Trevali Mining Files For Creditor Protection After Missing Debt Payment

True to their word, Trevali Mining (TSX: TV) has failed to make a scheduled interest payment that was due August 17, as it broadcasted the day before in connection with its second quarter earnings release. As a result of the failure to make payment, in a move surprising no one, the firm has now officially filed for creditor protection under the Companies Creditors Arrangement Act.

The filing for creditor protection was made in the British Columbia Supreme Court yesterday, with both Trevali as well as its subsidiary Trevali Mining (New Brunswick) Ltd making a filing. The initial order was received the same day.

The company currently intends to continue to operate through the proceedings, with management remaining responsible for day to day operations, while being monitored by FTI Consulting. The process is being sought as a means of securing a stay of creditor claims and proceedings in favour of the company, with the firm now set to begin the process of identifying the available transactional and restructuring options.

Operations at the Caribou Mine in New Brunswick meanwhile have been placed on care and maintenance, which follows the mine being placed under review by the company on Tuesday. The company also cut guidance for the mine earlier this week, citing poor performance due to low productivity rates as well as equipment and operator availability from the mining contractor. Mining and milling activities have now been wound down at site, with general maintenance and environmental compliance employees remaining on site to preserve the asset.

It’s unclear if a restart at the mine will happen at all.

“The decision to suspend operations is a difficult but necessary step to address challenges at the Caribou Mine. This was not an action taken lightly and we are aware of the uncertainty created and impacts this decision has on the community and on our team,” commented CEO Ricus Grimbeek.

The suspension of operations at the Caribou Mine is the second such suspension of an operation this year for Trevali. It follows the suspension of operations at the Perkoa Mine in Burkina Faso, after a major flood on April 16 breached the mine, resulting in the death of eight employees that were caught underground. Mining and milling remains suspended at the mine, with a timeline to restart also unclear for the operation.

Prior to the flood, the Perkoa Mine represented the largest revenue generating asset for Trevali, posting revenues of $148.3 million in 2021, or roughly 52% of all revenues generated by the company during the period.

The filing for creditor protection follows the firm being unable to make a $7.5 million prepayment on certain of its debts on August 17. The company notably has debts of $97.2 million that come due in September, for which it has been unable to source the capital required to pay off. The firm reported a cash position of $41.7 million as of June 30, along with a working capital deficit of $41.4 million.

The company currently expects its sole remaining mine, the Rosh Pinah Mine in Namibia, to provide the cash flow needed, combined with cash on hand, to continue to fund itself through the CCAA proceedings.

Trevali Mining last traded at $0.205 on the TSX.

Information for this analysis was found via Sedar and Trevali Mining Corp. 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.

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