Trevali warns it will default on debt

16th August 2022

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online


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Base metals miner Trevali warned on Monday that its liabilities exceeded its assets and that it would not be able to make a mandatory payment of $7.5-million on a revolving credit facility this week.

This comes as the company has faced several setbacks, including a flooding event that shuttered its Perkoa mine, in Burkina Faso. The  Caribou operation, in Canada, continues to suffer from low productivity rates and equipment availability.

Trevali in September last year appointed an adviser to provide a competitive financing solution for its RP2.0 expansion project, at Rosh Pinah, in Namibia, and to refinance its existing debt facilities.

The financing initiative has proceeded with several capital providers, including Standard Bank, an export credit agency, Glencore and a metal streamlining company, but has not sufficiently progressed to be completed before the maturity of its existing debt facilities.

In May, the company engaged a financial adviser to conduct a strategic review process to solicit proposals for a broad range of transaction alternatives to run in parallel with the financing initiative. These alternatives include the potential sale of all, or a part of, the business and assets.

“Following recent developments, there can be no assurance that the strategic review process will progress in a fashion that will allow for the culmination of a transaction in a timely manner or sufficient value to refinance the debt facilities.”

The company produced 34.5-million pounds of zinc in the second quarter, owing to the challenges at Perkoa and Caribou, partially offset by a positive performance at Rosh Pinah.

The full-year guidance for Rosh Pinah has been increased to between 62-million and 66-million pounds of zinc, from the previous outlook of 58-million to 66-million pounds. The lead and silver guidance remain unchanged at 16-million to 18-million and 168 000 oz to 178 000 oz, respectively.

The C1 cash cost guidance increased to a range of $0.84/lb to $0.90/lb.

With Caribou’s full-year production and cost guidance suspended and Perkoa operations also still suspended following the flooding, which resulted in the death of eight people, Trevali provided a new full-year guidance.

Consolidated zinc production would be between 247-million and 280-million pounds, lead production between 36-million and 41-million pounds and silver output between 128 000 oz and 122 000 oz.

Second-quarter revenue of $52-million decreased by 44% over the prior quarter. Adjusted earnings before interest, taxes, depreciation and amortisation fell by 78% quarter-on-quarter to $9.2-million.

Trevali recorded a noncash impairment of $23.7-million on Perkoa and Caribou.

Edited by Creamer Media Reporter





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