VANCOUVER, BC, Feb. 25, 2021 /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 twelve months ended December 31st,
2020. The Company achieved production and cost guidance
reporting annual production of 313 million pounds of zinc at an
all-in sustaining cost1 ("AISC") of $1.02 per pound. In Q4 revenue increased by 36%
relative to Q3 at $68.1 million. At
the end of the year net debt reduced to $105
million and further reduced to $95
million as at January
31st, 2021. All financial figures are in U.S.
dollars.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
- Improved safety performance with a 35% reduction in
Total Recordable Injury Frequency for 2020 compared to 2019.
- Achieved 2020 production and cost guidance by producing 313
million payable pounds of zinc at a C1 Cash Cost1 of
$0.90 per pound and an All-in
Sustaining Cost1 of $1.02
per pound.
- Lead production exceeded 2020 guidance and silver production
achieved guidance with 30 million payable pounds of lead and
752 thousand payable ounces of silver produced in 2020.
- Q4 2020 revenues increased 36% to $68.1 million compared to the prior quarter
due to a 12% improvement in the average quarterly zinc price and a
15% increase in payable sales volumes.
- Operating cash flows before changes in working capital of
$20.9 million for Q4
2020, due to the implementation of T90 initiatives and the
recovery in commodity prices, with positive contributions from all
operating mines.
- Adjusted EBITDA1 of $20.1
million for Q4 2020 ($19.0
million for 2020 year), a 79% increase over prior
quarter and consistent with Q4 2019.
- A non-cash impairment of $43.6
million was recorded in Q4 2020 relating to Santander as
a result of the revised mine plan with mining operations expected
to complete at the end of 2021.
- Amended the existing credit facility and arranged a loan
facility with Glencore in August
2020.
- Completed an equity raise of $26.6 million to pursue growth
activities in December 2020.
- Implemented a hedging program covering 148 million pounds of
2021 payable zinc production (~40% of forecast production)
through forward swaps, fixed pricing arrangements and put
options.
- Net Debt1 of $105.0
million as at December 31,
2020 reduced to $95.0 million
as at January 31, 2021, a result
of the collection of receivables largely related to sales late in
Q4 2020.
- Published Trevali's second annual Sustainability Report in
May 2020 setting targets to
reduce water consumption and greenhouse gas emissions.
Ricus Grimbeek, Trevali's President and CEO, stated, "Our entire
team delivered a strong performance in Q4 and throughout 2020,
closing the year on solid footing. During 2020, we posted a 35%
reduction in recordable injuries as compared to 2019. We
achieved our production guidance of 313 million payable pounds of
zinc at a C1 cash cost of $0.90 per
pound with an all-in-sustaining-cost of $1.02 per pound. In Q4 revenues increased 36% to
US$68.1 million compared to the
previous quarter, due to a 12% increase in zinc prices and a 15%
increase in sales volumes. These factors also supported the
delivery of $20.9 million in
operating cash flow for Q4 before changes in working capital.
Additionally, we accelerated our T90 program a full year ahead of
schedule and published our second annual sustainability report.
With the amendment to our existing credit facility, securing a
new facility with Glencore, and through the completion of our
$26.6 million equity raise, we have
strengthened our balance sheet and reduced our net debt position to
$95 million as at January 31st 2021. With the equity
proceeds we moved to restart Trevali's Caribou operations in
Eastern Canada, are advancing
exploration work across the portfolio, and have paid down debt.
Our accomplishments during 2020 enable us to take full advantage
of the significant opportunities the positive momentum the zinc
markets are providing in 2021. We are looking forward to an
exciting year ahead. I congratulate everyone at Trevali for
the outstanding work they have done during 2020."
|
|
2020
|
2019
|
YoY
|
|
Q4'20
|
Q3'20
|
Q4'19
|
Q4'20
vs
Q3'20
|
Q4'20
vs
Q4'19
|
Zinc payable
production
|
Mlbs
|
313.0
|
417.4
|
–25%
|
|
74.2
|
74.1
|
104.8
|
0%
|
–29%
|
Lead payable
production
|
Mlbs
|
29.9
|
50.3
|
–41%
|
|
8.4
|
6.1
|
13.8
|
38%
|
–39%
|
Silver payable
production
|
Moz
|
0.8
|
1.5
|
–47%
|
|
0.3
|
0.1
|
0.4
|
200%
|
–25%
|
Revenue
|
$
|
212,884
|
386,110
|
–45%
|
|
68,086
|
50,157
|
91,466
|
36%
|
–26%
|
Adjusted
EBITDA1
|
$
|
18,960
|
106,864
|
–82%
|
|
20,101
|
11,214
|
20,364
|
79%
|
–1%
|
Net (loss)
income
|
$
|
(245,606)
|
(35,411)
|
594%
|
|
(51,742)
|
1,122
|
(3,833)
|
–4712%
|
1250%
|
Net (loss) income per
share
|
$
|
(0.30)
|
(0.04)
|
650%
|
|
(0.06)
|
–
|
–
|
–100%
|
–100%
|
C1 Cash
Cost1
|
$/lb
|
0.90
|
0.88
|
2%
|
|
0.87
|
0.81
|
0.86
|
7%
|
1%
|
AISC1
|
$/lb
|
1.02
|
1.01
|
1%
|
|
0.97
|
0.91
|
1.02
|
7%
|
–5%
|
Sustaining capital
expenditure1
|
$
|
32,887
|
52,004
|
–37%
|
|
6,561
|
6,665
|
15,752
|
–2%
|
–58%
|
Exploration
expenditure
|
$
|
4,278
|
10,362
|
–59%
|
|
550
|
143
|
2,755
|
285%
|
–80%
|
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; on January 15, 2021, the
Company announced that the operations were being restarted with
first payable zinc production expected by the end of March 31, 2021. 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 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 implementation
of benefits under the program have been accelerated and
expanded.
