Trevali Buying Glencore Interests in Rosh Pinah, Perkoa

The Rosh Pinah mine in Namibia is expected to produce 100 million lb zinc in concentrates.
Trevali Mining has entered into definitive agreements with Glencore PLC and certain of its subsidiaries to acquire a portfolio of zinc assets from Glencore, including an 80% interest in the Rosh Pinah mine in Namibia, a 90% interest in the Perkoa mine in Burkina Faso, an effective 39% interest in the Gergarub project in Namibia, an option to acquire 100% interest in the Heath Steele property in Canada, and certain related exploration properties and assets for an aggregate purchase price of approximately $400 million.

Trevali is headquartered in Vancouver, British Columbia, and produces zinc and lead-silver concentrates from its 2,000-metric- tons-per-day (mt/d) Santander mine in Peru and its 3,000-mt/d Caribou mine in the Bathurst mining camp of northern New Brunswick. The Glencore transaction will more than double Trevali’s zinc production to approximately 410 million payable pounds per year (lb/y), positioning the company as a top 10 global zinc producer.

“The acquisition of Rosh Pinah and Perkoa is an historic event and unique opportunity for Trevali and sets the stage for a multi-asset, low-cost global zinc producer,” said Dr. Mark Cruise, president and CEO, Trevali Mining. “The assets provide a strong upside in the current strengthening macro-zinc environment through scale of production as well as an attractive package of exploration ground.”

The transaction is subject to customary regulatory approvals and is expected to close by July. Following completion of the transaction, Glencore will have offtake agreements for all four of Trevali’s mines.

The Rosh Pinah mine is located in southwest Namibia, approximately 600 kilometers (km) south of Windhoek, the nation’s capital. The underground mine is owned 80.08% by Glencore and 19.92% by Namibian empowerment companies. Production during 2017 is forecast at 100 million pounds (lb) to 105 million lb of zinc in concentrates at all-in sustaining costs of $0.68/lb to $0.72/lb. Mine life is forecast at more than 14 years.

The Perkoa mine is located in Sanguie province, Burkina Faso, approximately 120 km west of the capital city of Ouagadougou. The underground mine is owned 90% by Glencore and 10% by the government of Burkina Faso. Production during 2017 is forecast at 165 million lb to 170 million lb of zinc in concentrates at all-in sustaining costs of $0.83/lb to $0.87/lb. Mine life is forecast at more than six years.

Consideration to be paid by Trevali to Glencore on closing of the transaction will consist of approximately $244 million in cash and the issuance of about 175 million Trevali common shares.

Glencore will become a cornerstone investor in Trevali, with an approximate 25% interest in the company. “Trevali has a proven track record in the sector, as demonstrated by their success in opening up the Santander mine in Peru and the Caribou mine in Canada,” said Daniel Maté, head of zinc marketing for Glencore. “We have been working together as partners since their first mine was built, and we share the same vision for the future growth of the business through value-creating organic and inorganic growth opportunities. We are excited to form part of this unique global zinc vehicle, providing pure zinc exposure across a wide geographic footprint.”

As featured in Womp 2017 Vol 04 -