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TSX: TV | www.trevali.com
Perkoa Rosh Pinah
Investor Presentation
November 2018
Santander Caribou
Investor Presentation Santander Caribou November 2018 Perkoa - - PowerPoint PPT Presentation
Investor Presentation Santander Caribou November 2018 Perkoa Rosh Pinah TSX: TV | www.trevali.com TSX: TV | www.trevali.com Cautionary Note Regarding Forward-Looking Statements: This presentation contains forward -looking
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Perkoa Rosh Pinah
November 2018
Santander Caribou
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This presentation contains “forward-looking information” (also referred to herein as “forward-looking statements”) under the provisions of applicable Canadian securities legislation. Generally, these forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will”, “occur” or “be achieved” or the negative connotation thereof. Forward-looking statements include, but are not limited to, those in respect of: the economic outlook for the mining industry; expectations regarding metal prices; the timing and amount of estimated future production; the current and planned commercial operations, initiatives and objectives in respect of certain projects of Trevali Mining Corporation (“Trevali” or “TV”), including the Perkoa, Caribou, Rosh Pinah and Santander mines (the “Mines”); the estimation of mineral reserves and mineral resources; the realization of mineral reserve estimates, changes in mineral resources and conversion of mineral resources to proven and probable mineral reserves; Trevali’s current and planned exploration initiatives; strategies and objectives in respect of the Mines; liquidity, capital resources and expenditures; sustainability and environmental initiatives and objectives; business development strategies and outlook; leverage metrics; debt repayment schedules; planned work programs and drilling programs in respect of the Mines; achieving projected recovery rates; anticipated mine life, recovery rates and
targeted cost reductions; exploration and expansion potential; success of exploration activities; permitting and certification timelines; currency fluctuations; requirements for additional capital; government regulation of mining operations; environmental matters; closure obligations and unanticipated reclamation expenses; title disputes or claims; limitations on insurance coverage; the timing and possible outcome of pending litigation; information relating to Trevali’s normal course issuer bid, including the number of shares that may be purchased thereunder and the timing and terms and conditions of same; and other information that is based upon forecasts of future operational or financial results, estimates of amounts not yet determinable and assumptions of management. Forward-looking statements are necessarily based upon a number of factors and assumptions that, if untrue, could cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such statements. Assumptions have been made regarding, among other things: present and future business strategies and the environment in which Trevali will operate in the future, including commodity prices, anticipated costs and ability to achieve goals; Trevali’s ability to carry on its exploration and development activities; Trevali’s ability to meet its obligations under property agreements; the timing and results of drilling programs; the discovery of mineral resources and mineral reserves on Trevali’s mineral properties; the timely receipt of required approvals and permits, including those approvals and permits required for successful project permitting, construction and operation
ability to obtain financing as and when required and on reasonable terms; Trevali’s ability to continue operating; dilution and mining recovery assumptions; assumptions regarding stockpiles; the success of mining, processing, exploration and development activities; the accuracy of geological, mining and metallurgical estimates; no significant unanticipated operational or technical difficulties; maintaining good relations with the communities; no significant events or changes relating to regulatory, environmental, health and safety matters; certain tax matters; and no significant and continuing adverse changes in general economic conditions or conditions in the financial markets (including commodity prices, foreign exchange rates and inflation rates). Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used.
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Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, level of activity, performance or achievements of Trevali and/or the Mines to be materially different from those expressed or implied by such forward-looking statements, including but not limited to, those in respect of: risks related to the integration of acquisitions; volatility of the price of zinc, lead, silver and other metals; international operations including economic and political instability in foreign jurisdictions in which Trevali operates; current global financial conditions; joint venture operations; actual results of current and planned exploration activities; actual results of drilling programs; discrepancies between actual and estimated production, mineral reserves and mineral resources, grade and metallurgical recoveries; failure to replace mineral reserves; mining operational and development risks; actual results of current reclamation activities; environmental policies and risks; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; changes in the market, demand, supply and/or uses of zinc and copper; accidents; labour disputes; delays in obtaining governmental approvals or financing or in the completion of development or construction activities and other risks of the mining industry; inaccuracies or changes in the consolidated zinc production, exploration and operational guidance for the Mines; inaccuracies or changes in the analysis of the exploration potential of the Mines; failure to complete the work programs or drilling programs at the Mines; delays, suspensions or technical challenges associated with capital projects; risks relating to reliance on historical data; failure of plant, equipment or processes to operate as anticipated; inaccuracies or changes in the growth pipelines of the Mines; taxation risks; title risks; opposition from community or indigenous groups; compliance with laws, including environmental laws; exchange controls; higher prices for fuel, steel, power, labour and other consumables; political or economic instability and unexpected regulatory changes; as well as those factors discussed in the section entitled “Risk Factors” in Trevali’s most recent management’s discussion and analysis and annual information form available under Trevali’s profile on SEDAR at www.sedar.com. Although Trevali has attempted to identify important factors, assumptions and risks that could cause actual results to differ materially from those contained in forward-looking statements, there may be others that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking
expectations and opinions of management on the date the statements are made and, accordingly, are subject to change. Trevali assumes no obligation to update any forward-looking statements that are included in this presentation, whether as a result of new information, future events or otherwise, except as required by law. Non-IFRS Measures This presentation refers to “EBITDA” (earnings before interest, taxes, depreciation and amortization), “free cash flow”, “site cash operating cost per tonne milled”, and “site cash operating cost per pound of payable zinc equivalent produced”, which are financial performance measures with no standard meaning under International Financial Reporting Standards (“IFRS”). Such non‐IFRS financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. Management uses these measures internally to evaluate the underlying
evaluate the results of the underlying business of Trevali. Management understands that certain investors, and others who follow Trevali’s performance, also assess performance in this way. Management believes that these measures reflect Trevali’s performance and are better indications of its expected performance in future periods. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The information presented herein was approved by management of Trevali on November 22, 2018.
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Certain statements represent forward looking information, see “Cautionary Note Regarding Forward-Looking Statements”. Such forward-looking information assumes normal operating conditions and achievement of production and cost guidance.
