Does Trevali Make it Through?The question of the day is whether Trevali still exists when all is said and done.
Scenario 1 - Perkoa Finished
- Considering that RP is the only long term asset in play, then yes you take a hit of 70 million in lost profits at Perkoa and allow Trevali Caribou and Trevali Perkoa corporations to go bankrupt. RP2 has decent margins and mine life, so if you can control the G&A costs (e.g. close the expensive Vancouver office) then it should deliver decent profits.
Scenario 2 - Perkoa Closed for 2 Q's
- Rehab the mine and complete mining, lose 25 million in stand-by operating costs and rehab costs. Potential expansion based on future drill results.
The question is does the loss of Perkoa bankrupt Trevali? It makes the financing more difficult and expensive, but over the long term it seems likely that RP2 will be developed.
So it looks superficially like Trevali will limp forward, but the 2022 earnings are going to be a disaster. Zinc will also likely come back to Earth further in 2022, which may make shuttering Perkoa the economic move, rather then rehabbing the mine.
Best case would be for them to sell RP to a competent miner that can finish the development and close up shop, and possibly distribute a 2-3 $ final dividend to shareholders. Their G&A costs are way to high for a 1-mine company and will destroy future earnings.
By the way who commits almost 100% of a mine's production to a fixed price deal for 2 years. What a financial disaster. Fix the price for 6 months and just shut down again if things go sideways pricewise. Or a profit sharing arrangement based on the price of zinc. Anything but what they did, deplete the resource and likely lose money doing it......