After flooding, debt defaults, and now creditor protection, a legal problem adds to the list of troubles Trevali Mining Corp (TSX: TV) is facing. Two of the firm’s executives–including the general manager of the Perkoa mine–have been arrested on Wednesday in Burkina Faso related to the mine’s flooding that took the lives of eight miners.
The two managers have appeared before the country’s high court in the city of Koudougou and remain in custody as the trial begins on August 24. It is still unclear what the specific charges are being thrown on the executives.
Back in April, the Canadian mining firm had to stop operations at the Perkoa mine–its largest revenue generating asset–after the property had been subjected to flooding following heavy rains in the region. The intense weather triggered flash floods that breached the open pit.
While many workers were able to escape the incident, eight miners–six from Burkina Faso and one each from Tanzania and Zambia–went missing. After rescue efforts, the African country’s government declared that no survivors were found at the mine’s refuge chamber.
Since the event, the company has suspended its production guidance for the mine, with operations still on hold “for the foreseeable future.”
The Perkoa mine incident heavily affected Trevali Mining’s results: it recorded zinc production of 34.5 million pounds for Q2 2022, down 44.6% sequentially.
As the company work on its sole revenue generating asset Caribou mine, all-in sustaining costs jumped up by 32% to US$1.61 per zinc pound quarter-on-quarter, a mere 17 cents down the London Metal Exchange’s zinc price during the quarter.
Th poor performance out of Caribou and the Perkoa mine suspension led to the mining firm’s incapacitated financials that made it miss its debt payments due on Wednesday. The company has since filed for creditor protection under the Companies Creditors Arrangement Act.
The company ended Q2 2022 with a cash balance of US$41.7 million, posting current assets at US$105.1 million. Total liabilities, meanwhile, amounted to US$146.5 million.
The Perkoa incident has cost Trevali around US$15.2 million to date.
Trevali Mining last traded at $0.20 on the TSX, falling 89% since the Perkoa mine flooding in April.
Information for this article was found via Northern Miner. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.