Global Top-10 Zinc Producer Industry-leading zinc leverage (85% of revenue from zinc) Production increases for 5 straight years Disconnect between current zinc pricing and future supply constraints Four operating zinc mines Perkoa Mine (Burkina Faso) Caribou Mine (Canada) Rosh Pinah Mine (Namibia) Santander Mine (Peru) Diversified Production in Pro-Mining Jurisdictions Significant Organic NAV Growth Opportunities Mineral resources at all mines remain open for expansion with exploration drill programs
Advanced Project pipeline – Rosh Pinah 2.0, Bathurst Mining Camp, Santander Pipe, Perkoa Frontier VMS Belt Strong Financial Position and Leadership Proven management and technical teams – On track to achieve 2018 guidance Strong balance sheet and liquidity with low leverage Glencore: a cornerstone strategic shareholder (25.5%) providing strong technical and logistical support NCIB for up to C$20 million (6.5% of free float)
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*Constitutes forward-looking information; see “Cautionary Note Regarding Forward-Looking Statements”. Cash costs (net of by-products) are based on various assumptions and estimates, including, but not limited to: production volumes, commodity prices (Zn: $1.25/lb Pb: $1.00/lb Ag: $19/lb), foreign currency exchange rates (N$/USD: 13.00; XOF/USD: 609; PEN/USD 3.25; C$/USD $1.25) and normal operating conditions. Trevali’s interest is 90% of Perkoa and 90% of Rosh Pinah. **Site operating cost per tonne milled is a non-IFRS measures. See “Non-IFRS Measures”
2018 consolidated zinc production guidance*
Santander Mine, Peru
Caribou Mine, Canada
Perkoa Mine, Burkina Faso
172-180* million payable lbs Rosh Pinah Mine, Namibia
392-418 million payable lbs Zinc 39.7-42.6 million payable lbs Lead 1.4-1.5 million payable ozs Silver
Site operating costs of US$65-$68 per tonne**
Zinc Mines Projects/Other Assets
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Optimize Existing Operations
▪ Implement Best Practices & continuously improve efficiencies ▪ New management and operating teams: ▪ Santander → Rosh Pinah – transferred underground operational skills & practices ▪ Perkoa → Caribou – underground geotechnical and CRF experience ▪ Rosh Pinah – transferred systems tracking ▪ Caribou – transferred mine planning protocols ▪ Focus on near-mine exploration to extend mine life: ▪ Built exploration team at Perkoa – extending deposit ▪ Re-evaluating Rosh Pinah from first principles ▪ Increased focus on Santander Pipe and its higher grades ▪ Improve cash flow stability and predictability: ▪ Focus on concentrate transportation logistics ▪ Enhanced mine to mill planning and oversight
Pursue Organic Growth Opportunities
▪ Increase production and improve cost position through strategic allocation of capital: ▪ Rosh Pinah (RP) 2.0: Evaluating a capital-efficient, 50% increase in mill throughput at Trevali’s lowest cost and longest life operation (Tier 1 deposit) ▪ Perkoa’s HFO Project: On schedule with substantial annual savings (US$5/t milled) and attractive returns (25+% IRR) expected ▪ Drive district-scale exploration to extend mine life: ▪ Bathurst Mining Camp: Mine-to-Mill strategy encompassing Caribou, Restigouche, Murray Brook and Halfmile to take advantage of existing infrastructure ▪ Regional opportunities at Perkoa and Santander
Evaluate Accretive Investment Opportunities
▪ NCIB in place for up to C$20 million (~6.5% of freely traded shares outstanding). ▪ Investments must be accretive – maintain track record of disciplined and patient capital allocation
Increase Production, Cash Flow and Value for all Trevali Stakeholders
Certain statements represent forward looking information, see “Cautionary Note Regarding Forward-Looking Statements”. Such forward-looking information assumes normal operating conditions and achievement of production and cost guidance.
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*Effective as of December 31st, 2017
5 3 12 5 4 1 5 2 7 4 5 1 Caribou Santander Rosh Pinah Perkoa
Reserve and Resource Life*
Reserve Life M&I Resource Life(1) Inferred Resource Life(1) (1) Contained M&I and Inferred resources (exclusive of reserves) divided by mill production rates. Mineral resources that are not mineral reserves do not have demonstrated economic viability and can therefore not be relied upon to extend mine life.
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Source: S&P Market Intelligence, Trevali Mining Corp.
Source: Trevali Mining Corp.
Trevali’s mines are well positioned for mine life extensions
▪ Globally, most underground Zn & Pb mines have short lives. 47% have lives < 6 years ▪ 10-year track record at Trevali of replacing resource – reserves and extending LOMs ▪ $14 million, 60,000-metre 2018 committed brown-field (low risk) drill campaign in progress ▪ Proven exploration team – lower quartile discovery costs (< 0.5¢/lb) ▪ All deposits remain open for expansion ▪ Rosh Pinah: 50-year history, 12 years of reserves, plus significant exploration upside ▪ Caribou: Bathurst Life of Mill strategy, including Restigouche and Murray Brook ▪ Santander: Long-history of production, under- explored region, with upside at Pipe to deliver higher-grades longer-term ▪ Perkoa: Drilling extending deposit at depth with new VMS targets being tested (3,000m regional program)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 5% 10% 15% 20% 25% [0,2] [2,4] [4,6] [6,8] [8,10] [10,12] [12,14] [14,16] [16,18] [18,20] [20,22] [22,24] [24,26] [26,28] [28,30] ≥30
Cumulative Frequency (%) Frequency (%) LOM (years)
% of Zn &Pb Mines Cumulative Frequency
Santander Caribou / Perkoa Rosh Pinah
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Bolstered Management Team to Further Optimize Stakeholder Returns
Source: Trevali Mining Corp.
