Trevali Mining Corporation ("Trevali" or the "Company")
(TSX:TV)(TSX:TV.WT)(OTCQX:TREVF)(LMA:TV)(FRANKFURT:4TI) is pleased
to announce it has entered into a definitive combination agreement
("Agreement") to acquire Maple Minerals Corporation ("Maple"), a
private New Brunswick incorporated company, that owns the Caribou
milling and mine complex located in the Bathurst Mining Camp of
northern New Brunswick (herein, the "Transaction").
Pursuant to the terms of the Agreement, a wholly-owned
subsidiary of Trevali, Trevali (New Brunswick) Ltd. and Maple will
amalgamate in a three cornered amalgamation with Trevali and
Trevali will issue to the former shareholders of Maple, 20,000,000
common shares of Trevali and 4,000,000 common share purchase
warrants with each warrant exercisable at the greater of $2.00 per
share or the market price of Trevali's common shares (calculated on
a 5-day VWAP basis immediately prior to closing) for two years
following the closing date of the Transaction. Based on the closing
price of Trevali on the Toronto Stock Exchange ("TSX") on May 11,
2012, the Transaction implies an acquisition price of approximately
$23.8 million for Maple.
"We are extremely pleased to enter into a definitive agreement
to acquire this highly strategic asset. Simply put, it provides
Trevali with a substantially cheaper and faster milling solution
with minimal production disruption for the Company. It should
strategically position Trevali to maximize shareholder value in
light of anticipated near-term global zinc deficits," stated Dr.
Mark Cruise, Trevali's President and CEO. "We look forward to
continue to work closely with the Province of New Brunswick, the
world's most favourable mining jurisdiction, and our Mi'gmag First
Nation partners in order to expand our mining operations in a
timely and responsible manner. Subject to receipt of all necessary
approvals and permits, Trevali is confident it can quickly provide
an additional 120-150 initial full-time employment positions in a
very short-timeframe as well as expand upon our very successful
First Nations Underground Core Mining Training Program.
Medium-to-longer term the Company hopes to be in a position to
provide 400-450 full-time positions within the region."
HIGHLIGHTS
-- Provides Trevali with a modern 3,000 tonne-per-day concentrate
processing plant including a metallurgical and geochemical laboratory
and permitted tailings treatment facility (Figure 1).
-- Addition of a former producing mine with significant resources that can
be rapidly and cost effectively brought on-line.
-- Highly preferable from a social and sustainability perspective - near-
term creation of an additional 120-150 full-time employment positions
making Trevali one of the larger employers in northern New Brunswick and
utilization of a working brown-field industrial site versus a green-
field site.
-- Very significant financial, technical and timing de-risk versus
permitting and building a new stand-alone Milling complex for the
Company's Halfmile and Stratmat deposits.
-- Due to superior quality of the Halfmile-Stratmat mineralization (coarse
with good metallurgical characteristics) modeling of the mill grinding
circuit indicates that it is readily modifiable to produce saleable
zinc, lead and copper concentrates.
-- Deposit remains open for expansion at depth and along strike - deepest
underground intercept to date returned 34.77 metres at 7.22% zinc, 2.69%
lead, 0.25% copper, 76.8 g/t silver and 2.19 g/t gold.
-- Potential to provide a smooth transition and minimize production
disruptions at Halfmile as Xstrata's Brunswick 12 Mine closes in 2013.
-- Will enable long-term mine plan optimization and operational
efficiencies at the Halfmile and Stratmat deposits.
-- Includes an environmental closure bond of $4.67 million dollars
currently in place.
-- Near optimal timing from a production scheduling perspective for the
Company to benefit from predicted significant zinc deficits as
Brunswick-12 shuts-down followed by closures of several other globally
significant marque zinc producers in Europe, Africa and Austral-Asia.
-- Further strengthens and confirms Trevali's position as an up-and-coming
zinc producer.
To view Figure 1 please click on the following link:
http://media3.marketwire.com/docs/0514tv.jpg
CARIBOU DEPOSIT
The most recent National Instrument 43-101 (NI 43-101) compliant
resource for the Caribou polymetallic deposit was prepared by Micon
International in 2006 (Table 1).
---------------------------------------------------------------------------
Caribou Ag Zn Pb Cu Ag
Resource(i) Tonnes %Zn %Pb %Cu (gpt) (Mlbs) (Mlbs) (Mlbs) (Moz)
---------------------------------------------------------------------------
Contained Metal
---------------------------------------------------------------------------
Indicated
Resources 3,810,000 7.5 3.26N/A(i) 92 629 273 N/A(i) 11.2
---------------------------------------------------------------------------
Inferred
Resources 3,944,300 7.36 3.59N/A(i) 107 639 312 N/A(i) 13.5
---------------------------------------------------------------------------
Table 1: Caribou deposit NI 43-101 resources(i) based on 2006 Micon
International report
(i)Note: Based on 554 diamond drill holes and 6,000 chip samples and using a
9% lead+zinc cut-off grade. Copper and gold were not estimated.
