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TABLE OF CONTENTS Jun 16 - 22, 2014 Volume 100 Number 18 - 0 comments

Trevali finds two new zones at Santander

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Shares in Trevali Mining (TSX: TV; US-OTC: TREVF) got a little boost after the Vancouver-based firm reported two new zones of high-grade polymetallic mineralization at its Santander zinc–lead–silver underground mine in Peru.

Trevali acquired the past-producing Santander mine in 2007 and put it back into production on Jan. 31, 2014. The mine, located 200 km northeast of Lima, is milling at a rate of 2,000 tonnes per day. 

Santander is exploiting  a carbonate replacement deposit with defined resources in three Magistral deposits: north, central and south. 

The new zones — Fatima North and Fatima South — are adjacent and sub-perpendicular to the central deposit. The zones are similar to the high-grade Rosa zone, discovered last year near the north deposit, and are thought to represent a later phase of high-grade replacement mineralization along a set of east-to-west trending feeder veins, Trevali says. 

The best two assays from the three channel samples on the Fatima zones are 6.7 metres grading 12.95% zinc, 0.74% lead and 2.47 oz. silver per ton (70 grams per tonne), and 4.5 metres of 7.45% zinc, 2.85% lead and 6.30 oz. silver per ton (178.6 grams per tonne). 

Raymond James analyst Adam Low notes that the grades from these channel samples are two to three times higher than the grade for Santander’s indicated resource, which stands at 6.3 million tonnes of 3.6% zinc, 1.3% lead and 43 grams silver per tonne. 

Given the Fatima zones are in the footwall of the central deposit and next to the underground development, they could be easily added to the Santander mine plan, the company says. 

Trevali intends to start a 5,000-metre drill program to explore and define the Fatima and Rosa zones. The Fatima zones are open for expansion to the east and at depth, while Rosa is open at depth. 

Low says the three mineralized areas could increase metal production over the next couple of years for “minimal incremental costs.” 

The company says the Rosa and Fatima zones trend to the project’s Puajanca South deposit and Puajanca North prospect, where sampling has intersected “bonanza” silver, lead and zinc, highlighting exploration potential on the property, particularly in the Magistral–Puajanca corridor. 

Santander is the company’s main source of revenue. During the first quarter, the mine generated US$21.8 million from total concentrate sales. 

During that time, Trevali shipped and sold 13,790 tonnes of zinc concentrates containing 14.6 million lb. payable zinc, and 4,330 tonnes of lead–silver concentrates containing 5.46 million lb. payable lead and 268,600 oz. silver. Glencore Xstrata (LSE: GLEN) bought all of the mine’s concentrates under an existing offtake agreement. 

Trevali is guiding full-year production at Santander of 42 million to 45 million lb. zinc, 15 million to 17 million lb. lead and 700,000 to 720,000 oz. silver. 

Along with Santander, the company owns three polymetallic projects in northern New Brunswick: the Halfmile mine, the Stratmat deposit and the Caribou mine and mill. 

The company completed an initial trial production at the Halfmile underground mine in 2012, and intends to start up the 3,000-tonne-per-day Caribou mill complex in 2015.

Trevali shares closed up 5% at $1.02 on June 4, the day the discoveries were announced.

Raymond James’ Low has an “outperform” rating and a $1.35 target price.

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Trevali Mining's Santander zinc-lead-silver mine in Peru, 200 km northeast of Lima.  Credit: Trevali Mining
Trevali Mining's Santander zinc-lead-silver mine in Per...

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