Improving Value Per Share Since 2015
▪ Utilizing our balance sheet and cash flow to add incremental production ▪ Building liquidity, reducing net debt, positioning TV for future smart growth ▪ Increased spending on exploration to drive incremental production growth and mine life extensions ▪ Returning cash to shareholders through C$20 million NCIB, further increasing production per share
Building a High-Performance Management Team
▪ Corporate team growth of >100% in the past year ▪ New senior finance team with new CFO and Head of Group Finance ▪ New operating team with new COO announced following Perkoa & Rosh Pinah acquisition. New General Managers at 2 of the 4 mines ▪ Enhanced HSEC team ▪ In-house legal counsel, resource management, HR, corporate development and investor relations capabilities
0.00 0.04 0.08 0.12 0.16 0.20 0.24 0.28 0.32 0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 Net Debt (US$) / Share Production (lb) / Share Zn Prod'n/sh ZnEq Prod'n/sh Net Debt/sh Reduced Net Debt / Share Increased Prod'n / Share
Date Position Person September 2017 Chief Operating Officer Bryant Schwengler June 2018 Chief Financial Officer Gerbrand van Heerden June 2018 Head of Group Finance Daniel Schnurrenberger June 2018 Corporate Manager HSEC Tracey Jacquemin July 2018 VP General Consel & Corp. Secretary Steven Molnar July 2018 VP Mineral Resource Management Yan Bourassa September 2018 SVP Corporate Development & IR Alex Terentiew October 2018 VP Human Resources Joanne Thomopoulos July 2018 General Manager Santander Mine Giovanni Bloise December 2017 General Manager Caribou Mine Hein Frey
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(1) Production guidance constitutes forward-looking information. see “Cautionary Note Regarding Forward-Looking Statements”. (2) Site operating cost per tonne milled and C1 cost per pound of zinc (net of by-products) are non-IFRS measures. See “Non-IFRS Measures”
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Asset diversification to de-risk corporate production
On track to achieve 2018 production guidance (per January 15, 2018)
▪ Caribou – Adverse ground conditions to impact Q4 production and costs, costs YTD higher on use of CRF and additional development. ▪ Santander – Higher costs driven primarily from a weaker Q1 (ball mill maintenance and underground water pumping infrastructure completed). Temporary blockade in Q3 marginally impacted production, with annual guidance maintained. Costs per tonne milled in Q2 and Q3 within guidance. ▪ Rosh Pinah – Production and costs in 1H18 below expectations due to sub-optimal operational practices while training and building new team /
– and going forward. ▪ Perkoa – Production and costs continue to track better-than-expectations on higher mill availability and grades. Production guidance raised twice. ▪ Since 2014 when Santander 1st commenced commercial production, Trevali has exceeded ZnEq production guidance 3 of 4 years. ▪ 2018 production guidance, as announced on January 15, 2018 was 400 – 427 mm lbs Zn.
Source: Trevali Mining Corp.
*2018 guidance mid-point adjusted for 2018A YTD production distribution
63 2.5 0.7 (1.6) 66 1.7 0.72 0.008 0.035 0.010 (0.043) 0.73
Lower end of Zn production guidance as originally stated on January 15, 2018
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Undrawn RCF* $ 119.6 mm Cash $ 93.1 mm
Liquidity at Sept. 30, 2018
*net of $5.9 mm in Letters of Credit $213 mm
As of September 30, 2018:
▪ $93 million in cash & equivalents ▪ $155 million in debt ▪ Net debt of $62 million ▪ $175 million working capital ▪ Rosh Pinah sales made October ▪ Options being evaluated to improve Perkoa concentrate trucking and transport logistics ▪ Total liquidity of $213 million ▪ Amended and increased Credit Facility September 18, 2018 to $275 million
▪ $149.5 million drawn as at September 30, 2018 ▪ Reduces interest payments and provides financial flexibility ▪ No principal repayments required until maturity in September 2022
Source: Trevali Mining Corp. 3Q18 Financial Statements
2.0 3.0 4.0 5.0 6.0 7.0 8.0 50 100 150 200 250
Net Debt / LTM EBITDA (x) US$ mm
Net Debt LTM EBITDA Net Debt / LTM EBITDA
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Over the last 12 months (LTM)
▪ Trevali has invested $145 million in
▪ Repaid $56 million in debt ▪ Net debt improved by $34 million ▪ Increased ownership in Rosh Pinah, a Tier 1 zinc deposit, by 10% for $23 million ▪ Invested $10 million on exploration to increase resources and extend mine lives
▪ Zinc prices have declined by 21% ▪ Cash position largely unchanged
Subsequent to quarter end
▪ Repaid $9 million in finance leases ▪ Reducing concentrate inventory at Rosh Pinah with 25,472 DMT sold in October ▪ Initiated C$20 million NCIB
Source: Trevali Mining Corp.
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Share Capital: (as of November 23, 2018, C$0.46/share) Shares issued/outstanding: 830 million Shares fully diluted: 834 million Market Capitalization: C$382 million Cash Position:
Debt Outstanding:
Major Shareholders:
Glencore PLC 25.4% Blackrock 5.9% Wellington 4.1% CI Investments 2.4% Oppenheimer Funds 2.3% Total Institutional Ownership (ex-Glencore): ~40%
TSX:TV BVL(Lima):TV US-OTCQX: TREVF
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Benefits of the Glencore Relationship
Access to Glencore Technical Services
metallurgist, technology
Supply chain / logistical support as required Long-term & supportive shareholder (partner since 2010 and shareholder since 2012)
*The above estimates and multiples are based on consensus estimates compiled by S&P Capital IQ. Trevali does not, by any reference, imply any endorsement of, or concurrence with, such information, conclusions or recommendations. Trevali does not distribute research reports.
