RE:RE:Objective AnalysisFire, you are consumed by Q4 AISC. You have thrown AISC for the 1st three quarters and for the year out of the the window. Rationally, when we are talking of the annual projection for 2022 and 2023, our basis should be the annual achievements (or non-achievements) for the full year 2021, not just one quarter. Having said that, my projection of an AISC of $1.13 for 2022 is based on the following objective analysis for each of the three mines:
Rosh Pinah: AISC for Q1 to Q3 2021 was $0.99. AISC in Q4 was $1.24. This was as a direct result of the delayed lead shipment and decreased by-product credits. Otherwise, it would have been $0.58 for the quarter and the annual AISC would have been around $0.88. For 2022, Trevali has given guidance of 58-66 mlbs at an AISC of $1.07-1.17. I expect that TV will meet the 2022 production target of 66 mlbs (higher end of the guidance) at an AISC of about $1.07 (lower end of the guidance) at Rosh Pinah.
Perkoa: February 25, 2022 Financial Results Presentation, page 6 says, “Commenced extraction of crown pillar as part of plan to mine remaining Mineral Reserves". As per my understanding “Crown Pillar” is defined as a rock mass situated above an uppermost stope of the mine, can be one of two types: a “surface crown pillar” and “crown pillar between open pit and underground”. It is part of the proven & probable mineral reserves and it is extracted at the very end of the mine life. At Perkoa, the extraction started in Q4 2021 and the zinc grade in this rock mass was around 11.9%. We can expect the same zinc grade in 2022. Had there not been a reconciliation adjustment of 6.2 mlbs (16%), the AISC would have been $1.13 instead of $1.36 in Q4 2021. I expect that TV will meet the 2022 production target of 136.5 mlbs (mid-point of guidance) but with a higher AISC (higher than guidance) of about $1.13 at Perkoa.
Caribou: AISC in Q4 2021 was 1.44. With only 10.2 mlbs zinc payable production in the quarter, AISC was bound to be very high with such a low production. Reasons given by TV management are lower ore availability and decreased zinc recoveries due to lower than planned head grades. Regarding lower ore availability, the explanation given is localized ground conditions in an area where, historically, ground activity and failures were not encountered. A third-party ground control assessment was subsequently completed which confirmed that this is not a pervasive stability issue. Q2 and Q3 2021 combined production was 30.4 mlbs with an AISC of 1.07. Since the realignment of the mine plan for the impacted zone is being worked out and meanwhile additional production areas are being brought on-line, I expect that TV will meet the 2022 production target of 61 mlbs (near lower end of guidance) at an AISC of about $1.20 (higher end of guidance) at Caribou.
IMHO
Note: In my original post, there was a typo. I gave cash generation projections with zinc at 1.65 and 1.55 but typed 1.65 and 1.5.