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TORONTO (miningweekly.com) – Canadian base metals miner Trevali this week secured a financing arrangement for $52-million in 12.5% senior secured notes, representing the final component needed to restart its Caribou mine and mill complex, in New Brunswick, by next year.
The Vancouver-based miner on Tuesday said that it had priced 52 500 units, consisting of 12.5% senior secured notes due on May 30, 2019, and common share purchase warrants at a price of C$980 per unit, where each unit would consist of a C$1 000 principal amount of notes and 123.2 warrants for total proceeds of C$51.45-million.
Each whole warrant entitled the holder, subject to certain conditions, to buy a common share at an exercise price of $1.26. The warrants will expire on May 30, 2019.
Trevali expected to close the offering on May 30, subject to customary closing conditions.
The units would be issued on a private placement basis to transaction lead GMP Securities.
The company said that it would use the proceeds of the offering to refinance the RMB Resources bridge facility due on June 30, fund Trevali's asset build-out of the Caribou mine and mill, repay Trevali's $2-million convertible notes, and for general corporate purposes.
“The straight debt structure of these notes will provide Trevali maximum leverage and exposure to the full projected metal production from Caribou operations,” Trevali president and CEO Dr Mark Cruise said.
TSX-listed Trevali earlier this month reported the positive results of a preliminary economic assessment (PEA) for its Caribou zinc/lead/silver mine and mill complex, located in the Bathurst Mining Camp of New Brunswick, saying the complex had an after-tax net present value of $106-million at a 5% discount rate.
Trevali said that the PEA, prepared by SRK Consulting (Canada), in collaboration with Holland & Holland Consulting and Stantec Consulting, had placed a pre-production capital cost of $36.3-million on the project, giving it an internal rate of return of 56.9%.
Over the project’s expected 6.3-year mine life, its yearly output would average about 93-million pounds of zinc, 32.5-million pounds of lead, 3.1-million pounds of copper, 730 000 oz silver and 1 500 oz of gold.
The PEA expects the operation to produce zinc equivalent at a direct cash cost of $0.46/lb and at a total site operating cost of $74.77/t milled.
Over the life of the operation, the mill would process about 6.15-million tonnes of ore grading 6.11% zinc, 2.49% lead, 0.34% copper, 67.9 g/t silver and 0.86 g/t gold.
The base economic case for the Caribou project used price assumptions of $1/lb zinc, $1/lb lead, $3/lb copper, $21/oz silver and $1 200/oz gold.
Other miners are also actively developing projects in the Bathurst Mining Camp, including joint venture partners El Nino Ventures and Votorantim Metais Canada with their Murray Brook zinc/copper/lead/silver project and Wolfden Resources with its Tetagouche zinc/copper/ lead/silver/gold property.
Trevali operates the 2 000 t/d Santander underground operation, in Peru, which produces zinc and lead/silver concentrates.