Source: Capital IQ consensus estimates
0.0 1.0 2.0 3.0 4.0 5.0 6.0
2019E P/CF (x)
TSX:TECK.B TSX:LUN TSX:HBM TSX:TV TSX:TI NYSE:NEXA TSX:CMMC TSX:ASND TSX:CS TSX:TKO 0.2 0.3 0.4 0.5 0.6 0.7
2.00 3.00 4.00 5.00 6.00
P/NAV (x) 2019E EV/EBITDA (x)
TSX: TV | www.trevali.com Location Burkina Faso (150 km west of Ouagadougou) Ownership 90% Trevali, 10% Government of Burkina Faso Type of deposit Volcanogenic Massive Sulphide (VMS) Mining Underground - Transversal and retreat Processing Concentrator plant with crushing, milling, flotation, thickening and filtration End product Zn concentrate Infrastructure 2,000 tpd underground mining operation and processing mill Current mine life 5 years; remains open, drilling ongoing
Perkoa Mine
Primary metal
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TSX: TV | www.trevali.com Category Tonnes Zn (%) Proven Reserves 2,290,000 13.9 Probable Reserves 1,040,000 11.1 Proven and Probable Reserves 3,330,000 13.1 Measured Resources 2,630,000 15.7 Indicated Resources 2,220,000 11.4 Measured and Indicated Resources 4,850,000 13.7 Inferred Resources 680,000 8.9
See “Cautionary Note Regarding Mineral Reserves and Mineral Resources” for additional information on the mineral reserves and mineral resources in above table. Proven & Probable Reserves included in Measured & Indicated Resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
(1) 2017 production is full year production. Trevali acquired ownership (90%) of Perkoa as of Aug 31, 2017. (2) Production guidance constitutes forward-looking information. see “Cautionary Note Regarding Forward-Looking Statements”. (3) Site operating cost per tonne milled and C1 cost per pound of zinc (net of by-products) are non-IFRS measures. See “Non-IFRS Measures”
Reserves and Resources (as of Dec. 31/2017) 2017 Production(1) (100% basis)
2018 production guidance(2) (100% basis)
Site operating costs US$103-113/tonne
zinc (net of by-products)(3)
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Highlights
➢ Current mine life of 5 years ➢ Remains open and actively drilling ➢ 2018 Zn production guidance raised twice ➢ On track to exceed 2017 production ➢ HFO project on budget and schedule ➢ Exploration team established
1.47 billion lbs contained Zn (in measured & indicated resources - as of Dec. 31/2017)
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Perkoa Mine: Value Add
results up to 320m below the current modelled mining level
PUX016: 18.3m at 13.2% Zn, incl. 6.75 metres at 18.78% Zn-
to increase inferred resources
Regional: Value Creation
Two New VMS systems identified:
(Matagami, Flin Flon, Noranda, etc.; approx. 40-100 million- tonne endowments)
system then Perkoa – requires drill testing
discovered
Map showing areas worked in Q3 and drill targets planned during Q4 Hangingwall Lens Long Section
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TSX: TV | www.trevali.com Location Bathurst Mining Camp, New Brunswick, Canada Ownership 100% Trevali Type of deposit Volcanogenic Massive Sulphide (VMS) Mining Underground - Modified Avoca (cut-and-fill) Processing Concentrator plant with crushing, milling, flotation, thickening and filtration End product Zn concentrate and Pb-Ag concentrate Infrastructure 3,000 tpd processing mill; 2,600-2,700 tpd underground mining operation Current mine life 6 years; remains open, drilling ongoing
CANADA NEW BRUNSWICK
Primary metal
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Caribou Mill and Mine
By-product metals
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See “Cautionary Note Regarding Mineral Reserves and Mineral Resources” for additional information on the mineral reserves and mineral resources in above table.
Reserves and Resources (as of Dec. 31/2017) 2017 Production
79.9 million payable lbs Zinc 30.9 million payable lbs Lead 890,300 payable ozs Silver
2018 production guidance(1)
(1) Production guidance constitutes forward-looking information. see “Cautionary Note Regarding Forward-Looking Statements”. (2) Site operating cost per tonne milled and C1 cost per pound of zinc (net of by-products) are non-IFRS measures. See “Non-IFRS Measures”
70-75 million payable lbs Zinc 23-25 million payable lbs Lead 627,000-658,000 payable ozs Silver
Site operating costs US$63-69/tonne milled. C1 cost of US$0.68-0.74 per lb zinc (net of by- products)(2)
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Category Tonnes Zn (%) Pb (%) Ag(g/t) Cu (%) Proven Reserves 2,620,000 5.8 2.1 64.3 0.35 Probable Reserves 2,480,000 5.9 2.2 62.1 0.39 Proven & Probable Reserves 5,110,000 5.8 2.2 63.2 0.37 Measured Resources 5,870,000 6.1 2.3 67.0 0.37 Indicated Resources 3,030,000 6.1 2.3 70.0 0.39 Measured & Indicated Resources 8,890,000 6.1 2.3 68.0 0.38 Inferred Resources 7,000,000 5.7 2.1 65.0 0.30
Highlights
➢ Current mine life of 6 years ➢ Remains open and actively drilling ➢ Advancing life of mill strategy
1.2 billion lbs contained Zn (in measured & indicated resources - as of Dec. 31/2017)
Resource Tonnes Zn % Pb % Cu % Ag (g/t) Au (g/t) Indicated 4,700,000 5.31 2.07 0.41 48.5 0.6 Inferred 2,400,000 4.76 2.07 0.70 38.8 0.4 Resource Tonnes Zn % Pb % Cu % Ag (g/t) Au (g/t) Measured 400,000 5.92 1.99 0.46 40 0.6 Indicated 7,400,000 7.00 2.37 0.16 35 0.3 Measured & Indicated 7,800,000 6.94 2.35 0.18 36 0.3 Inferred 6,500,000 5.62 1.51 0.15 23 0.1
Six VMS Deposits Providing Optionality and Long-term Feed to the Caribou Mill
Restigouche
*Based on a Mine Plan Reopening Report dated March 2009 and prepared by CSI Mining and Engineering, for Blue Note Metals Inc. Historic resource estimate is based on 236 diamond drill holes and past open pit production, using a 7% lead+zinc cut-off grade. Gold was not estimated. These resources should be viewed as historic and neither the Canadian Securities Administrators nor the US Securities and Exchange Commission recognize the reporting of historic resources, they are considered conceptual in nature. It cannot be assumed that all or any part of historic geological resources will ever be upgraded to a higher category. **Historic reserve estimate is based on 1998 Noranda internal Heath Steele Mines report. These reserves should be viewed as historic and neither the Canadian Securities Administrators nor the US Securities and Exchange Commission recognize the reporting of historic reserves/resources, they are considered conceptual in nature. It cannot be assumed that all or any part of historic geological reserves/resources will ever be upgraded to a higher category. See “Cautionary Note Regarding Mineral Reserves and Mineral Resources” for additional information on the mineral reserves and mineral resources in above tables. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Heath Steele
Category Tonnes Zn% Pb% Cu% Ag (g/t) Historic Resources Remaining* 861,882 7.07 5.25 0.33 78 Past Production 1997 198,000 6.6 5.34 127 Past Production 2008 557,978 6.4 4.7 100 Category Tonnes Zn% Pb% Cu% Ag (g/t) Historic Proven & Probable Reserves** 743,434 5.11 2.18 1.16 91.5 Historic Possible Reserves** 292,530 4.02 1.49 1.36 67.0
Halfmile (fully permitted mine) Stratmat
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Resource Tonnes Zn % Pb % Cu % Ag (g/t) Au (g/t) Measured 3,681,000 5.57 1.87 0.36 70.5 0.56 Indicated 1,603,000 4.48 1.63 0.70 65.3 0.88 Measured & Indicated 5,284,000 5.24 1.80 0.46 68.9 0.65 Inferred 125,000 2.58 0.92 2.16 47.3 0.54
Murray Brook(1)
(1) Letter of Intent to enter option agreement to earn 75% interest from Puma Exploration. Resources estimates based on Puma Exploration NI 43-101 report filed on SEDAR February 20, 2017.
