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Dundee has described Trevali as an emerging zinc producer that will start generating free cash flow in 2013 from mines in Canada and Peru.
Dundee Securities Ltd. has initiated coverage of Trevali Mining Corp. ( TSX: T.TV, Stock Forum), putting a (high risk) buy rating on the stock with a one year target price of $2.80.
After Friday’s 8% jump, Vancouver-based Trevali is trading at 84 cents, leaving the company with a market cap of $235.3 million, based on 161.1 million. The 52-week range for the stock is $1.71 and 73 cents.
In a July 26 research report, Dundee analyst Joseph Gallucci described Trevali as “our top pick in the small cap mining space as we believe it provides a unique and inexpensive opportunity for zinc leverage.’’
Gallucci was referring to forecasts that Trevali will have two producing operations by the end of this year.
They include the Halfmile (zinc-lead-copper-silver) project in New Brunswick, which is expected to reach commercial production – at a rate of 2,000 tonnes-per-day -- by the first quarter of 2013. The nearby Stratmat project is slated to double that capacity by 2014.
Meanwhile in Peru, the Santander (zinc-lead-silver) project is expected to come on line by the third quarter of 2012, reaching a commercial production rate of 2,000 tonnes-per-day by 2013. The production rate in Peru is scheduled to be increased to 4,000 tonnes by 2015.
Trevali is subject to the general risks associated with being in the mining business as well as the usual exploration and development risks that are typical in the junior mining space, Gallucci said. However, the company benefits from having offtake agreements with Swiss commodities giants Xstrata PLc and Glencore International PLc, he said.
Trevali currently has $30 million in cash on hand and will generate, by Dundee’s estimates, another $21.8 million in operating cash flow this year. As as result, the company is fully-funded to bring two mines into full commercial production by the end of this year. |
