Vancouver-based Trevali Mining (TSX:T.TV
, Stock Forum
) stock appears to be riding a ski lift of late, and that may continue for a while yet if new coverage from M Partners
is anything to go by.
M gives T.TV a BUY rating on their initial analysis of the $208m market cap zinc miner, released Thursday, and a price target of $2.00 – a 141% increase on the stock price at the time the report was prepared.
In the last three days, covering a period before the M coverage was released, Trevali stock climbed 17% to $0.93.
M Partners titled their analysis, “Putting the Zing back in Zinc” and says T.TV management is “building a multi-asset zinc producer in a favourable macro-environment for zinc.”
The report focuses on Trevali’s shift from a developer to a producer, with giant Glencore Xstrata (OTO:GLNCY
, Stock Forum
) constructing and commissioning a mill in Peru for the company as part of a mill construction/off-take agreement that de-risks project ramp-up.
It also notes that, while the company has employed $54m in debt to fund construction of their Santander and Caribou projects, with another $30m expected this year, the cash flow from those operations “should be more than sufficient to service the existing debt facilities,” leaving the company with a debt to equity ratio superior to competitors.
Another factor in the strength of the company is cited as the expectation that, over the next four years, around 14% of global zinc production is expected to go offline as current producers deplete their mines.
The report warns of balance sheet red ink in the near term, but expects oncoming operations to deal with that going forward, as New Brunswick production moves closer.
M Partners isn’t alone on their bullish outlook on Trevali, with BarChart.com giving the company and 80% buy rating, with all medium and long term indicators predicting growth. BarChart’s 7-day average says the stock is a SELL, but 10-day to 100-day indicators are all BUY.
There was a rash of insider purchases at or near $0.80 in May of this year, and no sales since.
FULL DISCLOSURE: Trevali Mining is a Stockhouse Publishing client, but this article is not paid content.