3.5 billion lbs contained Zn (in measured and indicated resources - as of Dec. 31/2017)
*Conceptual plan based on potential of continued utilization of the Caribou Mill Complex to process mineral feed from Trevali’s other projects and deposits in the Bathurst Mining Camp beyond the operating life of the Caribou underground mine. Subject to additional engineering studies, permitting and operating plans.
Conceptual Bathurst Mining Camp Life of Mill Strategy
Halfmile / Stratmat Caribou Murray Brook Restigouche
TSX: TV | www.trevali.com Location
Namibia (600 km south of Windhoek)
Ownership
90% Trevali, 10% Namibian Empowerment Partners
Type of deposit
Sediment hosted
Mining
Underground – Sub-level open stoping
Processing
Concentrator plant with crushing, milling, flotation, thickening and filtration
End product
Zn concentrate and Pb-Ag concentrate
Infrastructure
2,000 tpd underground mining operation and processing mill
Current mine life
12 years; remains open, drilling ongoing
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Rosh Pinah Mine
AFRICA NAMIBIA
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Primary metal By-product metals
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Reserves and Resources (as of Dec. 31/2017) 2017 Production(1) (100% basis)
88.2 million payable lbs Zinc 14.5 million payable lbs Lead 239,572 payable ozs Silver
2018 production guidance(2) (100% basis)
95-105 million payable lbs Zinc 5.7-6.0 million payable lbs Lead 123,000-129,000 payable ozs Silver
Site operating costs US$49-54/tonne milled. C1 cost of US$0.55-0.60 per lb zinc (net of by- products)(3)
Category Tonnes Zn (%) Pb (%) Ag(g/t) Proven Reserves 2,660,000 9.1 1.3 18 Probable Reserves 5,080,000 6.8 1.4 20 Proven and Probable Reserves 7,740,000 7.6 1.4 20 Measured Resources 4,370,000 8.5 1.9 27 Indicated Resources 6,400,000 7.3 1.5 24 Measured and Indicated Resources 10,760,000 7,8 1.7 25 Inferred Resources 3,000,000 6.5 1.1 31
See “Cautionary Note Regarding Mineral Reserves and Mineral Resources” for additional information on the mineral reserves and mineral resources in above table. Proven & Probable Reserves included in Measured & Indicated Resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
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(1) 2017 production is full year production. Trevali acquired ownership (80%) of Rosh Pinah on Aug 31, 2017. In Q2-2018, Trevali increased its interest to 90%. (2) Production guidance constitutes forward-looking information. see “Cautionary Note Regarding Forward-Looking Statements”. (3) Site operating cost per tonne milled and C1 cost per pound of zinc (net of by-products) are non-IFRS measures. See “Non-IFRS Measures”
Highlights
➢ Current mine life of 12 years ➢ Remains open and actively drilling ➢ Zn recoveries increased 4% YoY ➢ On track to exceed 2017 Zn production
1.85 billion lbs contained Zn (in measured & indicated resources - as of Dec. 31/2017)
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Value Add - Western Orefield Resource Extension Drilling:
program undertaken until now.
define the emerging NW extension in the Western Orefield.
potential to discover new extensions.
