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Updates

November 29, 2013

We believe that Trevali is extremely cheap, trading at 0.4x NAV of approximately $2.00 per share, and 0.8x tangible book value. As Trevali continues to demonstrate the production and cash flow capability of its mines, we believe there is significant potential for an upward valuation re-rating for the stock. Moreover, given that zinc could move into a supply deficit within the next two years and the lack of common stocks with significant leverage to zinc, we believe that Trevali could eventually become a take-over candidate.

Operationally, we were pleased to see that the Santander mine, located in Peru, operated at full capacity of 2,000 tpd in the month of October. Given that Santander is a relatively low cost mine, we believe Trevali has significant operating leverage given the current zinc price of approximately $0.85/lb and potential to increase production. The company is also advancing its New Brunswick assets, including the Caribou mine and mill, Halfmile mine, and Stratmat deposit, with commercial production targeted for 2014. The company has life-of-mine off-take agreements with Glencore Xstrata plc, the largest global zinc miner, for all concentrates produced at the Santander and Caribou mines. Glencore Xstrata is also a significant shareholder of Trevali and has a representative on the company’s Board of Directors.

We continue to believe that Trevali maintains a strong financial position. On November 28th, the company completed a $46 million equity financing, consisting of 55.43 million common shares priced at $0.83 per share. Proceeds will be used to pay for expenses relating to the restart of the Caribou mine and mill and for general working capital purposes. Post the financing, we believe that Trevali is well capitalized to pursue its development and exploration objectives.

December 13, 2013

On December 10th, Trevali Mining announced positive drill results at the recently discovered Rosa Zone at its Santander Mine in Peru. All three drill holes intersected high grade lead-silver-zinc mineralization that is above Santander’s current resource grade. By way of review, the Santander project commenced production in August 2013 and operated at full capacity of 2,000 tpd during the month of October. Recent drill results have confirmed our view that the Santander mine life could ultimately be extended, and infrastructure exists to support a doubling of production over time. Moreover, we believe that mineralization from this newly discovered zone could be incorporated into the existing mine plan, and given its high grade content, could represent upside to Trevali’s near-term cash flow.

We believe that Trevali is extremely cheap, trading at approximately 0.4x NAV and 0.9x tangible book value. As the company continues to demonstrate the production and cash flow capability of its mines, we believe there is significant potential for an upward valuation re-rating for the stock. Moreover, given the positive fundamentals of the zinc market, and the lack of equities with significant exposure to zinc, Trevali could ultimately be a takeover candidate.

June 20, 2014

On May 13th, Trevali released the Preliminary Economic Assessment (PEA) for its Caribou mine located in New Brunswick. The PEA is an independent study that assesses the economic viability of the project and is an important milestone in the development of the mine. In our view, the results are consistent with our expectations, and outline both a robust production and cash cost profile. To put this into context, based on a planned 6.3-year mine life, Caribou is expected to deliver average annual production of 93 million lbs. of zinc, 32.5 million lbs. of lead, 3.1 million lbs. of copper, 730,000 ozs. of silver, and 1,500 ozs. of gold. In addition, the life-of-mine direct cash cost of $0.46/lb. compares favourably to the current zinc spot price of $0.97/lb., and demonstrates the potential profitability of the mine. Production at Caribou is scheduled to commence in H1 2015 at an initial capital cost of $36.3 million, with an estimated 2.1-year payback.