Management has work to do…Look at the Q3 cashflow statement key items:
- $2.427M net cash used in operating activities – operations are using cash not generating cash!
- $3.600M increased borrowings on the Glencore Facility – increase in debt!
- $4.675M increased borrowings from other facilities – increase in debt!
- Overall, there is a $7.633 net decrease in cash during Q3 – Trevali has less cash even after borrowing more than $7.2M in Q3!
In the Q3 income statement, there is a $4.877M Other expense that includes:
- the “non-cash loss on the extinguishment of debt” – the original financing costs that were deferred and subsequently expensed after cancelling the original facility – is this good stewardship of the company funds?! Also concerned that the details of such a large expense were buried in the notes – is this transparency?
- Caribou care and maintenance totaling $5.610M YTD with $1.663 in Q3 and $3.947M in Q2 (MDA page 11)
Total debt is $141.5M up from $78.6M as reported at December 31, 2019 – not a good trend!
After September 2020, Trevali
drew a further $11.2M on the Glencore Facility (Note 11 Debt) – increased borrowings just after the quarter close!!!
Management estimate of future zinc prices is $1.13 per pound for 2021 and $1.14 for 2022 and future years. Mineral resource estimates are priced out at $1.14 per pound.
Management committed to zinc price forwards at $1.10 and $1.12 per pound for 15% and 10% respectively of the estimated zinc production to March 31, 2021 (Note 18 Subsequent events):
- 25% of this production is capped at $1.10 and $1.12 – Trevali cannot benefit from any price increases – a critical issue!!!
- Forward prices are below the Mineral Resource price of $1.4 per pound!???
Where are the LOM estimates especially for Perkoa?