Value Recognition and Creation:
accountability, and operational tracking
stopes currently with 1 rig
and an improved understanding of the deposit
200m
EXT – WF3 WF3
EF1
POTENTIAL EXT - EF1
SF1
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TSX: TV | www.trevali.com Location
Peru (approx. 200 km northeast of Lima)
Ownership
100% Trevali
Type of deposit
Carbonate Replacement Deposit (CRD)
Mining
Underground - Modified Avoca (cut-and-fill)
Processing
Concentrator plant with crushing, milling, flotation, thickening and filtration
End product
Zn concentrate and Pb-Ag concentrate
Infrastructure
2,000 tpd underground mining operation and processing mill
Current mine life
3 years; remains open, drilling ongoing
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Primary metal By-product metals
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2017 Production
53.1 million payable lbs Zinc 10.5 million payable lbs Lead 602,700 payable ozs Silver
2018 production guidance(1)
55-58 million payable lbs Zinc 11-12 million payable lbs Lead 654,000-687,000 payable ozs Silver
Site operating costs US$38-42/tonne milled. C1 cost of US$0.49-0.53 per lb zinc (net of by- products)(2)
Reserves and Resources (as of Dec. 31/2017)
See “Cautionary Note Regarding Mineral Reserves and Mineral Resources” for additional information on the mineral reserves and mineral resources in above table. Proven & Probable Reserves included in Measured & Indicated Resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
23
(1) Production guidance constitutes forward-looking information. see “Cautionary Note Regarding Forward-Looking Statements”. (2) Site operating cost per tonne milled and C1 cost per pound of zinc (net of by-products) are non-IFRS measures. See “Non-IFRS Measures”
Category Tonnes Zn (%) Pb (%) Ag(g/t) Proven Reserves 460,000 3.8 0.8 26 Probable Reserves 1,460,000 4.6 0.7 32 Proven and Probable Reserves 1,930,000 4.4 0.8 31 Measured Resources 1,057,558 4.2 0.8 27 Indicated Resources 1,930,033 5.1 0.9 38 Measured and Indicated Resources 2,987,591 4.8 0.8 34 Inferred Resources 3,080,000 5.1 0.5 32 Category Tonnes Zn (%) Pb (%) Ag(g/t) Inferred Resources 10,100,000 4.1 0.2 15 Magistral North, Central, South Orebodies: Santander Pipe Deposit:
Highlights
➢ Current mine life of 3 years ➢ Remains open and actively drilling ➢ Mining & milling rates above design ➢ On track to exceed 2017 Zn production
314 million lbs contained Zn (in measured & indicated resources - as of Dec. 31/2017)
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Value Add:
deposit extensions approximately 350m below current development.
mineralization and associated geophysical anomalies
Value Recognition and Creation:
with potential for polymetallic replacement and vein type mineralization
explored and recent geophysical and geochemical surveys have defined several high priority targets Magistral Sur
Magistral Section looking West HG Pipe Section looking North
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Rosh Pinah Deposit Bathurst Mining Camp Santander CRD System Perkoa VMS Belt Trevali Exploration Update
25
Tier One Zn deposit (tonnage/grade) in an underexplored major Zn district. Ongoing underground exploration continues to extend the Western Orefield. In-mine and regional discovery drill program has commenced. Control 6 deposits in one of the world’s larger VMS Districts. Unlocking the project pipeline to provide +20 years of mine to mill strategy. Caribou resource expansion drilling continue to add new inferred resources. Unlocking potential of the system – discover high grade tonnes. Pipe – multiple high grade Zn-Cu lenses intersected and continuing to extend the high-grade targets at depth. Multiple targets identified with potential for Zn–Pb–Ag replacement and porphyry Cu style mineralization. Perkoa resource expansion drilling continued to extend high-grade zinc hangingwall. Continue to test the depth and lateral extents of Perkoa system - two new target horizons identified. Two new VMS systems identified regional – drilling in progress ➢ Aim is to expand and discover new mineral resources adjacent to existing mine infrastructure, replace mined inventory, grow sustainable production, extend expected mine life and ultimately, contingent on success, provide production growth optionality to the operations. ➢ Exploration drilling at Trevali’s four mines totaled approximately 25,000 metres during Q3 - 2018. ➢Proven exploration team – lower quartile discovery costs providing strong leverage for generating shareholder value. ➢All deposits remain open for expansion – drives increased Life Of Mines (LOM) - ~60,000m committed brown-field (low risk) drill campaign in progress.
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PRESIDENT & CEO Base metal deposit specialist with over 20-years project experience from exploration and resource definition to permitting and production in Europe and the America’s on behalf of Pasminco Exploration, Anglo American and TSX-listed companies. Co-founded Trevali in 2007 to position the Company for anticipated global Zn deficits.
Bryant Schwengler
CHIEF OPERATING OFFICER 17 years of experience in a variety of roles including senior management positions in both underground and open-pit mining operations. Bryant commenced his career with Mount Isa Mines Ltd at Ernest Henry Mine (Cu-Au), then transitioned to Xstrata Zinc and ultimately Glencore at the world-class Mt Isa Zinc
in early 2016.
Paul Keller, P.ENG.
SVP MAJOR PROJECTS & TECHNICAL SUPPORT 30 years of mine operations experience in Canada and Peru. Paul began his career with Rio Algom and has also worked in various management roles with Barrick Gold's Hemlo mine in
engineering and maintenance.
Steve Molnar
VP GENERAL COUNSEL & CORPORATE SECRETARY Joined Trevali from McCarthy Tetrault LLP, where he practiced corporate and securities law with a focus on the mining industry.
Gerbrand Van Heerden
CHIEF FINANCIAL OFFICER 18 years experience in the finance and mining industry. Gerbrand began his career at Deloitte and has worked at Metorex Limited as Group Financial Controller and moved to senior management positions there prior to joining Rosh Pinah Zinc Corp. as CFO in
Institute of Chartered Accountants of South Africa and a Chartered Professional Accountant in British Columbia (CPABC)
Alex Terentiew
SVP CORPORATE DEVELOPMENT & INVESTOR RELATIONS Joined from BMO Capital Markets, where he was a top-ranked analyst, covering the base metals sector and providing research papers
and commodity research.
Steve Stakiw
VP IR/CORPORATE COMMUNICATIONS Over 25 years of geology/mining industry and research/finance market experience and has held a senior management role with a leading mining research and investment publication.
Daniel Marinov
VP OF EXPLORATION Over 24 years of international experience in exploration and underground mining, and has held senior management roles with Rio Tinto and Anglo American (including project manager at Anglo's Michiquillay porphyry Cu- Au-Mo deposit in Peru).
Yan Bourassa
VP MINERAL RESOURCE MANAGEMENT Geologist with 20 years of experience in the resource industry in Africa and the Americas, whose experience ranges from exploration to
Mike Hoffman, CHAIRMAN
Over 35 years global mine development experience including Vice President at Yamana Gold, Desert Sun and Goldcorp, and is on the Board of Eastmain Resources and a Director of Havilah Mining.
Chris Eskdale
Global Head Industrial Zinc for Glencore Plc.
Dan Myerson
Manages Glencore's Canadian zinc business.
