Trevali Mining Corporation
(TSX: TV, BVL: TV; OTCQX: TREVF,
Frankfurt:
4TI) (“Trevali”
or the “Company”) is providing details of
its response to the COVID-19 pandemic, including the steps taken to
ensure the health and safety of its workforce, as well as the
initiatives underway across the Company to accelerate its T90
program to sustainably reduce the cost structure of the business,
preserve cash and support the long term value of its assets. In
addition, the Company is announcing an amendment to its revolving
credit facility entered into with its lenders, as well as an update
as to the status of each of its operations.
Ricus Grimbeek, President and CEO stated, “The
health of our people and communities is our first priority. We
adopted early COVID-19 management practices, which have been
recognized by the governments in Peru, Burkina Faso and in Namibia
and have enabled us to continue operating. Actions include stopping
all non-essential travel and all employees who can work remotely
are doing this. At all of our operations, we have implemented
testing, social distancing and greatly increased cleaning and
disinfection. We will continue to demonstrate organizational
agility using our technology platform. We will continue to invest
in healthcare support for our local communities and countries where
we operate, because their protection is both the right thing to do
and it reduces risk for our operations.
As of today, Perkoa and Rosh Pinah continue to
operate at full capacity with enhanced health measures in place.
The situation remains dynamic and the status of the operations are
showing some evidence of disruption with the notable example being
a curtailment of processing activities at Santander. Despite
difficult conditions our workforce is engaged, and they have shown
great resolve.
Our industry is facing strong headwinds, but
over the last year the team has achieved record production while
reducing costs and increasing efficiencies under our T90 program
launched last November. We have delivered nearly half of the annual
sustainable efficiencies against T90’s initial target of $50
million. The overall goal of T90 had been to reach an
All-In-Sustaining-Cost (“AISC¹”) of $0.90 per pound of payable zinc
by the beginning of 2022 – we are now in a position to accelerate
that target by a full year, to the beginning of 2021.
As the pandemic continues to depress zinc
prices, we have also taken strong measures to reduce cash outflows
and preserve liquidity. We have placed Caribou on care and
maintenance to preserve the value of the orebody, reduced capital
spending and rationalized our supply chain. We will continue to
operate with the health and wellbeing of our workers and
communities at the front of mind, while taking aggressive measures
to steer us through the unprecedented market that is affecting us
all.”
Acceleration of T90 Program and
2020 Cost
Reductions
Launched in November 2019, the T90 program is
aimed at lowering costs and increasing efficiency across the
Company, with a focus on operational improvements, standardization,
and the deployment of technology. These objectives are as important
as ever. In response to current market conditions and near-term
zinc price uncertainty as a result of the COVID-19 pandemic,
Trevali has had to defer or reduce the projects that require
significant investment, such as the expansion of the Rosh Pinah
zinc mine “RP2.0”. Despite the change, the program has already
delivered $24 million of annualized efficiencies and is focused on
implementing initiatives that provide near term recurring cost
savings. The result is an acceleration to a
consolidated AISC¹ of $0.90 per pound
of payable zinc by the beginning of 2021, a full year
earlier than the original target, assuming no further reduction of
activities is required in response to the COVID-19 pandemic.
In addition to the T90 Program, Trevali is
implementing further costs reductions in 2020 that will preserve
$44 million in liquidity, including the following:
- Sustaining &
Expansionary Capital ($32 million): Sustaining and
Expansionary capital expenditures in 2020 will be reduced to
approximately $37 million down from previous guidance of $69
million. Trevali’s operations have been well capitalized in recent
years, creating an opportunity to defer $15 million in sustaining
capital costs while ensuring operations are maintained to a high
standard and expansionary capital will be reduced by $7 million.
$10 million relates to sustaining capital at Caribou that under
care and maintenance will not be spent.
- Exploration Program ($8
million): The 2020 exploration budget will be reduced to
$4 million from previous guidance of $12 million. The T3 drill
program at Perkoa and the Santander Pipe infill drilling program
including the internal preliminary economic assessment will be
paused.
- Operating Costs ($4
million): $4 million in one-time cost reductions to
operating costs.
- Development Project
Capital: Trevali plans on publishing the RP2.0 Expansion
Project pre-feasibility study in Q2 2020. The investment decision
initially planned for 2020 is being deferred and will be evaluated
in the future.
Amendment to Revolving Credit Facility
(RCF)
The Company engaged with its syndicate of
lenders during the first quarter of 2020 regarding a waiver of
compliance with existing financial covenants as of March 31, 2020.
The Company entered into an amendment to the RCF on March 31, 2020,
whereby the availability of the facility was temporarily reduced
from $275 million to $125 million in exchange for a waiver of the
financial covenants until April 30, 2020. The facility amendment
contains a number of terms and restrictions, including a
restriction on dividends and distributions, acquisitions,
disposition of assets as well as a requirement that the Company
maintain a minimum level of liquidity.
The Company is currently negotiating updated
terms and conditions to the RCF that will apply after April 30,
2020, in addition to pursuing other financing opportunities to
provide additional sources of liquidity.
Status of Operations
Trevali’s actions in response to COVID-19 are
guided by a priority on the health and well-being of our team and
the communities in which we operate, and are based on guidance and
directives from public health officials.
