Trevali Mining Corporation ("Trevali" or the "Company")
(TSX:TV)(TSX:TV.WT)(OTCQX:TREVF)(LMA:TV)(FRANKFURT:4TI) is pleased
to announce that it has completed the acquisition of Maple Minerals
Corporation ("Maple"), a private New Brunswick incorporated
company, that owns the 3,000 tonne-per-day Caribou mill and mine
complex located in the Bathurst Mining Camp of northern New
Brunswick (herein, the "Transaction").
Pursuant to the terms of a combination agreement dated May 14,
2012, a wholly-owned subsidiary of Trevali, Trevali Mining (New
Brunswick) Ltd., and Maple have amalgamated in a three cornered
amalgamation with Trevali, and Trevali has issued to the former
shareholders of Maple 20,000,010 common shares of Trevali and
3,999,986 common share purchase warrants with each warrant
exercisable at $2.00 per share for one year following the closing
date ("Closing") of the Transaction. Based on the closing price of
Trevali on the Toronto Stock Exchange ("TSX") on November 2, 2012,
the Transaction implies an acquisition price of approximately $22
million for Maple. Trevali shares issued under the Transaction are
subject to a lock-up agreement and the former principal
shareholders of Maple receiving Trevali shares are also subject to
voting support and stand-still agreements (see Transaction
Details).
"We are extremely pleased to complete the acquisition of this
highly strategic asset as we continue to consolidate our position
within the Bathurst Mining Camp. The modern Caribou Mill provides
Trevali with a cost-effective, fast-track milling solution for our
New Brunswick operating unit, and it positions the Company to
maximize shareholder value in light of anticipated near-term global
zinc deficits," stated Dr. Mark Cruise, Trevali's President and
CEO. "We look forward to continued positive relationships with the
Province of New Brunswick and our Mi'gmag First Nation partners in
order to expand Trevali's operations in a timely and responsible
manner. As stated previously, subject to receipt of all necessary
approvals and permits, Trevali is confident that it can quickly
provide an additional 120-150 initial full-time employment
positions in a short-timeframe as well as expand upon our very
successful First Nations Underground Core Mining Training Program.
Medium-to-longer term, the Company hopes to be in a position to
provide 400-450 full-time positions within the region."
HIGHLIGHTS OF THE ACQUISITION
-- Provides Trevali with a modern, state-of-the-art 3,000 tonne-per-day
processing plant (that will produce zinc, lead and copper concentrates)
and includes a metallurgical and geochemical laboratory and permitted
tailings treatment facility (Figures 1 and 2).
-- Addition of a former producing mine with significant underground
development workings and historic resources that can be rapidly and cost
effectively brought on-line. The deposit remains open for expansion and
Trevali classifies the upside potential as good to excellent: the
deepest underground intercept to date returned 34.77 metres at 7.22%
zinc, 2.69% lead, 0.25% copper, 76.8 g/t silver and 2.19 g/t gold.
-- Very significant financial, technical and timing advantages/de-risk
versus permitting and building a new stand-alone milling complex for the
Company's Halfmile and Stratmat deposits.
-- Preferable from a social and sustainability perspective - near-term
creation of an additional 120-150 full-time employment positions,
establishing Trevali as one of the larger employers in northern New
Brunswick, and utilization of a working brown-field industrial site
versus a green-field site.
-- Due to superior quality of the Halfmile-Stratmat mineralization (coarser
mineralogy with good metallurgical characteristics), modeling of the
mill grinding circuit indicates it is readily modifiable to produce
saleable zinc, lead (silver) and copper (gold) concentrates.
-- Near optimal timing from a production scheduling perspective for the
Company to benefit from predicted significant zinc deficits as Brunswick
12 shuts-down followed by closures of several other globally significant
marque zinc producers in Europe, Africa and Austral-Asia.
-- Further strengthens and confirms Trevali's position as a near-term
intermediate zinc producer.
To view Figure 1, please visit the following link:
http://media3.marketwire.com/docs/trefig1.pdf.
CARIBOU DEPOSIT
A 2006 historic resource estimate by the previous operator at
Caribou tabled significant resources in the deposit (Table 1).
Trevali plans to undertake an updated National Instrument 43-101
(NI 43-101) compliant resource estimate for the Caribou
polymetallic deposit in early 2013.