During Q4 2020, the Company continued its efforts to
transform the business through the implementation and
acceleration of the T90 program and additional one-time cost
reductions. In response to market conditions as a result of the
COVID-19 pandemic, the T90 business program was accelerated and is
now expected to reach an AISC1 of $0.90 per pound by the beginning of 2021, a full
year earlier than originally planned. The program is forecast to
deliver $51 million of recurring annualized efficiencies, of
which $35 million was delivered in 2020.
Improvements delivered by the T90 program during Q4 2020
reduced AISC1 by approximately $0.09 per pound and increased Adjusted
EBITDA1 by approximately $7 million. For the 2020
year, the T90 program reduced AISC1 by approximately
$0.08 per pound and increased
revenues and Adjusted EBITDA1 by approximately
$5 million and $29 million, respectively.
FINANCIAL AND OPERATIONAL SUMMARY
Production
|
|
2020
|
2019
|
YoY
|
|
Q4'20
|
Q3'20
|
Q4'19
|
Q4'20
vs
Q3'20
|
Q4'20
vs
Q4'19
|
Ore mined
|
t
|
2,399,931
|
3,150,423
|
–24%
|
|
567,071
|
558,044
|
790,927
|
2%
|
–28%
|
Ore milled
|
t
|
2,376,829
|
3,234,358
|
–27%
|
|
560,898
|
532,033
|
822,278
|
5%
|
–32%
|
Zinc head
grade
|
|
8.1%
|
8.0%
|
1%
|
|
8.1%
|
8.5%
|
7.8%
|
–5%
|
4%
|
Lead head
grade
|
|
1.2%
|
1.5%
|
–20%
|
|
1.4%
|
1.1%
|
2.0%
|
27%
|
–30%
|
Silver head
grade
|
(ozs/t)
|
1.0
|
1.4
|
–29%
|
|
0.8
|
0.9
|
1.3
|
–11%
|
–38%
|
Zinc
recovery
|
|
88.2%
|
87.2%
|
1%
|
|
88.9%
|
88.3%
|
88.2%
|
1%
|
1%
|
Lead
recovery
|
|
73.4%
|
67.2%
|
9%
|
|
75.7%
|
77.3%
|
69.5%
|
–2%
|
9%
|
Silver
recovery
|
|
51.4%
|
46.2%
|
11%
|
|
61.9%
|
49.9%
|
47.4%
|
24%
|
31%
|
Zinc
payable
|
Mlbs
|
313.0
|
417.4
|
–25%
|
|
74.2
|
74.1
|
104.8
|
0%
|
–29%
|
Lead
payable
|
Mlbs
|
29.9
|
50.3
|
–41%
|
|
8.4
|
6.1
|
13.8
|
38%
|
–39%
|
Silver
payable
|
Moz
|
0.8
|
1.5
|
–47%
|
|
0.3
|
0.1
|
0.4
|
200%
|
–25%
|
Cost per
unit
|
|
|
|
|
|
|
|
|
|
|
C1 Cash
Cost1
|
$/lb
|
0.90
|
0.88
|
2%
|
|
0.87
|
0.81
|
0.86
|
7%
|
1%
|
AISC1
|
$/lb
|
1.02
|
1.01
|
1%
|
|
0.97
|
0.91
|
1.02
|
7%
|
–5%
|
Consolidated quarterly production remained consistent with the
prior quarter at 74.2 million pounds of payable zinc but decreased
by 29% as compared to Q4 2019 as Caribou's operations were on care
and maintenance during 2020.
