Trevali Mining Corporation says it will not be able to make a mandatory payment of N$124.4 million (US$7.5 million) on a revolving credit facility after its liabilities exceeded its assets.
The base metals miner has also suspended the N$330 million (US$20 million) Early Works programme at its Rosh Pinah Mine and put it under review.
According to the miner’s financial and operating results for the three and six months ended June 30, 2022 financing initiatives to fund the RP2.0 expansion project and refinance the existing debt that matures in September 2022, which had progressed with several capital providers, including Standard Bank, an Export Credit Agency, Glencore, and a metal streaming company, has not sufficiently advanced in a manner that would allow for the refinancing to be completed prior to the maturity of existing debt facilities.
Sustaining capital guidance at Rosh Pinah was revised to N$448 million (US$27 million) from N$398 million (US$24 million), while planned N$33.2 million (US$2 million) in exploration capital is unchanged.
“Although the performance of Rosh Pinah continues to be consistent, the second quarter was challenging at Perkoa where flooding on 16 April triggered an evacuation of the mine and the suspension of operations,” the company said.
The TSX-listed firm has faced several setbacks in the past few months, 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.
In September last year, Trevali appointed an adviser to provide a competitive financing solution for its RP2.0 expansion project, at Rosh Pinah and to refinance 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 non-cash impairment of US$23.7 million on Perkoa and Caribou.
