, analyst Ian Parkinson of GMP Securities wrote that "we see production and cash flow increasing for the company. . .we believe that Trevali remains one of the best Canadian companies to play a continued zinc price recovery."
"We are once again very impressed with the operating performance at Santander, where Trevali seems to set new production records every quarter," Dundee's Gallucci wrote in a July 11 note. "With commercial production declared at Caribou just three days ago, Santander's continued excellence provides a strong foundation for [the company] to focus on optimizing Caribou."
In addition to Santander, located in Peru, and Caribou, located in the Bathurst Mining Camp of northern New Brunswick, Canada, Trevali owns the Halfmile and Stratmat base metal deposits, also in New Brunswick, which are currently undergoing preliminary economic assessments.
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1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She owns, or her family owns, shares of the following companies mentioned in this article: None.
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1. The analyst does not have a financial interest in Trevali Mining Corp.
2. Haywood Securities has reviewed lead projects of this company and a portion of the expenses for this travel have been reimbursed by the issuer.
3. Haywood Securities 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.
Paradigm Capital, July 8, 2016:
1. The analyst does not have an ownership position in the subject company.
2. Paradigm Capital Inc. has assumed an underwriting liability for, and/or provided financial advice for consideration to the subject companies during the past 12 months.
3. Paradigm Capital Inc. expects to receive or intends to seek compensation for investment banking services from the subject companies in the next 3 months.
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Dundee Capital Markets, July 7, 2016:
Dundee Capital Markets may have had, and may in the future have, long or short positions in the securities discussed in this research report and, from time to time, may have executed or may execute transactions on behalf of the issuer of such securities or its clients.
GMP Securities, July 11, 2016:
1 GMP has, within the previous 12 months, provided paid investment banking services or acted as underwriter to the issuer.
3 GMP owns 1% or more of this issuer’s securities.
4 GMP Securities, LLC (“GMP LLC”), an affiliate of GMP, discloses the following in relation to this issuer as required by the Financial Industry Regulatory Authority (“FINRA”) Rule 2711: as applicable.
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6 The analyst has viewed the operations of this issuer and the issuer paid all or a portion of the travel expenses associated with the analyst’s site visit to its operations.
7 The analyst has viewed the operations of this issuer.
8 The analyst has a position in this issuer's securities.
9 A member of the Board of Directors of this issuer is also a member of the Board of Directors of GMP Capital Inc., but that individual had no influence in the preparation of this report.
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