According to Raymond James:
Trevali Mining Corporation
June 13, 2013
Prepared for the Startup of Santander
Trevali Mining has completed a C$10.9 million private placement equity financing, and has announced the commencement of crushing of ore at its Santander mine in Peru. We have also updated our financial model for the company’s 1Q13 financial results, and provide a Santander mine development update and a review of the recent hire of several senior management personnel.
We maintain our Outperform rating, but are reducing our target price to C$1.70 (from C$1.85) after incorporating the dilution from the equity raise.
- Santander mine development update – The company recently began crushing stockpiled mill feed at its Santander zinc-lead-silver mine in Peru. The mill is expected to produce initial concentrate by the end of June, and to make first shipments of concentrate in July.
- A much needed cash injection – The C$10.9 million equity financing (18.2 mln common shares at C$0.60/share), while dilutive, does provide the company with much required cash to support its working capital needs as it transitions through the start-up of the Santander mine in Peru, and waits for the closing of the full RMB US$60 million debt and precious metals facility.
- Management additions reflect the transition to a producer – Trevali announced 3 new hires and 2 promotions to its senior management team to support its transition from a mine development company to a producer.
- Upcoming Potential Catalysts – 1) Closing of the RMB debt facility – 2Q13; and 2) commissioning of the Santander mine – 3Q13.
Trevali’s shares are trading at a P/NAV of 0.26x. Our C$1.75 target price is based on a 0.75x multiple applied to our NAV of C$2.30 per share (previously C$2.55; in-line with risk and liquidity-adjusted historic developer and producer multiples).