(MENAFN- ProactiveInvestors) (TSE:TV) is the best vehicle for zinc leverage on the Toronto Stock Exchange according to a research note released by Dundee Capital Markets which cited strong production at the Santander mine and progress in mill construction at its Caribou asset.
The zinc producer gave an update Thursday morning on the ramp up of its Caribou mine and mill in New saying the mill is on track for commissioning in the first half of 2015.
The new 3000 tonne per day SAG mill which was the big lead time item has now been installed and will be commissioned in the first quarter. This will be followed by the full ramp up of the mineral processing plant Trevali said.
Dundee also noted the construction of a new portal which will reduce underground haulage distances to the surface from 1.5 km to 100 metres. It is expected to be completed in the first quarter and will significantly lower haulage costs and improve the availability of the underground mining fleet wrote Dundee analyst Joseph Gallucci.
The Caribou mine is a planned 3000 tpd stand-alone operation in the Bathurst Mining Camp with an expected average annual production of 93 million pounds of zinc 32.5 million pounds of lead 3.1 million pounds of copper 730000 ounces of silver and 1500 ounces of gold.
Trevali is planning to stockpile ore in January to ensure the mill is fed during ramp up and the company says it is finding development costs to be lower than expected due to over investment in the underground development by the previous operator. Between 2006 and 2008 about $100 to $120 million was invested in the project by the previous operator before going into receivership after 13 months of operations due to high debt and depressed commodity prices.
Currently capex for the project is over budgeted at $36.3 million said Dundee and sustaining capex is estimated at $88.8 million.
"With production going well at Santander and mill construction progressing in New at Caribou Trevali should have two producing operations online and fully ramped-up by the time we expect improving zinc S&D fundamentals to buoy prices in 2015" said Dundee.
The capital markets firm reiterated its buy rating and top pick status on Trevali with a $2.00 per share target price. Shares of Trevali closed at C$1.06 on Thursday in Toronto up almost 5 percent year-to-date.
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