How Burkina Faso floods brought down Trevali Mining

 

A shadow of misfortune trailed the Canadian zinc producer Trevali Mining Corporation throughout 2022.

The flooding at Trevali's Perkoa mine in Burkina Faso set off a chain of events that resulted in the sale of the Rosh Pinah mine in Namibia.

In September, directors Richard Williams, Jill Gardiner and Jeanne Hull resigned.

In October, Trevali's subsidiary - Nantou Mining, in Burkina Faso, filed for liquidation.

 

Here is how it played out.

20 January 2022 

Trevali Mining Corporation said it was working toward securing project financing for expanding the Rosh Pinah mine using the existing Corporate Revolving Credit Facility and Glencore Facility, maturing in September 2022. 

The company said it had received non-binding expressions of interest from several capital providers about participating in the financing process, including commercial banks, streaming and royalty companies, and mining-focused alternative lenders, as well as from Rosh Pinah's concentrate offtaker, Glencore.

Glencore had indicated its support for the project by proposing an aggregate $33m financing package, which may include an extension to the existing Glencore Facility of $13m.

24 January 2022

Trevali Mining Corporation president Ricus Grimbeek said the company achieved excellent performance from Rosh Pinah and had improved Q4 2021 performance at Perkoa and the recently divested Santander mine, though faced challenges at Caribou, which we are working through. 

"We are focused on safety, operational excellence, disciplined capital allocation, debt reduction and investing in the RP2.0 project at Rosh Pinah," Grimbeek said.

Total zinc production from operations was 78 million pounds for Q4 2021, for total annual production of 322 million pounds of payable zinc. 

Trevali's 2021 actual production finished below the 330 – 355 million pounds of payable zinc revised guidance range disclosed on August 4, 2021. 

Consolidated production guidance for 2022 was estimated between 247 – 280 million pounds of payable zinc, 36 – 41 million pounds of payable lead and 688 – 778 thousand ounces of payable silver. 

 25 February 2022

Trevali Mining Corporation reported annual production of 316.2 million pounds of zinc at an all-in sustaining cost 1 of US$1.05 per pound. 

The 2021 revenues increased 61% to US$343 .7 million compared to 2020 due to a 32% strengthening of the average annual zinc price and a 47% decrease in treatment charges. Two thousand twenty-one adjusted earnings per share were US$0.13. 

Grimbeek said the company generated adjusted EBITDA 1 of US$102.3 million in 2021 versus US$25.2 million last year, aided by a 32% increase in the average zinc price and a 47% decline in zinc concentrate treatment charges. 

The improvement in commodity prices allowed Trevali to reduce Net Debt 1 to $78 million as of 31 December 2021, despite the production challenges we experienced during the year, particularly at Caribou.

31 March 2022

Trevali Mining Corporation reported a 4.9 million tonne increase in consolidated proven and probable mineral reserves, a 28% increase over the year ended 2020.

Grimbeek said Rosh Pinah contributed by increasing its mineral reserves by 50% yearly, representing a 36% increase to the Rosh Pinah expansion feasibility study published in August 2021. 

"This is a great result as it adds 4.39 million tonnes to the existing 12.35 million tonnes of Mineral Reserves reported in that study and is expected to extend the mine life beyond 2032. With the RP2.0 early works program underway," Grimbeek said.

16 April 2022

Trevali Mining Corporation announced a flooding event at the Perkoa mine in Burkina Faso, where eight miners went missing underground.

21 April 2022

Trevali Mining Corporation said all underground mining and surface activities at Perkoa remained suspended as the search and rescue operation for the eight miners continued.

25 April 2022

Trevali Mining Corporation said efforts to find the missing miners were continuing. The company said it had a three-stage dewatering plan. 

Two stages involved repurposing existing piping to commence initial dewatering efforts and installing additional underground pumping infrastructure to increase pumping capacity.

The third stage, which is currently in progress, involves the installation of 5,000 metres of new piping and higher-capacity pumps to increase pumping capacity. Multiple welding crews are mobilized for this assembly effort.

 9 May 2022

Trevali Mining Corporation said it had pumped approximately 32 million litres of water from the mine and restored access to Level 550. 

22 May 2022

Trevali Mining Corporation rebuilt the five-kilometre-long underground access ramp and restored more than 3,800 metres using more than 25,000 tonnes of waste rock. The company said they pumped about 38 million litres of water out of the mine.

16 May 2022

Trevali Mining Corporation reported first-quarter production of 62.3 million pounds of zinc at an all-in-sustaining cost 1 of US$1.22 per pound.

The company said the first quarter revenues of US$93.1m were supported by the average LME zinc price of US$1.70 per pound over the quarter and contributed to adjusted EBITDA 1 of US$41 .4m, an increase of 64% over the prior quarter. 

The Net Debt 1 for Q1 2022 increased from $78.0 million at 31 December 2021 to $81.8m due to the timing of shipments and the buildup of receivables. 

The majority of the $96.1m receivables balance at 31 March 2022 was expected to be collected between April and July 2022, and the Net Debt 1 position has reduced by 30 April 2022 by $19.1 to $62.7m.

The Rosh Pinah works programme was reported to be on course with a US$2,4m of US$20m forecast incurred by the end of April 2022, expected to be sourced from internal cash flow.

17 May 2022

Trevali Mining Corporation reported that search and rescue team members reached the refuge chamber below Level 520 in the Perkoa Mine in Burkina Faso. The refuge chamber was found intact and with no one inside. 

25 May 2022

The search team at Pekoa mine discovered six bodies. 

20 June 2022

The search team discovered two more bodies. 

