Teal Valley T.TV

GMP: Buy rating and $1.70 target for Trevali Mining Corp.

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According to GMP Securities:

https://personal.crocodoc.com/5R2J5U5

Trevali Mining Corp.

Rating: BUY

Target: C$1.70

Equity financing allows Trevali to focus on optimizing commissioning the Caribou Mine

We are reinstating coverage of Trevali Mining Corp. following closing of the $30.6 million equity financing. The company intends to use the net proceeds from the offering to pay expenses relating to the restart of the Caribou Mine & Mill and for general working capital purposes.

The financing will give Trevali much more flexibility during the Caribou Mine ramp up in production where first concentrate shipments are not planned until late Q2/15 or early Q3/15. The company intends to use a portion of the proceeds from the equity financing to hire a specialist based mill training team to fast track and de-risk commissioning and optimize production at Caribou over an 8-12 month period.

Trevali’s Caribou Mine began mill commissioning in late May. The company has adopted a phased commissioning plan with onsite support from a number of consultants. Initial commissioning will begin with low-grade material as the grinding and flotation circuits as brought up to specification. Underground mining has built an approximately 75,000-tonne mill-feed stockpile with an additional 28,000 tonnes of mill-feed drilled and readily available for blast and mucking through the new ramp system.

2015 production guidance for the Santander Mine remains 48-50 million lbs. zinc, 23-25 million lbs. lead, and 850,000-950,000 oz silver which is in line with our 2015 estimates of 50 million lbs. zinc, 24 million lbs. lead, and 896,000 oz silver, respectively.

Recommendation

We have integrated the $30.6 million equity financing into our estimates. We reiterate our BUY rating and $1.70 target price based on our 1xNAV8 estimate. Trevali offers great exposure to zinc and its improving supply demand fundamentals which we believe will drive positive returns.