{"id":1139129,"date":"2019-09-18T17:34:12","date_gmt":"2019-09-18T22:34:12","guid":{"rendered":"https:\/\/www.mining.com\/?p=1002340"},"modified":"2019-09-18T17:34:12","modified_gmt":"2019-09-18T22:34:12","slug":"new-trevali-boss-bullish-despite-zinc-price-weakness","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1139129","title":{"rendered":"New Trevali boss bullish despite zinc price weakness"},"content":{"rendered":"<p>The stock market has not been kind of late to Trevali Mining Corp. (TSX:TV).<\/p>\n<div class='d-flex justify-content-center'>\n<div id='div-gpt-ad-1561499308230-0'><script>googletag.cmd.push(function() {googletag.display('div-gpt-ad-1561499308230-0');});<\/script><\/div>\n<\/div>\n<p>The Vancouver-based zinc miner has doubled in size since acquiring two zinc mines from Glencore Plc in 2017, bumping it to mid-tier miner status, with a global head count of about 2,000.<\/p>\n<p>It now has four operating zinc mines \u2013 one in New Brunswick, one in Peru and two in Africa (Namibia and Burkina Faso).<\/p>\n<p>Normally, that kind of production growth would be a good reason to hold onto a mining stock. But the company\u2019s share price has recently fallen to below $0.20 from $1.68 at the end of January 2018.<\/p>\n<p>Trevali is not the only zinc miner to experience a stock market pummelling. Glencore PLC (LON:GLEN), one of the world\u2019s largest zinc producers, has suffered a 45% decline in share value since January 2018.<\/p>\n<p>Copper prices are also down to a two-year low \u2013 a strong indicator of a global economic slowdown.<\/p>\n<p>But Trevali\u2019s stock price drop also appears to be partly driven by shareholder dissatisfaction with the company\u2019s performance since it acquired the two Glencore mines.<\/p>\n<p>\u201cI think Trevali is oversold; I think it\u2019s well owned,\u201d Rick Rule, president of Sprott U.S. Holdings, told BNN Bloomberg in March.<\/p>\n<p>By \u201cwell owned,\u201d Rule means that a lot of the stock owners are \u201cmission-specific\u201d shareholders who understand mining, as opposed to generalist investors.<\/p>\n<p>Rule added he doesn\u2019t own Trevali stock because he\u2019s \u201ca little bit nervous about the broad economy.\u201d<\/p>\n<p>In other words, a global recession would result in a lower demand for zinc, copper and other industrial metals. Trevali would then have to reduce its costs and increase its grades to make a profit with lower zinc prices.<\/p>\n<p>To do that, the company will need an experienced CEO to turn things around, which it now has.<\/p>\n<p>Earlier this year, Trevali\u2019s CEO and chairman resigned, and a new management team is now in place. In April, Ricus Grimbeek, former COO of Vale Base Metals, joined Trevali as the company\u2019s new CEO.<\/p>\n<p>Most of the executive team is also new and has been expanded to include three new positions \u2013 chief sustainability, technology and commercial officers, a reflection of Grimbeek\u2019s belief that technology and sustainability are keys to a successful modern mining operation.<\/p>\n<p>\u201cWe\u2019d be one of the first mining companies with a chief sustainability officer,\u201d Grimbeek said.<\/p>\n<p>Grimbeek\u2019s mining experience is extensive. He started out underground as a coal miner in South Africa and later earned a degree in mining engineering. Over the years, he has supervised or managed mining operations in almost every space imaginable \u2013 from manganese and platinum mines to bauxite and diamond mines.<\/p>\n<p>Grimbeek, who was president and COO for BHP Billiton Diamonds at the Ekati mine in the Northwest Territories, acknowledges that Trevali has not lived up to shareholder expectations. He has plans to optimize the company\u2019s operations.<\/p>\n<p>\u201cIt\u2019s like anything \u2013 you get rewarded when you deliver what you say you\u2019re going to,\u201d he said. \u201cAnd so I think the company struggled a bit over the last 18 months to deliver on what they promised they would be doing.<\/p>\n<p>\u201cOn the flip side, for the last two quarters, we\u2019ve produced really good results. We\u2019ve been on target \u2013 or higher than target \u2013 for both cost and production. And that\u2019s what we\u2019ve got to keep on doing.\u201d<\/p>\n<p>While at Vale Base Metals, Grimbeek helped cut costs by $130 million in one year. He hopes to accomplish something similar at Trevali, which he describes as four small mining companies operating four mines. His goal is to get them all operating more as a single company.<\/p>\n<p>The company is also investing in exploration at its existing mines to try to identify higher-grade deposits and extend mine life.<\/p>\n<p>Trevali is a bit unusual for a Vancouver mining company. Most mining and exploration companies here are in gold, copper, silver or metallurgical coal. Trevali, founded in 2007 with a single mine in Peru, is a pure-play zinc miner.<\/p>\n<p>Zinc\u2019s primary market is for strengthening steel. In 2016, commodities analysts began warning of a looming zinc shortage and soaring prices. In 2018, it hit US$1.60 per pound, but it has since dropped to about US$1 per pound.<\/p>\n<p>Mickey Fulp, who publishes the Mercenary Geologist, said zinc\u2019s downward trajectory is only partly attributable to global economic performance. It\u2019s also a supply issue. Three zinc mines closed between 2015 and 2016, he said.<\/p>\n<p>\u201cThat led to the idea we were going to face zinc supply shortages,\u201d Fulp said. \u201cSo all these new projects popped up.<\/p>\n<p>\u201cYear-over-year, production\u2019s increased 2.1%. You get these high prices. Well, the cure for high prices is high prices, so logically it went back down. And it\u2019s been exacerbated, no doubt, by the continuing trade dispute between the U.S. and China and the thoughts of a slowing economy.\u201d<\/p>\n<p>But the long-term demand for zinc and other industrial metals is believed to be strong. Renewable energy, electric vehicles and the general decarbonization and electrification effort will drive demand for industrial metals.<\/p>\n<p>Grimbeek said there may also be an increased demand from manufacturers of zinc-air batteries, as well as in agriculture, as a soil supplement.<\/p>\n<p>Scotiabank\u2019s (TSX:BNS) commodity price index foresees zinc prices around US$1.20 per pound through 2019 and 2020. Grimbeek said he thinks he can get Trevali operating at a profit at $1 per pound. And he doesn\u2019t seem overly worried about the prospect of a global slowdown.<\/p>\n<p>\u201cI always believe you can\u2019t waste a good recession. It\u2019s the time when I think there\u2019s lots of value in the market. This is the time to work together to become more efficient.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Trevali is not the only zinc miner to experience a stock market pummelling.<\/p>\n","protected":false},"author":47,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[369,4],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1139129"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/47"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1139129"}],"version-history":[{"count":2,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1139129\/revisions"}],"predecessor-version":[{"id":1139133,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1139129\/revisions\/1139133"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1139129"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1139129"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1139129"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}