Trevali feasibility outlines US$111M capex for Rosh Pinah expansion

Trevali Mining (TSX: TV; US-OTC: TREVF) has released a feasibility study for the expansion of its Rosh Pinah zinc-lead-silver mine in Namibia to 1.3 million tonnes per year from 700,000 tonnes per year.

At an initial capital cost of US$111 million, the expansion will include modifications to the mill, a new paste fill plant, a water treatment plant, a new portal, decline and material to the WF3 deposit, plus surface and underground infrastructure.

Once the project is commissioned, Trevali expects to reduce its operating costs by about 26% on a per-tonne-milled basis.

The company owns 90% of the underground mine and mill, 800 km south of Windhoek. The remaining 10% is held by Namibian and employee empowerment plans.

Assuming a positive investment decision, detailed engineering for the 86% mill throughput increase and procurement of long lead items will begin by the end of this year. Construction will follow in the middle of next year, with commercial produced expected around mid-2024.

The after-tax project economics reveal a net present value (at a 8% discount rate) of US$156 million, and internal rate of return of 58%, and a payback period of 4.6 years. Free cash flow of US$290 million is estimated.

The grinding circuit at the mill will receive an upgrade that sees the installation of a single stage semi-autogenous (SAG) mill and pebble crusher. Work will also include primary crushing upgrades and an ore blending area. Flotation, thickening, filtration and pumping capacity will also be upgraded.

The development of a dedicated portal and decline to the WF3 underground deposit will support the increased mining rate and reduce operating costs. New 60-tonne trucks will deliver the ore to a new surface primary crusher. New large load-haul-dumpers (LHDs) will also be purchased. Ore transported from other area will be transported to the existing underground crusher in the existing 30-tonne trucks.

The planned paste fill plant will be designed to operate at the current mining rate and the 1.3 million tonne-per-year eventual rate. A water treatment system at the paste fill plant will reduce the amount of water needed to 0.5 cubic metre from 1.5 cubic metres.

The project would reduce the project’s carbon intensity and water consumption on a per-tonne-milled basis. The underground mine will be modernized (it began operations in 1969). 

Rosh Pinah has resources (including reserves) of 18.5 million measured and indicated tonnes grading 7.4% zinc, 1.8% lead and 25.8 grams silver per tonne as well as 1.6 million inferred tonnes at 8.3% zinc, 2.2% lead and 54.9 grams silver per tonne.

Trevali has signed a 15-year solar power purchase agreement with Emerging Markets Energy Services Company (Emesco) to supply 30% of the power Rosh Pinah needs. The fixed rate agreed in the contract is expected to reduce energy costs at the project by 8%.

In a research note, Rene Cartier of BMO Capital Markets noted that “financing discussions are ongoing with TV’s lending syndicate as well as other financial institutions on securing project debt” adding that “potential asset sales, or silver stream, could also be part of the solution.”

“On timing, construction is expected to commence in mid-2022, with commercial production expected mid-2024 (previously commence in Q1/22, commercial in H1/23),” he wrote. “Capital costs have increased to $111M, from $93M, and including a contingency of $8.8M.”