TD Securities ReportOn Nov. 5th, the analyst at TD Securities (TD) suspended his target price and recommendation due to near term liquidity concerns. The share price on that date was $0.14. On Dec. 3rd, the analyst recommended a Hold with a target price of $0.20. The basis of the change being the closing of the recent equity issue and rising zinc prices which are above his estimates.
Based on zinc and lead prices of $1.00/lb. and $0.80/lb., the TD analyst estimates that Trevali's (TV) operating cash flow in 2021 will be $68.4 million. The current zinc and lead prices are $1.25 and $0.94 respectively. If these prices were to prevail throughout 2021 and assuming TD's production and cost estimates were as estimated in their report, TV's operating cash flow would be $147.5 million. The TD analyst does not even mention zinc concentrate treatment charges which are a major cost component and in TV's case, in the order of $300/tonne. Several industry sources are estimating that benchmark treatment charges are likely to decling to the $200/tonne level in 2021. If this were to happen, it could result in additional cost savings of $30 million in 2021.