Vancouver-based junior Trevali Resources Corp. (TSX: T.TV, Stock Forum), which debuted on the TSX on Thursday, plans to start construction on its Santander mine in Peru in the first quarter of 2011, with first production emerging from the mill later that year.
Trevali has a strategic partnership with Glencore International AG, the privately-owned Switzerland-based miner and commodities trader, at the polymetallic Santander mine.
CEO Mark Cruise said in an interview the company started detailed engineering work for the project last week, and the mine was estimated to cost come in at a total cost of C$22-million.
Trevali was trading Wednesday at $1.28 a share, giving it a market capitalization of around $80-million.
The company had previously been listed on the Canadian National Stock Exchange, but delisted from the alternative bourse for smaller companies when it started trading on the TSX.
Based on the 2 000 tonne-per-day day mill that Glencore is building at the mine as part of the partnership, and the positive metallurgical test-work, it is estimated that the Santander mine could produce some 40-million pounds of zinc, 20-million pounds of lead and 700 000 oz of silver annually.
According to the partnership agreement, Glencore would design, build and operate the mill and mine on a contractor/toll basis and buy the plant’s concentrate at benchmark terms.
Trevali would acquire the plant and associated infrastructure over a four-year period following commercial concentrate production.
Santander had operated as a mine previously, from 1958 to 1991, when production was halted owing to low metal prices. Trevali acquired the project in 2007 and following an aggressive exploration program has discovered 3 new deposits all of which remain open for expansion.
An independent NI43-101 resource estimate by Golder Associates found 5,3-million indicated tonnes grading at 3,3% zinc, 1,3% lead and 38 g/ton of silver.
Golder Associates was currently finalizing a new resource estimate, which would be released by the end of the month, Cruise said.
Zinc was trading at $1 per pound, the same price as a pound of lead, while silver was selling for $22,66, close to a 30-year high.
NEW CHAIRMAN
Traveli on Wednesday appointed Anthony Holler as chairperson, saying he had “extensive experience” in mergers and acquisitions.
He was previously chairperson of Corriente Resources Inc. (TSX: T.CTQ,Stock Forum) which Tongling Nonferrous Metals Group and China Railway Construction Corporation bought for $700-million earlier this year.
Holler was also CEO of ID Biomedical, when GlaxoSmithKline bought the company for $1,7-billion in
Does his appointment as Travali chairperson mean a likely bid from Glencore? Not necessarily, said Cruise.
“Really, we brought him on because he’s made a lot of people a lot of money. He’s created a lot of shareholder value.”
Cruise went on to say that Trevali had a good relationship with Glencore at both the corporate and operational level.
“They’ve got a lot of mines this size in production in South America,” is all he would offer.
Glencore owns two other mines in the same area as Santander, both about 60 kilometres away.
HYDRO POWER
Trevali also owns the Tingo hydro power plant near Santander, from which it will draw power for the mine.
The company is lifting the plant's production to 10 MW from the current 1,6 MW, which will cost around $17-million.
“We are in discussions with several banks regarding debt financing for this,” Cruise said.
Santander will require 4 MW to 5 MW, and Trevali will sell the excess power to mines operating nearby.