Between 2006 and 2007, the previous operator invested
approximately $100-to-120 million in a major overhaul and
modernization of the processing plant and mine infrastructure
(effectively new milling and grinding circuits - Isa Mills and
On-Stream analysers to optimize recoveries) (Figure 2). The mine
operated for approximately 13 months prior to going into
receivership in 2008 due to depressed commodity prices and adverse
global financial conditions.
Immediately prior to shut down, Mill records indicate recoveries
of 71% Pb and 83% Zn to produce saleable concentrates. No copper
concentrates were produced and may represent additional near-term
upside.
Trevali believes that the deposit contains good to excellent
exploration potential and production can be fast-tracked to provide
additional mill-feed (and employment opportunities). Specific
upside includes:
-- Currently defined deposit remains open along strike and at depth.
-- Silver and gold may be under-estimated by up to 20-30% as there was no
routine precious metal analysis.
-- Significant copper 'feeder' zones were not mined due to lack of a copper
circuit. A historic non- NI 43-101 resource for one such near-surface
zone suggests that it could contain 2.5 million tonnes at 0.89% copper,
3.2% zinc, 1% lead and 40 g/t silver; however, the Company cautions that
this work is historical in nature and that more work is required in
order to define a NI 43-101 Resource.
To view Figure 2 please click on the following link:
http://media3.marketwire.com/docs/0514tv1.jpg
TRANSACTION DETAILS
In addition to the execution of the Agreement, Trevali has also
entered into a transition services agreement ("TS Agreement") with
Maple pursuant to which Trevali will, among other things, manage
the Caribou Mine operations for the period up to Closing. Trevali
has also provided Maple with equity advances in the amount of
approximately $400,000 as of the date hereof and has further agreed
to provide additional equity capital to Maple to enable Maple to
meet its financial obligations for the Caribou Mine as such
obligations fall due prior to Closing.
The majority shareholder of Maple - MMC Holding - a private
limited company incorporated under the laws of the Grand Duchy of
Luxembourg ("MMC"), has also entered into a lock-up agreement
pursuant to which MMC has agreed, among other things, to support
the Transaction and cause its shares to be voted in favour of the
Transaction. At Closing, MMC has further agreed to enter into a
voting support and standstill agreement pursuant to which, among
other things, MMC will support, for an agreed period of time, the
Company's board nominees and agree to restrictions on the
disposition of certain of the Trevali common shares issuable to MMC
at Closing. MMC has also agreed to guarantee the representations
and warranties given by Maple under the Combination Agreement and
has further agreed to escrow a certain number of shares to be
received at Closing to support its guarantee.
Upon completion of the Transaction, Trevali will have
181,131,713 common shares issued and outstanding (based on
161,131,713 common shares issued as of today's date) with the
current shareholders of Maple holding approximately 11.04% of the
common shares of Trevali.
The closing of the Transaction is subject to a number of
conditions including, but not limited to, receiving the approval of
the Toronto Stock Exchange ("TSX"), the approval of the Maple
shareholders and on Trevali (working with Maple) entering into, on
or before December 31, 2012, an environmental agreement with the
Province of New Brunswick similar in form and substance to that
enjoyed by previous operators of the Caribou Mine. There is a
finder's fee of 2% payable to Minvisory Corp., an arms-length third
party upon Closing.
The Company is optimistic that the Transaction can close over
the course of the next several months.
Qualified Person and Quality Control/Quality Assurance
EurGeol Dr. Mark D. Cruise, Trevali's President and CEO and a
qualified person as defined by NI 43-101, has supervised the
preparation of the scientific and technical information that forms
the basis for this news release. Dr. Cruise is not independent of
the Company, as he is an officer and shareholder.
ABOUT TREVALI MINING CORPORATION
Trevali has two advanced-stage polymetallic
(zinc-lead-silver-copper) deposits in Canada and Peru - the
Halfmile and Santander mine projects respectively. In Canada,
Trevali owns the Halfmile Mine and Stratmat polymetallic deposit in
the Bathurst Mining Camp of northern New Brunswick, and the
past-producing Ruttan copper-zinc mine in northern Manitoba.
Production from the Halfmile Mine commenced in early 2012 and is
ramping up to a planned production rate of
2,000-tonnes-per-day.
In Peru, the Company has the Santander zinc-lead-silver mine
project and the former-producing Huampar silver mine, both located
in the Central Peruvian Polymetallic Belt. Mine commissioning is
anticipated to commence at the Santander operation in mid-2012 with
ramp up to full 2,000-tonnes-per-day production to follow shortly
thereafter. Additionally through its wholly-owned subsidiary,
Trevali Renewable Energy Inc., Trevali is undertaking a significant
upgrade of its wholly-owned Tingo run-of-river hydroelectric
generating facility along with transmission line upgrades and
extensions to allow, in addition to supplying power to the mining
operation on the property, the potential sale of surplus power into
the Peruvian National Energy Grid.
