Canadian portfolio manager Irwin Michael likes Trevali Mining Corp.
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), a zinc-focused mining company that recently raised $46 million from a bought deal financing.
Michael told Business News Network this week that his firm I.A. Michael Investment Counsel Ltd. bought 40 million Trevali shares, or 14.3% of the Vancouver-based company, for its ABC Funds.
Trevali has a mine in operation in Peru called Santander. Proceeds from the bought deal financing will be used to fund development of the company’s Caribou mine and mill complex in Bathurst, New Brunswick.
“It’s incredibly cheap and we consider it a value play, much like Capstone Mining Corp.
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), was when we bought Capstone pretty cheaply at $2.30,’’ he said, during an interview with BNN’s Market Call program.
Trevali shares rose 1.2% to 82 cents on Tuesday, leaving a market cap of $229 million, based on 279.3 million shares outstanding. The 52-week range for the stock is $1.19 and 49 cents.
Michael says he likes Trevali for the following reasons:
The stock is trading well below his estimated net enterprise value of $2.
Trevali’s 43-year-old President and CEO Mark Cruise knows the business extremely well.
Trevali is aided and abetted by Swiss commodities giant Glencore-Xstrata, which is an 8% shareholder.
Michael also said he likes the prospects for zinc, which is used primarily for galvanizing steel, and has many other applications. “If you have dandruff in your hair, you are probably using zinc,’’ Michael said.
He said an investment in Trevali is also a bet on future shortages of zinc supply. “There will be a deficit in a year or two,” Michael said.
Disclosure: readers should note that Trevali is a Stockhouse client.