Trevali Mining Corp (TSX: TV) has halted production at its flagship Perkoa mine. The mine, located in Burkina Faso, has been subjected to flooding following heavy rains in the region.
There is reportedly eight workers from the mine presently missing as of the time of announcement yesterday evening, with rescue efforts said to be ongoing. Both mining as well as milling operations at the mine have been suspended as a result, with no timeline for restart currently provided.
The Perkoa Mine is the largest revenue generating asset for Trevali, generating revenues of $148.3 million in 2021, equating to roughly 51.6% of revenue generated by the firm last year. In terms of adjusted EBITDA, the company amounted to 46.7% of last years figure, with $47.7 million in adjusted EBITDA.
Despite being its largest revenue generator, the mine has become a bit of a headache for the company as of late. Late in 2021, the company was forced to revise the mining plan for the asset due to escalating operating costs, though no impairment has yet been taken. All in sustaining costs at the mine reached $1.36 per pound of zinc in the fourth quarter, while averaging out to $1.03 per pound for the year. The company meanwhile is forecasting 2022 zinc prices to be $1.60 per pound, while 2023 forecasts sit at $1.30 per pound – indicating that the mine may be headed towards negative cash flow territory.
On top of that, fourth quarter production was down 24% versus the third quarter, at 31.2 million pounds. A negative reconciliation adjustment of 6.2 million pounds from preliminary results also occurred, leading to questions related to how well of a handle the company has on the operation. Production failed to hit annual guidance, coming 8.0 million pounds short of the revised guidance, a result of declining head grades and lower recoveries than planned.
And as icing on the cake, Burkina Faso has been the subject of civil unrest as of late, which the company has indicated “may have a material affect on the Perkoa mine’s future performance.” To date, unrest has not impacted the operation.
Further updates on the flooding event are to be provided “as information becomes available.”
Trevali Mining last traded at $1.89 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.