The common shares of Trevali are listed on the TSX (symbol TV),
the OTCQX (symbol TREVF) and on the Lima Stock Exchange (symbol
TV). Warrants to purchase common shares of Trevali are listed on
the TSX (symbol TV.WT). For further details on Trevali, readers are
referred to the Company's web site (www.trevali.com) and to
Canadian regulatory filings on SEDAR at www.sedar.com.
On Behalf of the Board of Directors of
TREVALI MINING CORPORATION
Mark D. Cruise, President
This news release contains "forward-looking statements" within
the meaning of the United States private securities litigation
reform act of 1995 and "forward-looking information" within the
meaning of applicable Canadian securities legislation. Statements
containing forward-looking information express, as at the date of
this news release, the Company's plans, estimates, forecasts,
projections, expectations, or beliefs as to future events or
results and the company does not intend, and does not assume any
obligation to, update such statements containing the
forward-looking information. Such forward-looking statements and
information include, but are not limited to statements as to: the
accuracy of estimated mineral reserves and resources, anticipated
results of future exploration, and forecast future metal prices,
anticipated results of future electrical sales and expectations
that environmental, permitting, legal, title, taxation,
socio-economic, political, marketing or other issues will not
materially affect estimates of mineral reserves. These statements
reflect the Company's current views with respect to future events
and are necessarily based upon a number of assumptions and
estimates that, while considered reasonable by the Company, are
inherently subject to significant business, economic, competitive,
political and social uncertainties and contingencies.
These statements reflect the Company's current views with
respect to future events and are necessarily based upon a number of
assumptions and estimates that, while considered reasonable by the
company, are inherently subject to significant business, economic,
competitive, political and social uncertainties and contingencies.
Many factors, both known and unknown, could cause actual results,
performance or achievements to be materially different from the
results, performance or achievements that are or may be expressed
or implied by such forward-looking statements contained in this
news release and the company has made assumptions and estimates
based on or related to many of these factors. Such factors include,
without limitation: fluctuations in spot and forward markets for
silver, zinc, base metals and certain other commodities (such as
natural gas, fuel oil and electricity); fluctuations in currency
markets (such as the Peruvian sol versus the U.S. dollar); risks
related to the technological and operational nature of the
Company's business; changes in national and local government,
legislation, taxation, controls or regulations and political or
economic developments in Canada, the United States, Peru or other
countries where the Company may carry on business in the future;
risks and hazards associated with the business of mineral
exploration, development and mining (including environmental
hazards, industrial accidents, unusual or unexpected geological or
structural formations, pressures, cave-ins and flooding); risks
relating to the credit worthiness or financial condition of
suppliers, refiners and other parties with whom the Company does
business; inadequate insurance, or inability to obtain insurance,
to cover these risks and hazards; employee relations; relationships
with and claims by local communities and indigenous populations;
availability and increasing costs associated with mining inputs and
labour; the speculative nature of mineral exploration and
development, including the risks of obtaining necessary licenses
and permits and the presence of laws and regulations that may
impose restrictions on mining; diminishing quantities or grades of
mineral reserves as properties are mined; global financial
conditions; business opportunities that may be presented to, or
pursued by, the Company; the Company's ability to complete and
successfully integrate acquisitions and to mitigate other business
combination risks; challenges to, or difficulty in maintaining, the
Company's title to properties and continued ownership thereof; the
actual results of current exploration activities, conclusions of
economic evaluations, and changes in project parameters to deal
with unanticipated economic or other factors; increased competition
in the mining industry for properties, equipment, qualified
personnel, and their costs.
Investors are cautioned against attributing undue certainty or
reliance on forward-looking statements. Although the Company has
attempted to identify important factors that could cause actual
results to differ materially, there may be other factors that cause
results not to be as anticipated, estimated, described or intended.
The Company does not intend, and does not assume any obligation, to
update these forward-looking statements or information to reflect
changes in assumptions or changes in circumstances or any other
events affecting such statements or information, other than as
required by applicable law.
Trevali's production plans at Halfmile-Stratmat and Santander
are based only on Indicated and Inferred Mineral Resources and not
Mineral Reserves and do not have demonstrated economic viability.
Inferred Mineral Resources are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorized as Mineral Reserves, and
there is therefore no certainty that the conclusions of the
production plans and Preliminary Economic Assessment (PEA) will be
realized. Additionally where Trevali discusses
exploration/expansion potential, any potential quantity and grade
is conceptual in nature and there has been insufficient exploration
to define a mineral resource and it is uncertain if further
exploration will result in the target being delineated as a mineral
resource.
The TSX has not approved or disapproved of the contents of this
news release.
Contacts: Trevali Mining Corporation Steve Stakiw Manager -
Corporate Communications (604) 488-1661 / Direct: (604) 638-5623
(604) 408-7499 (FAX)sstakiw@trevali.com www.trevali.com
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