----------------------------------------------------------------------------
Caribou Historic % % Ag Zn Pb Ag
Resources(i) Tonnes Zn Pb (gpt) (Mlbs) (Mlbs) (Moz)
----------------------------------------------------------------------------
Contained Metal
----------------------------------------------------------------------------
Indicated
Resources 3,810,000 7.5 3.26 92 629 273 11.2
----------------------------------------------------------------------------
Inferred Resources 3,944,300 7.36 3.59 107 639 312 13.5
----------------------------------------------------------------------------
Table 1: Historic Caribou deposit resources(i) based on a 2006
NI 43-101 report dated January 30, 2006 prepared by InnovExplo Inc
(and reviewed by Micon International Limited in its technical
report dated March 23, 2006) for Blue Note Metals Inc. Historic
resource estimate is based on 554 diamond drill holes and 6,000
chip samples and using a 9% lead+zinc cut-off grade. Copper and
gold were not estimated.
(i)Note: The Company cautions that although the 2006 resource
estimate was calculated under NI 43-101 regulations, it is not
treating such estimates as a current resource under NI 43-101.
Investors are further cautioned that a qualified person has not yet
completed sufficient work to be able to verify the historical
resource estimates, and therefore such historic resource estimates
should not be relied upon.
Between 2006 and 2007, the previous operator of the Caribou mill
and mine complex invested approximately $100-to-120 million in a
major overhaul and modernization of the processing plant and mine
infrastructure (effectively new state-of-the-art milling and
grinding circuits - Isa Mills and On-Stream analysers to optimize
recoveries) (Figure 1). The mine operated for approximately 13
months prior to going into receivership in 2008 due to depressed
commodity prices and adverse global financial conditions.
Immediately prior to shut down, mill records indicate recoveries
of 71% Pb and 83% Zn to produce saleable concentrates. Historically
no copper concentrates were produced, which represents additional
near-term upside as Trevali intends to add a copper circuit to the
processing plant.
Trevali believes that the historically defined deposit contains
excellent exploration potential and production can be fast-tracked
to provide additional mill-feed (and employment opportunities).
Specific upside includes:
-- Historically defined deposit remains open along strike and at depth;
-- Silver and gold may be under-estimated by up to 20-30% as there was no
routine precious metal analysis in historic drill holes; and
-- Significant copper 'feeder' zones were not mined due to lack of a copper
circuit. A historic non- NI 43-101 resource(ii) for one such near-
surface zone suggests that it could contain 2.5 million tonnes at 0.89%
copper, 3.2% zinc, 1% lead and 40 g/t silver within which significant
higher grade zones occur.
(ii)The Company cautions again, however, that the foregoing is
historical in nature and that more work is required in order to define a
NI 43-101 resource. As previously stated, Trevali plans to undertake an
updated NI 43-101 compliant resource estimate for the Caribou
polymetallic deposit in early 2013.
To view Figure 2, please visit the following link:
http://media3.marketwire.com/docs/trefig2.pdf.
SPROTT BRIDGE LOAN FACILITY
In order to facilitate the closing of the Maple transaction,
Trevali and Sprott Resource Lending Partnership ("Sprott") have
amended the $10-million bridge-loan credit facility agreement
announced on August 15, 2012, increasing it to $16-million under
similar terms. The additional proceeds were used to redeem Maple's
$6 million debenture issued earlier this year to Breakwater
Resources Ltd. (Nyrstar). In connection with Sprott's advance of an
additional $6 million to Trevali, Sprott received a $60,000
structuring fee and 158,127 common shares as a bonus.
Trevali and RMB Resources continue to make progress on securing
a $60-million senior, corporate-level debt facility in order to
support the Caribou Mill re-start. It is anticipated that upon
completion of such a senior-debt facility, that Trevali will repay
the $16 million Sprott bridge credit facility in full.
TRANSACTION DETAILS
As previously announced, since May 14, 2012, the date Trevali
and Maple executed the Combination Agreement, Trevali has, through
a transition services agreement, managed the Caribou Mine
operations. This has included Trevali providing Maple with equity
advances in the amount of approximately $3,943,800 through the end
of October, 2012 to enable Maple to meet its financial obligations
for the Caribou Mine as such obligations fell due prior to Closing.