Anton Drescher
Certified Management Accountant with extensive public company board and officer experience
Russell Ball
Past Executive VP, CFO and Corporate Development
Goldcorp Inc. Previously Strategic and Business Planning, Executive VP and CFO with Newmont Mining Corporation. He is both a Chartered Accountant from the Institute of Chartered Accountants of South Africa and a Certified Public Accountant in Colorado.
Jessica McDonald
Chair of Canada Post Corporation. Recently President & CEO of BC Hydro. Previous roles include Executive VP at HB Global Advisors Corp, positions in the British Columbia provincial government including Deputy Minister to the Premier, Cabinet Secretary, and Head of the BC Public Service.
Dan Isserow
Past President & CEO of major Canadian restaurant franchise. Currently the Co-Founder, President and CFO of company focused on the expanding market for digital sign applications. He is a Chartered Accountant from the Institute of Chartered Accountants of South Africa.
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Zinc: Demand and Supply – Continued Strong Fundamentals
Forecast 1-2% per year through 2022
Global Zinc Demand Increase
US-China trade war, concerns on global growth rates and rising interest rates weighing on demand expectations. Yet demand growth remains positive.
Zinc Supply Remains Constrained
limited mine and refined supply growth for two years
will grow rapidly (15-20%) in 2019. Given Chinese refined supply ↓ 3.1% YTD, a tighter market and higher prices could materialize.
tonnes/year
Strong zinc prices
Disconnect between current pricing environment & supply Forecast of continued strong zinc prices in reaction to ongoing near- term refined metal supply deficits
US$1.33/lb
US$2,923/tonne
2018
US$1.47/lb
US$3,250/tonne
2019
US$1.28/lb
US$2,820/tonne
LONG-TERM
Wood Mackenzie zinc price forecasts:
27
Source: Wood Mackenzie research
US$1.60/lb
US$3,525/tonne
2020
Source: Bloomberg $- $0.50 $1.00 $1.50 $2.00 $2.50 500,000 1,000,000 1,500,000 2,000,000 Zinc Price (US$/lb) Zinc Inventory Levels (tonnes) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Current Data Point
Current Data Point
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$26 $5
$0 $5 $10 $15 $20 $25 $30
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
Global Stocks <100K mt Global Stocks <200K mt Global Stocks >500K mt Global Stocks >1000K mt
3m price, $/mt
Historically fair prices for Zinc and spreads at certain stock levels
Zinc Average Cash-3m spread Average
Source: Bloomberg, Scotiabank GBM and Scotiabank Commodity Derivatives
Zinc: Low Stocks, Strong Backwardation, a Tight Market Highest Backwardation in 12 years
Highest in 12 years.
normally >$3,000/t. Currently ~$2,600/t.
Zinc Market Participation Rates Low
sitting on the sidelines.
grow as expected.
Consensus is Cautious
conservative outlook for Zn prices
however, that Zn is undervalued, and price risk is to the upside
US$1.34/lb
US$2,954/tonne
2018
US$1.25/lb
US$2,756/tonne
2019
US$1.14/lb
US$2,513/tonne
LONG-TERM
Consensus zinc price forecasts:
28
Source: Wood Mackenzie research
US$1.20/lb
US$2,646/tonne
2020
Stocks currently at 164 kt and backwardation >$80/t
7,400,000 8,600,000 9,800,000 11,000,000 12,200,000 13,400,000 $1,400 $1,800 $2,200 $2,600 $3,000 $3,400 2013-11-18 2014-11-18 2015-11-18 2016-11-18 2017-11-18 2018-11-18
Zinc Participation; at cyclical lows
Zinc, $/mt (LHS) LME + SHFE Aggregate OI, mt (RHS)
Source: LME, Scotiabank GBM and Scotiabank Commodity Derivatives, Bloomberg
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Zinc: Growing Market/New Uses
(Agriculture, Batteries, Renewable Power)
14 million tonnes
consumed annually. Demand is forecast to increase by 1- 2% per year through 2022. APPROX 40%
Utilized in die-casting, production of brass and bronze, and into oxides and chemicals. Galvanizing 59% Brass/Bronze 11% Zinc diecast alloys 13% Zinc chemicals 9% Zinc Semis 5%
APPROX 60%
Utilized for its corrosion resistance (galvanized steel, rebar, autos, structural steel) Other 2%
Initiatives propelling new potential uses
Zinc nutrient/fertilizer applications Zinc fertilizer can both significantly increase crop yield and boost nutrient value. Zinc Nutrient Initiative and Zinc Saves Kids programs spearheading new, significant uses. Zinc battery technology Advances in renewable grid power storage applications and fuel cells. Zinc is a highly stable metal, has excellent power density and is sustainable.
Zinc is an excellent anti-corrosion metal, is difficult to substitute and typically forms a minor cost component in its applications.
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Source: International Zinc Association; Zinc.org
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30
(1) Q3-2017 and nine months September 30, 2017 consolidated production and sales include only September for Rosh Pinah and Perkoa. Trevali acquired the Perkoa and Rosh Pinah mines on August 31, 2017. (2) Please refer to non-IFRS Measures in the Cautionary Note Regarding Forward-Looking Statements at the end of this news release and in Trevali’s September 30, 2018 Management’s Discussion and Analysis. (3) Revenues include effects of settlement adjustments on sales from prior quarters and is calculated on a 100% basis.
