Paradigm Capital analyst Jeff Woolley said of the results, "With both zinc and lead fundamentals currently strong, we forecast Trevali to generate substantial free cash in 2018 of $185M or $0.22/sh (+300% y/y). With only $160M in total debt, the company is well positioned to evaluate additional growth opportunities. Enhanced exploration programs at all the mines will seek to add tonnes to the resource base to extend mine life or potentially support mill expansions down. However, we believe Trevali is better positioned than ever to pursue additional acquisitions."
"Trevali's growth story is coming together at a most advantageous time in the market as supply constraints drives zinc higher. Trevali's two legacy mines are operating well and generating positive free cash flow, while the recently acquired African mines from Glencore have more than doubled the production base and we estimate will more than triple the consolidated free cash generation making Trevali a "go-to" name for investors seeking zinc/lead exposure," Woolley noted.
In a March 15 research report, analyst Brian MacArthur of Raymond James wrote, "2017 & 4Q17 production results were pre-released and in-line with our estimates. 4Q17 production came in at ~105 mln lbs of payable zinc, 13.5 mln lbs of payable lead and ~397 Koz of silver and 4Q17 EPS came in at $0.03, below RJL and consensus estimates of $0.05. Trevali repaid ~$40 mln in debt during the quarter and had ~$158 mln in total debt (including finance leases) at quarter end, in addition to ~$144 mln in working capital and ~$97 mln in cash."
"Given Trevali's high leverage to the zinc price and solid balance sheet, we continue to believe that the company offers investors one of the best st options on zinc, one of our preferred commodities, and rate the shares Outperform," stated MacArthur.
In its release, Trevali noted a number of financial highlights for 2017:
- Concentrate sales revenue of $330.5 million, up approximately 220% versus 2016
- EBITDA of $101 million, up 141% from $42 million in 2016; and annual net income of $20.2 million or $0.03 per share
- Income from mine operations of $86.1 million, up 203% from $28.4 million in 2016
- Total cash position of $97.3 million and working capital of $144 million.
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1) Jake Richardson compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Trevali Resources Inc. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Trevali Mining.
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Disclosures from Paradigm Capital, Trevali Mining Corp., March 15, 2018
Paradigm Capital Inc. has assumed an underwriting liability for, and/or provided financial advice for consideration to the subject companies during the past 12 months.
Paradigm Capital Inc. expects to receive or intends to seek compensation for investment banking services from the subject companies in the next 3 months.
Jeff Woolley visited the Rosh Pinah mine in Namibia in September 2017; the company paid for a portion of the trip.
The analyst (and associate) certify that the views expressed in this report accurately reflect their personal views about the subject securities or issuers. No part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations expressed in this research report.
Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is determined by revenues generated directly or indirectly from various departments including Investment Banking, based on a system that includes the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research and investment guidance and client feedback. Analysts are not directly compensated for specific Investment Banking transactions.
PCI, its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. PCI may act as financial advisor and/or underwriter for certain of the corporations mentioned herein and may receive remuneration for same.
Disclosures from Raymond James, Trevali Mining Corp., Mar. 14, 2018
Analyst Compensation: Equity research analysts and associates at Raymond James are compensated on a salary and bonus system. Several factors enter into the compensation determination for an analyst, including i) research quality and overall productivity, including success in rating stocks on an absolute basis and relative to the local exchange composite Index and/or a sector index, ii) recognition from institutional investors, iii) support effectiveness to the institutional and retail sales forces and traders, iv) commissions generated in stocks under coverage that are attributable to the analyst's efforts, v) net revenues of the overall Equity Capital Markets Group, and vi) compensation levels for analysts at competing investment dealers.
The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.
RAYMOND JAMES RELATIONSHIP DISCLOSURES Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months.
Raymond James Ltd. has managed or co-managed a public offering of securities within the last 12 months with respect to TV.
Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to TV.
Raymond James Ltd. has provided investment banking services to TV within the past 12 months.
Raymond James Ltd, the analyst and/or associate has viewed the material operations of TV.
Raymond James Ltd -within the last 12 months, TV has paid for all or a material portion of the travel costs associated with a site visit by the analyst and/or associate.