With enhanced safety measures in place at
Trevali’s mines, the governments of Burkina Faso, Namibia, and Peru
have provided special dispensations to allow for their continued
operation. As of today. Perkoa and Rosh Pinah are operating at full
capacity while at Santander, mining continues but processing
activities have been impacted due to supply chain constraints under
the extension to the National Emergency.
On March 26, 2020, Trevali withdrew its 2020
guidance due to the suspension of operations at Caribou as well as
the resulting uncertainty caused by COVID-19. While Trevali has
outlined an accelerated T90 program and cost reductions, the
situation remains dynamic and the impacts of COVID-19 continue to
evolve. Revised 2020 guidance will be issued when the effects on
the Company’s operations can be evaluated with greater
accuracy.
Further information regarding the status of each
of the assets is as follows:
Perkoa Mine, Burkina Faso
The Perkoa Mine continues to operate without
major impediments to mining or milling. To date, the Burkinabe
government is supportive of keeping the mining industry operating.
While the number of confirmed cases of COVID-19 in West Africa is
still small relative to population size, its governments including
Burkina Faso are taking steps to slow the virus from spreading.
These include the limiting of international flights, quarantining
cities, domestic travel restrictions and some restricted borders.
These challenging circumstances have put strain on the supply chain
of goods and the movement of Perkoa’s labour force. On March 25,
2020, two suspected cases of COVID-19 at Perkoa were confirmed. The
employees (a doctor and nurse), began self-isolating immediately
and the employees they came in contact with were also isolated. The
doctor and nurse appear to be making a full recovery and other
employees who were considered at risk have tested negative to
date.
Rosh Pinah Mine, Namibia
The Rosh Pinah Mine continues to operate at full
production without major impediments to mining or milling. On March
27, 2020 the Namibian government moved to lockdown specific regions
of the country, excluding the region Rosh Pinah operates in, and
closed all national borders until April 17, 2020. Goods permitted
for "essential services", including mining continue to be
transported into the country. On March 25, 2020, the Ministry of
Mines and Energy issued a letter to the Namibian Chamber of Mines
which indicated that key mining operations would be encouraged
to continue producing albeit on a risk-assessed basis, including
adherence to strict hygiene standards. The Rosh Pinah mine had
escalated precautionary measures early on in the outbreak of
COVID-19 and was deemed safe to continue operating at this time.
Rosh Pinah is also supporting the community by providing local
health care and medical clinics with sanitization and cleaning
products, personal protective equipment for nurses, and
accommodation for safe isolation, should it be required.
Santander Mine, Peru
As previously announced on March 27, 2020,
the Peruvian Government extended the state of National Emergency
which restricts travel in its efforts to contain the outbreak of
COVID-19 to April 12, 2020. The Santander mine has been in full
compliance with the Government’s requirements since the National
Emergency was declared and has been able to continue operations
with no material impact to date. Trevali has provided
non-perishable essential foods to the local communities of Santa
Cruz de Andamarca and San José de Baños, due to the fact that their
economic activities and supply routes have been restricted.
However, as a result of the extension of the declaration, the
Company will not be able to process ore for the duration of the
extension due to the limited supply of reagents. Mining and other
activities will continue, and mined ore will be stockpiled until
April 12, 2020 at which time the Company anticipates resuming
normal production levels, including milling, at the Mine.
Caribou Mine, Canada
As previously announced on March 26, 2020 the
Caribou mine has suspended operations due to the deterioration of
the zinc market which have made mine operations at Caribou
uneconomic at this time. The mine has been placed on a care and
maintenance program to preserve the value of the mineral resource
and mine assets. No timeline for a potential restart of operations
has been defined. Trevali’s operations centre in Bathurst, which
serves the Company’s global mine portfolio, will continue to
operate and Cooperation Agreements with the Mi’gmaq bands will
remain in place.
Conference Call
The Company will be hosting a conference call to
discuss the details of this press release later today.
Conference call dial-in details: Date: Friday,
April 3rd, 2020 at 01:00PM Eastern Time Toll-free (North America):
1 (877) 291-4570 International: +1 (647) 788-4919
Webcast: http://www.gowebcasting.com/10591
ABOUT TREVALI
Trevali is a global base-metals mining company,
headquartered in Vancouver, Canada. The bulk of Trevali’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. 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 Trevali 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.
Investor Relations
Contact:Brendan Creaney – Vice President, Investor
RelationsEmail: bcreaney@trevali.comPhone: +1 (778) 655-6070
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.
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 Company’s operations, including the impact on
the COVID-19 pandemic, the acceleration of the T90 Program and
planned cost reductions, the Company’s growth strategies and
planned development activities. 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, risks related to changes in project
parameters as plans continue to be refined; future prices of zinc,
lead, silver and other minerals and the anticipated sensitivity of
our financial performance to such prices; 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; risks relating to widespread
epidemics or pandemic outbreak including the COVID-19 pandemic; the
impact of COVID-19 on our workforce, suppliers and other essential
resources and what effect those impacts, if they occur, would have
on our business; 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;
corruption and bribery; limitations inherent in our insurance
coverage; compliance with debt covenants; competition in the mining
industry; our ability to integrate new acquisitions into our
operations; cybersecurity threats; litigation and other risks and
uncertainties that are more fully described in the Company’s annual
information form, interim and annual audited consolidated financial
statements and management’s discussion and analysis of those
statements, all of which are filed and available for review under
the Company’s profile on SEDAR at www.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 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 twelve months ended December 31,
2019.
Source: Trevali Mining Corporation
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