C1 Cash Cost1 and AISC1 for Q4 2020
both increased by 7% as compared to Q3 2020 primarily due to
increased costs related to higher sales volumes through the
reduction in inventories and increased distances to destination
ports, both of which result in higher smelting and refining costs,
which were partially offset by one of two annual lead shipments at
Rosh Pinah.
|
|
2020
|
2019
|
YoY
|
|
Q4'20
|
Q3'20
|
Q4'19
|
Q4'20
vs
Q3'20
|
Q4'20
vs
Q4'19
|
Revenues
|
$
|
212,884
|
386,110
|
–45%
|
|
68,086
|
50,157
|
91,466
|
36%
|
–26%
|
Zinc payable
sales
|
Mlbs
|
303.5
|
440.1
|
–31%
|
|
74.8
|
65.3
|
110.4
|
15%
|
–32%
|
Average zinc LME
price
|
$/lb
|
1.03
|
1.16
|
–11%
|
|
1.19
|
1.06
|
1.08
|
12%
|
10%
|
EBITDA1
|
$
|
(198,664)
|
71,787
|
–377%
|
|
(34,832)
|
15,368
|
19,611
|
–327%
|
–278%
|
Adjusted
EBITDA1
|
$
|
18,960
|
106,864
|
–82%
|
|
20,101
|
11,214
|
20,364
|
79%
|
–1%
|
Net (loss)
income
|
$
|
(245,606)
|
(35,411)
|
594%
|
|
(51,742)
|
1,122
|
(3,833)
|
–4712%
|
1250%
|
Loss per share basic
and
diluted
|
$
|
(0.30)
|
(0.04)
|
650%
|
|
(0.06)
|
0.00
|
(0.02)
|
–100%
|
200%
|
Adjusted (loss)
earnings
per
share1
|
$
|
(0.03)
|
0.00
|
–100%
|
|
0.00
|
0.00
|
0.00
|
0%
|
0%
|
The increase in revenues in Q4 2020 to $68.1 million is attributable to the 12% increase
in zinc price as compared to Q3 2020 as well as the 15%
increase in payable sales volumes as a direct result of the timing
of shipments.
Q4 2020 Adjusted EBITDA1 of $20.1 million improved from $11.2 million in Q3 2020 due primarily to the
increase in revenues. The $56.8
million difference between EBITDA1 and Adjusted
EBITDA1 during Q4 2020 is primarily due to the
$43.6 million impairment of property,
plant and equipment at the Santander mine and a $7.3 million mark-to-market loss on
financial instruments.
Market Outlook
Management of the Company believes that the outlook for the zinc
market has improved after ending a volatile year with the zinc
price up over 50% from the lows the commodity experienced in the
spring. Looking back, the rapid outbreak of the COVID-19 pandemic
caused a contraction to concentrate supply as mining operations
curtailed production in response to the virus. 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 and
an ever-changing response by various national governments continue
to put strain on the concentrate supply chain.
Global smelting production was also materially impacted in the
year however this was mainly limited to the first quarter of 2020
as production capacity in Asia
largely recovered to pre-COVID-19 levels early in the second
quarter. This imbalance between the supply of concentrate from
miners and the demand from smelters led to a deficit in concentrate
for the full year of 2020.
This concentrate deficit throughout the year led to a
significant reduction in spot zinc concentrate treatment charges
which trended 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 January 2021,
the average imported zinc spot treatment charge for the month was
reported to be $70 per tonne, which
is an important indicator in setting the annual benchmark which is
expected to be set lower for the year 2021.
Demand for refined zinc was also impacted by COVID-19 as early
into the pandemic global manufacturing was disrupted as factories
were temporarily shutdown to contain the spread of the virus.
However, this demand disruption was short lived as factories
reopened to normal operating levels and economic activities were
stoked by government infrastructure stimulus spending which began
in Asia and is expanding to the
rest of the world as governments implement similar infrastructure
stimulus programs.
During Q4 2020, the London Metals Exchange ("LME") zinc price
averaged $1.19 per pound, continuing
its improvement from its year low of $0.82 per pound reached back in March. We expect
that the continued disruption to mine production will 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 January 2021, total
global exchange inventories decreased by 30,000 tonnes to 231,000
tonnes or an estimated 6 days of global consumption, compared
to the end of Q3 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
Between March and August 2020, the
Company obtained waivers of the financial covenants under the terms
of its revolving credit facility (the "Facility") to
August 31, 2020. On August 6, 2020, further amendments to
the Facility and a new credit facility with Glencore Canada
Corporation (the "Glencore Facility"), an affiliate of the
Company's largest shareholder, Glencore plc (collectively
"Glencore") were announced.
On August 25, 2020, the Company
announced a positive pre-feasibility study ("PFS") for Rosh Pinah
Mine Expansion ("RP2.0") which
presented a mine plan to 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.
On September 4, 2020, the Company
announced the appointments of Nick
Popovic and Aline Cote to its
Board of Directors of the Company, replacing Chris Eskdale and Dan
Myerson as Glencore nominees.