In addition, on Closing, Trevali has (subject to certain
limitations set forth in the transaction documents) agreed to
assume all other financial (including short-term, non-interest
bearing debt in the principal amount of $729,972 USD) and other
obligations of Maple in relation to the Caribou mine and mill
complex. Such other obligations include a legal claim (the "Claim")
commenced in New Brunswick in May 2012 by two plaintiffs (Margaret
Kent and Ross F. Burns) against Maple and certain of its
principals. In the Claim, the plaintiffs claim, among other things,
a 24.5% interest in Maple and/or its underlying assets. Trevali and
Maple, including Maple's former principals who are named
defendants, believe that the Claim is without merit and plan to
defend the matter vigorously. On Closing of the Transaction, a
finder's fee of 2% is payable to an arms-length third party.
The majority shareholder of Maple, MMC Holding - a private
limited company incorporated under the laws of the Grand Duchy of
Luxembourg ("MMC"), has entered into a voting support and
standstill agreement (herein, the "Lock-Up Agreement") pursuant to
which, among other things, MMC has agreed to support, for a period
of one year from Closing, the Company's Board nominees and has
further agreed to restrictions on the disposition of certain of the
Trevali common shares issuable to MMC at Closing. Furthermore,
pursuant to the Lock-Up Agreement, MMC has agreed not to acquire
any additional Trevali common shares (other than through the
exercise of warrants issued to MMC at Closing) for a period of 2
years from Closing, without the consent of Trevali. In addition,
under the Lock-Up Agreement, MMC has agreed not to (and to cause
any transferee of its shares not to) dispose more than 10% of its
shareholdings through the facilities of any stock exchange on which
Trevali's common shares are listed for a period of one year from
Closing. The shares issued to MMC on Closing contain a four month
and one day statutory resale restriction. MMC has also agreed to
guarantee the representations and warranties given by Maple under
the Combination Agreement and, to this end, has escrowed 20% of its
Trevali shares (namely 3,967,399 common shares) received at Closing
in support of its guarantee.
Upon completion of the Transaction, Trevali has 197,098,695
common shares issued and outstanding with the current shareholders
of Maple now holding approximately 10.15% of the common shares of
Trevali.
The Company continues to work closely with the Province of New
Brunswick in respect to securing an environmental liability sharing
agreement in form and substance similar to that enjoyed by previous
operators of the Caribou Mine.
Qualified Person and Quality Control/Quality Assurance
EurGeol Dr. Mark D. Cruise, Trevali's President and CEO and a
qualified person as defined by NI 43-101, has supervised the
preparation of the scientific and technical information that forms
the basis for this news release. Dr. Cruise is not independent of
the Company, as he is an officer, director and shareholder.
ABOUT TREVALI MINING CORPORATION
Trevali is a zinc-focused base metals development company with
operations in Canada and Peru - the Halfmile and Santander mines
respectively. In Canada, Trevali owns the Halfmile zinc-lead-silver
mine, the Caribou Mine and Mill, and Stratmat polymetallic deposit
all located in the Bathurst Mining Camp of northern New Brunswick.
The Company also has the past-producing Ruttan copper-zinc mine in
northern Manitoba. Initial production from the Halfmile mine
commenced in early 2012 and underground development is ramping up
to achieve a planned production rate of approximately
3,000-tonnes-per-day to feed planned operations at the Company's
Caribou Mill Complex in 2013.
In Peru, the Company has the Santander zinc-lead-silver mine and
the former-producing Huampar silver mine, both located in the
Central Peruvian Polymetallic Belt. Mine commissioning is
anticipated to commence at the Santander operation in Q4-2012 with
ramp up to full 2,000-tonnes-per-day production in 2013.
Additionally through its wholly-owned subsidiary, Trevali Renewable
Energy Inc., Trevali plans to undertake a significant upgrade of
its wholly-owned Tingo run-of-river hydroelectric generating
facility to allow, in addition to supplying power to the Santander
mining operation, the potential sale of surplus power into the
Peruvian National Energy Grid.
The common shares of Trevali are listed on the TSX (symbol TV),
the OTCQX (symbol TREVF) and on the Lima Stock Exchange (symbol
TV). Warrants to purchase common shares of Trevali are listed on
the TSX (symbol TV.WT). For further details on Trevali, readers are
referred to the Company's web site (www.trevali.com) and to
Canadian regulatory filings on SEDAR at www.sedar.com.
