Globe and Mail Update: As zinc market tightens, biGlobe and Mail Update: As zinc market tightens, big upside seen for Trevali Mining
https://www.theglobeandmail.com/globe-investor/investment-ideas/features/eye-on-equities/as-zinc-market-tightens-big-upside-seen-for-trevali-mining/article2087335/
Eye on Equities
As zinc market tightens, big upside seen for Trevali Mining
Darcy Keith and May Jeong
Globe and Mail Update
Published Tuesday, Jul. 05, 2011 2:31PM EDT
Versant Partners analyst Anthona Curic has bolstered her outlook for the price of zinc - and suggests speculative-oriented investors take a look at Trevali Mining Corp. (TV-T1.47-0.03-2.00%) as a way to tap the sector’s improving fundamentals.
In a report titled “The next big zinc thing,” Ms. Curic sees a potential one-year return of more than 160 per cent in Trevali stock. With its recent acquisition of Kria Resources, the company now has two near-term zinc polymetallic production projects: Halfmile-Stratmat in New Brunswick and Santander in Peru. Halfmile-Stratmat is expected to enter production this September; Santander by early 2012.
It also recently optioned the Huampar property in Peru that could add to its production growth.
“In an environment where zinc prices are finally garnering support, due to zinc producers and supply disappearing, Trevali Mining is poised to take the lead as an intermediate producer and attractive investment,” she said.
Versant now sees prices for zinc - used to coat steel to prevent corrosion - averaging $1.07 (U.S.) per pound this year, up 7 cents from previous forecasts. Next year, it expects an average price of $1.15, up from $1.05.
Upside:Ms. Curic, who just concluded an updated net asset valuation of the company, raised her target price to $4 from $2.10 and is maintaining a “buy (speculative)” rating. She cautioned, however, that the company needs to raise funds to complete its current capital program and start up the new mines. That could result in an equity offering that may dilute the stock price and result in more conservative price gains.