Q3-2018 Q3-2017 2018 2017 Revenues (US$ mm) 30.5 64.4 279.2 141.8 Income from mining operations (US$ mm) (34.2) 28.4 48.5 48.2 Net income (US$ mm) (30.8) (7.8) 21.2 (4.9) Basic income (loss) per share (US$/share) (0.04) (0.01) 0.02 (0.01) Q3-2018 Q3-2017 2018 2017 Tonnes mined (kt) 652,904 552,385 2,250,284 1,295,140 Tonnes milled (kt) 753,122 567,552 2,317,271 1,431,774 Payable production Zinc (lbs) 101,593,542 58,425,056 304,224,094 120,320,433 Zinc (t) 46,082 26,501 137,994 54,576 Lead (lbs) 9,158,996 12,474,379 31,986,971 32,370,137 Lead (t) 4,154 5,658 14,509 14,683 Silver (ozs) 306,678 433,442 976,056 1,164,608 C1 cash cost (US$/lb payable Zn) 0.72 0.53 0.73 0.61 All-in sustaining cash cost (US$/lb payable Zn) 0.87 0.75 0.88 0.80 Site cash operating cash cost (US$/t milled) 67 54 66 51 Q3-2018 Q3-2017 2018 2017 Zinc concentrate (dmt) 84,264 49,346 306,853 119,869 Lead concentrate (dmt) 9,079 13,835 35,447 38,816 Payable sales Zinc (lbs) 75,512,580 43,892,815 279,223,613 105,115,820 Zinc (t) 34,252 19,909 126,654 47,680 Lead (lbs) 8,089,924 12,068,528 29,206,857 31,605,312 Lead (t) 3,670 5,474 13,248 14,336 Silver (ozs) 281,196 434,418 932,399 1,142,631 Three months ended 2018 YTD
Consolidated Production Results Summary Financial Results Consolidated Sales Results
Three months ended 2018 YTD Three months ended 2018 YTD
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Appendix – Provisional Pricing
31 The decline in zinc prices in 2018 (↓19% YTD), along with sales volume volatility, significantly impacted final concentrate sale settlement prices ▪ Provisional pricing reflects two components:
1) Final settlement of sales (sales that have closed and are no longer open to adjustment) 2) Mark-to-market of open contracts that have not yet settled
▪ Provisional pricing sensitivity will vary quarter to quarter and depends on numerous factors, including:
▪ Quantity of metal provisionally priced (96.3 mm lbs Zn at $1.10/lb and 5.1 mm lbs Pb at $0.93/lb, as of Sept. 30, 2018) ▪ Final timing of settlements for each of the four mines ▪ Settlement periods generally range from one to six months after shipment ▪ Actual zinc price movements throughout the quarter ▪ Settlement price is at average LME for the month of settlement ▪ 3-month forward average zinc price for the last month in the quarter (mark-to-market pricing adjustment) ▪ Quantity of other Zn sales made during the quarter, which impacts the mark-to-market quantity
Source: Trevali Mining Corp.
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Cautionary Note Regarding Mineral Reserves and Mineral Resources:
32
Scientific and technical information contained in this presentation was reviewed and approved by EurGeol Dr. Mark D. Cruise, TV's President and Chief Executive Officer, and a “qualified person” as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). Dr. Cruise is not independent of TV as he is an officer, director and shareholder of TV. Certain technical information in this presentation was derived from the following technical reports of Trevali in respect of the Perkoa, Caribou, Rosh Pinah, and Santander mines: 1. The technical report entitled “Technical Report on the Perkoa Mine, Burkina Faso” dated April 12, 2018 as prepared by Roscoe Postle Associates Inc. and by “qualified persons” Torben Jensen, P.Eng., Ian T. Blakley, P.Geo., EurGeol, Tracey Jacquemin, Pr.Sci.Nat., and Avakash A. Patel, P.Eng. (the “Perkoa Technical Report”); 2. The technical report entitled “Technical Report on the Caribou Mine, Bathurst, New Brunswick, Canada” dated May 31, 2018 as prepared by Roscoe Postle Associates Inc. and by “qualified persons” Torben Jensen, P.Eng., Ian T. Blakley, P.Geo., EurGeol, Tracey Jacquemin, Pr.Sci.Nat., and Shaun C. Woods, P.Eng. (the “Caribou Technical Report”); 3. The technical report entitled “Technical Report on the Rosh Pinah Mine, Namibia” dated May 1, 2018 as prepared by Roscoe Postle Associates Inc. and by “qualified persons” Torben Jensen, P.Eng., Ian T. Blakley, P. Geo., EurGeol, Tracey Jacquemin, Pr.Sci.Nat., and Avakash A. Patel, P.Eng. (the “Rosh Pinah Technical Report”); and 4. The technical report entitled “Mineral Reserve Estimation Technical Report for the Santander Zinc Mine, Province de Huaral, Peru” dated March 31, 2017 as prepared primarily by SRK Consulting (Canada) Inc. and SRK Consulting (Peru) S.A. and by “qualified persons” Benny Zhang, P.Eng., Gary Poxleitner, P.Eng., Gilles Arseneau, P.Geo., Leonard Holland, C.Eng., and David Maarse (the “Santander Technical Report”). The Technical Reports are available on the SEDAR profile of TV at www.sedar.com. Additionally, where TV discusses exploration/expansion potential herein, any potential quantity and grade is conceptual in nature and there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
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Cautionary Note to U.S. Investors:
33
Unless otherwise indicated, all mineral resource and mineral reserve estimates disclosed in this presentation have been prepared in accordance with NI 43-101 of the Canadian Securities Administrators. The definitions used in NI 43-101 are incorporated by reference from the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards for Mineral Resources and Mineral Reserves adopted by the CIM Council on May 10, 2014. Disclosure standards under NI 43-101 differ in material respects from the requirements of the United States Securities and Exchange Commission (the “SEC”), and reserve and resource information included on this Website may not be comparable to similar information concerning U.S. companies. Under SEC Industry Guide 7, mineralization may not be classified as a "reserve" unless the determination has been made that is “part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination”. In addition, the term “resource” does not equate to the term “reserve”. While the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are recognized and required to be disclosed by NI 43-101, the SEC does not recognize them. You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, you are cautioned not to assume that all
higher category. Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into mineral reserves. Accordingly, information concerning descriptions of any mineral deposits, mineralization and resources on this Website may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC.
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Trevali Mining Corporation
Suite 1400-1199 West Hastings Street Vancouver, BC, V6E 3T5, CANADA Tel: 1-604-488-1661 Fax: 1-604-629-1425 www.trevali.com
A member of the
Steve Stakiw
Vice President, Investor Relations and Corporate Communications sstakiw@trevali.com Direct phone:1-604-638-5623