On Behalf of the Board of Directors of
TREVALI MINING CORPORATION
Mark D. Cruise, President
This news release contains "forward-looking statements" within
the meaning of the United States private securities litigation
reform act of 1995 and "forward-looking information" within the
meaning of applicable Canadian securities legislation. Statements
containing forward-looking information express, as at the date of
this news release, the Company's plans, estimates, forecasts,
projections, expectations, or beliefs as to future events or
results and the company does not intend, and does not assume any
obligation to, update such statements containing the
forward-looking information. Such forward-looking statements and
information include, but are not limited to statements as to: the
accuracy of estimated mineral reserves and resources, anticipated
results of future exploration, and forecast future metal prices,
anticipated results of future electrical sales and expectations
that environmental, permitting, legal, title, taxation,
socio-economic, political, marketing or other issues will not
materially affect estimates of mineral reserves. These statements
reflect the Company's current views with respect to future events
and are necessarily based upon a number of assumptions and
estimates that, while considered reasonable by the Company, are
inherently subject to significant business, economic, competitive,
political and social uncertainties and contingencies.
These statements reflect the Company's current views with
respect to future events and are necessarily based upon a number of
assumptions and estimates that, while considered reasonable by the
company, are inherently subject to significant business, economic,
competitive, political and social uncertainties and contingencies.
Many factors, both known and unknown, could cause actual results,
performance or achievements to be materially different from the
results, performance or achievements that are or may be expressed
or implied by such forward-looking statements contained in this
news release and the company has made assumptions and estimates
based on or related to many of these factors. Such factors include,
without limitation: fluctuations in spot and forward markets for
silver, zinc, base metals and certain other commodities (such as
natural gas, fuel oil and electricity); fluctuations in currency
markets (such as the Peruvian sol versus the U.S. dollar); risks
related to the technological and operational nature of the
Company's business; changes in national and local government,
legislation, taxation, controls or regulations and political or
economic developments in Canada, the United States, Peru or other
countries where the Company may carry on business in the future;
risks and hazards associated with the business of mineral
exploration, development and mining (including environmental
hazards, industrial accidents, unusual or unexpected geological or
structural formations, pressures, cave-ins and flooding); risks
relating to the credit worthiness or financial condition of
suppliers, refiners and other parties with whom the Company does
business; inadequate insurance, or inability to obtain insurance,
to cover these risks and hazards; employee relations; relationships
with and claims by local communities and indigenous populations;
availability and increasing costs associated with mining inputs and
labour; the speculative nature of mineral exploration and
development, including the risks of obtaining necessary licenses
and permits and the presence of laws and regulations that may
impose restrictions on mining,; diminishing quantities or grades of
mineral reserves as properties are mined; global financial
conditions; business opportunities that may be presented to, or
pursued by, the Company; the Company's ability to complete and
successfully integrate acquisitions and to mitigate other business
combination risks; challenges to, or difficulty in maintaining, the
Company's title to properties and continued ownership thereof; the
actual results of current exploration activities, conclusions of
economic evaluations, and changes in project parameters to deal
with unanticipated economic or other factors; increased competition
in the mining industry for properties, equipment, qualified
personnel, and their costs. Investors are cautioned against
attributing undue certainty or reliance on forward-looking
statements.
Although the Company has attempted to identify important factors
that could cause actual results to differ materially, there may be
other factors that cause results not to be as anticipated,
estimated, described or intended. The Company does not intend, and
does not assume any obligation, to update these forward-looking
statements or information to reflect changes in assumptions or
changes in circumstances or any other events affecting such
statements or information, other than as required by applicable
law.
Trevali's production plans at Halfmile-Stratmat and Santander
are based only on Indicated and Inferred Mineral Resources and not
Mineral Reserves and do not have demonstrated economic viability.
Inferred Mineral Resources are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorized as Mineral Reserves, and
there is therefore no certainty that the conclusions of the
production plans and Preliminary Economic Assessment (PEA) will be
realized. Additionally where Trevali discusses
exploration/expansion potential, 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.
The TSX has not approved or disapproved of the contents of this
news release.
Contacts: Trevali Mining Corporation Steve Stakiw Manager -
Corporate Communications (604) 488-1661 / Direct: (604)
638-5623sstakiw@trevali.com www.trevali.com
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