In October 2020, the Company
entered into zinc price forward swaps for approximately 25% of
forecast zinc production for six months from October 1, 2020
to March 31, 2021 at an average price of $1.11 per pound. In addition, in order to provide
downside zinc price protection, zinc price put options for
approximately 25% of forecast zinc production across the group were
entered into for the same six-month period at $1.04 per pound.
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. The Company intends to use the net proceeds for
general corporate and working capital purposes, including advancing
work on the Rosh Pinah RP 2.0
expansion project and its associated feasibility study, undertaking
additional exploration work, continuing the study and potential
restart of the Caribou operation, and repaying amounts of the
Company's indebtedness.
On November 24, 2020, the Company
entered into a fixed pricing arrangement pursuant to its existing
offtake agreement with Glencore for 59.5 million pounds of zinc
allocable to production at Perkoa and Rosh Pinah. The tenure of the
arrangement is for a nine-month period covering April 2021 to December
2021 at a price of $1.23 per
pound and extends the existing hedging program which covers the
period October 2020 to March 2021.
On December 2, 2020, the Company
closed its marketed offering of 186,530,000 units at a price of
C$0.185 per unit for aggregate gross
proceeds of $26.6 million
(C$34.5 million), which included the
exercise of the full amount of the over-allotment option of
24,330,000 units. Each unit is comprised of one common share and
one-half of one common share purchase warrant entitling the holder
thereof to acquire one common share at a price of C$0.23 until June 2,
2022. Glencore plc exercised its pre-emptive participation
rights in the offering to purchase 49,000,000 units.
On December 10, 2020, the Company
announced the appointment of Brendan
Creaney as the permanent CFO.
On January 15, 2021, the Company
announced the planned restart of its Caribou mine which has been on
a care and maintenance program since March
2020. The Company has reduced its exposure to commodity
price fluctuations during the initial two-year plan by entering
into a 21-month fixed-pricing arrangement for 115 million pounds of
payable zinc production from Caribou, at an average price of
$1.25 per pound.
On January 18, 2021, the Company
announced the appointment of Jeane
Hull to its Board of Directors.
On January 18, 2021, the Company
announced preliminary 2020 full year and Q4 production results and
2021 operating, capital and exploration expenditure guidance.
1 See
"Use of Non-IFRS Financial Performance Measures".
|
Q4 2020 and Full Year Results Conference Call and Webcast
Details
Trevali will release the Q4 2020 and full year financial and
operating results before the market opens on Thursday, February 25, 2020 and a conference call
will be held the same day for management to discuss the Q4 2020
financial and operating results.
Conference call dial-in details:
Date: Thursday, February 25, 2021 at
01:00PM Eastern Time
Toll-free (North America): 1 (877)
291-4570
International: +1 (647) 788-4919
Webcast: http://www.gowebcasting.com/11056
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.
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. Forward-looking statements also include
statements with respect to the Company's
operations, including but not limited to financial and
expectations with respect to the Company's financial results for
fiscal year 2021, including its expectations with respect to timing
regarding the T90 business improvement program and the amount of
cost efficiencies to be generated therefrom, expectations with
respect to future commodity prices, commodity supplies, refining
and treatment charges and market conditions, expectations regarding
future macro-economic performance, future hedging activities and
the Company's expectations regarding the financial benefit to the
Company from these hedging activities, the Company's growth
strategies and planned development activities, including the
restart of the Caribou Mine, 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 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 and the
impact on the Company's operations of current and future actions
taken by governmental authorities, counterparties and others to the
COVID–19 pandemic. 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,
that the Company may fail to meet its T90 business
improvement program objectives or may abandon these objectives
prior to the completion of the T90 business improvement program;
that the Company may not undertake its planned development and
exploration activities on the timelines currently contemplated, or
at all; that the Company's hedging programs may not be economic to
the Company; 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,
future levels of commodity supplies, future refining and treatment
charges and future economic conditions and the anticipated
sensitivity of our financial performance to such factors; 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 decrees regulations, including any new or ongoing
decrees and regulations issued by a governmental authority in
response to the COVID-19 pandemic; 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 in
our credit agreements; 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 Company's
annual information form, interim and annual consolidated financial
statements and management's discussion and analysis off those
statements, all of which are filed and available for review under
the Company's SEDAR profile at wwww.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.
Non-IFRS Financial Performance Measures
The items marked with a "1" are non-IFRS measures. These
non-IFRS measures do not have any standardized meaning. These
measures are intended to provide additional information and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. Readers should refer
to "Use of Non-IFRS Financial Performance Measures" in the
Company's Management's Discussion and Analysis for the three
and twelve months ended December 31,
2020 for an explanation of these measures and
reconciliations to the Company's reported financial results in
accordance with IFRS.
SOURCE Trevali Mining Corp.