28 June 2022

Trevali Mining Corporation published its 2021 Sustainability Report saying it spent US$178m procuring goods and services from national suppliers, including US$110m on local suppliers. 

The company said the Rosh Pinah Mine expansion was expected to increase the capacity by 86%, from 0.7 million tonnes per annum to 1.3 million tonnes per annum over a 12-year mine life. 

3 August 2022 

The Standard Bank of Namibia granted Trevali a US$110m loan to fund the expansion of the Rosh Pinah Mine.

The credit approval followed the execution of a mandate agreement with Standard Bank in March of this year and the completion of legal and technical due diligence on the Rosh Pinah Mine project.

15 August 2022

Trevali Mining Corporation released financial and operating results for the three and six months that ended June 30, 2022. 

It reported payable zinc production of 34.5 million pounds due to the suspension of operations at the Perkoa mine and production challenges at the Caribou mine, partially offset by positive performance from Rosh Pinah.

The suspension of operations at Perkoa cost the company US$15.2m. 

A non-cash, after-tax impairment of $23.7 million was recorded on the Perkoa and Caribou operations and near-mine exploration assets at Perkoa.

Revised full-year guidance for Rosh Pinah for 2022 with production guidance of 62 – 66 million pounds of payable zinc, a C1 Cash Cost 1 of $0.84 – 0.90/lb and AISC 1 of $1.22 – 1.28/ lb.

Second-quarter revenue was US$52m, a decrease of 44% over the prior quarter due to the suspension of operations at Perkoa and Caribou operational underperformance.

The Net Debt 1 for Q2 2022 decreased from US$81.8m on 31 March 2022 to US$59.4m due to the timing of collection of settlement receivables built up from Q1 2022.

19 August 19, 2022

Trevali Mining Corporation and its subsidiaries received an Initial Order for creditor protection from the British Columbia Supreme Court. Trevali applied for the Initial Order after careful consideration of its cash position, scheduled debt payments, forecast revenue and expenses, all available alternatives to an application for creditor protection, and following thorough consultation with legal and financial advisors.

The Initial Order included, among other things: (i) a stay of creditor claims and proceedings in favour of Trevali Corp. and Trevali NB; and (ii) the appointment of FTI Consulting Canada Inc. as court-appointed monitor of Trevali. 

The company decided to place Caribou under care and maintenance and suspended the expansion work at Rosh Pinah.

22 August 2022

Trevali Mining Corporation suspended common shares trading on the Toronto Stock Exchange, the Lima Stock Exchange, OTCQX and Frankfurt Stock Exchange. 

Trevali suspected that the ordinary shares might be delisted after it filed for protection.

Nick Popovic and Aline Cote resigned from the company's board of directors. Burkina Faso authorities arrested the Pekoa mine manager and Byrnecut manager concerning the flooding in 2022.

29 August 2022 

The Supreme Court of British Columbia granted Trevali the Initial Order as protection from its creditors for ten days. FTI Consulting Canada Inc. was appointed as the Company's monitor.

The Court issued an order extending the Stay Period until October 6, 2022.

The Toronto Stock Exchange suspended trading of Trevali's common shares and advised that the TSX would require a delisting review. 

6 September 2022

Trevali Mining Corporation announced that its common shares would be delisted effective close of market on 3 October 2022.

Shareholders retained their legal rights and equity interest. They were advised to contact their brokerage where shares are held regarding retention policies for unlisted shareholdings and the potential for shares to trade in over-the-counter markets.

16 September 2022

 The Supreme Court of British Columbia granted Trevali Mining Corporation a Sales and Investment Solicitation Process Order.

The SISP Order, among other things: (i) approved a sales and investment solicitation process for Trevali’s 90%-interest in the Rosh Pinah Mine and 100%-interest in the Caribou Mine; and (ii) approved an engagement letter between Trevali and National Bank Financial Inc. appointing NBF as Trevali’s Sales Agent for the SISP.

26 September 2022 

Richard Williams resigned as a director of the company.

29 September 2022 

Trevali Mining Corporation announced today that Jill Gardiner and Jeane Hull resigned as directors of the Company.

6 October 2022

Nantou Mining Burkina Faso S.A. filed for liquidation with the Judicial Tribunal of Commerce in Burkina Faso. 

Nantou Mining’s liquidity deteriorated significantly in the months following the flooding event at its Perkoa Mine on 16 April 2022. 

The Supreme Court of British Columbia issued an order for a second extension of the Stay Period until 18 October 2022.

12 October 2022 

The Supreme Court of British Columbia conditionally authorized and empowered Trevali to obtain and borrow up to the maximum principal amount of US$16.5m according to an interim financing tranche to be made available to Trevali Corp. under the terms of an amendment to the existing credit facility extended under the Second Amended and Restated Credit Agreement dated 6 August 2020 with the Bank of Nova Scotia, as administrative agent. 

14 November 2022 

The Judicial Tribunal of Commerce in Burkina Faso granted an order to liquidate Nantou Mining Burkina Faso S.A. 

Trevali announced that it did not, and will not, file its interim financial statements for the three and nine months ended 30 September 2022.

The Company had previously advised the British Columbia Securities Commission and FTI Consulting Inc. that, due to financial and operational constraints, the company would not be able to continue with its prescribed public markets disclosure.

16 December 2022 

Trevali entered a share and asset purchase agreement with Appian Natural Resources Fund III LP and Appian Natural Resources (UST) Fund III LP for its 90% stake in Rosh Pinah.

The transaction is subject to the receipt of an order approving the Agreement and Transaction from the Court; (ii) the approval of the Namibia Competition Commission; (iii) approval of the Ministry of Land Reform; (iv) exchange control approval from the Bank of Namibia; and (v) other customary closing conditions.