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COMEBACK KIDClosed in 2008, Trevali Mining is looking to give New Brunswick’s Caribou mine, and the surrounding economy, a new lease on lifeBy Darren Campbell

Resource Development

Photo Courtesy: Trevali Mining Corporation

Trevali Mining Corporation president and CEO Mark Cruise

says that 2015 is an important year for the Vancouver-based junior miner, in large part because it’s on the brink of bringing the Caribou lead-zinc-silver-copper-gold mine located 50 kilometres west of Bathurst, New Brunswick back into production. “Caribou is a key project for us. We want to make sure it’s done right,” Cruise says during a December phone interview.

For Trevali, seeing the Caribou mine go into production, which Cruise says is on schedule to be commissioned in the fi rst half of 2015, will culminate almost three years of work. It bought the property from Maple Minerals in May of 2012 after the mine had been closed down in 2008 as the global economy tanked and commodity prices followed suit.

By the time Caribou produces

fi rst ore in 2015 (the mine plan is to churn out 3,000 tonnes of ore per day), Cruise says the company will have spent about $62 million in total to buy the property and re-open the shuttered mine. That’s a signifi cant investment for a company that lost $15.5 million in 2013 according to the company’s fi nancial statements.

For the town of Bathurst and the surrounding area, the mine’s rebirth is a key development as well. The local economy has lost some signifi cant employers in the past few years. The biggest loss came when Spanish-based Xstrata Zinc closed Bathurst’s Brunswick mine in May of 2013, putting roughly 1,000 people out of work. With the Caribou mine expected to employ approximately 275 people, it won’t completely fi ll the void left by Brunswick’s closure, but it’s a start for Bathurst. What’s more, Trevali has other mineral prospects in

the Bathurst area that could increase its economic footprint there.

In late December Trevali issued a press release providing a status update on its construction and mine re-start activities at the Caribou operation. The information the company provided was encouraging. “Both surface and underground development programs at Caribou continue to advance and the project status remains on schedule for start-up commissioning in the fi rst half of 2015,” reads the second paragraph of the Dec. 18, 2014 release.

The most notable nugget contained in the press release was that a new 3,000-tonne-per-day grinding mill had been installed and would be commissioned by the fi rst quarter of 2015. Getting the new mill installed is crucial for Trevali because the old

Natural Resources Magazine / Vol. 17 No. 1 2015NR40

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mill that came with the property wasn’t working. “We’re installing the new mill. If that isn’t in, we aren’t in operation,” Cruise says.

Having to replace an old mill with a new one is a big expense for a junior miner, but it also highlights one of the advantages Trevali has at the Caribou site. It is not building a mine from scratch. There is a lot of infrastructure already in place, even if some of it needs to be replaced or upgraded. “The site has a paved highway, power, buildings in place,” Cruise

says. “Having the infrastructure in place makes starting out easier for us. If this was a greenfield mine it would probably cost $250 to $300 million [to build].”

But as Trevali marches towards re-starting production at Caribou, one issue hanging over the heads of its management, and the people of Bathurst is that the mine is only scheduled to be operating for six years under the current mine plan. “That’s pretty short,” Cruise admits. With the investment it’s made in the

mine expected to be paid back after two years of operation, the longer Caribou mine is in production, the longer Trevali can enjoy cash flowing into its coffers. Of course, a longer mine life isn’t just good for Trevali, it’s good for Bathurst. It will mean Caribou’s employees will be working and earning salaries longer, they will be staying in the community and spending money at local businesses.

While Trevali has a mine plan that calls for it to produce six million tonnes of ore, Cruise says there is an additional two-to-three million tonnes that isn’t in the current mining plan. However, if the company can find a way to produce it, Cruise says that could add additional years to the mine’s life. Cruise says the additional ore will be “deep tonnes,” meaning they will be found at a deeper depth underground and will be more expensive to mine. In order to produce the additional tonnage, Cruise says the global commodity prices will have to be high enough to justify the expense of mining those deep tonnes.

So where are commodity prices going? Predicting the future is always tricky. But the Portugal-based International Lead and Zinc Study Group has forecast that global demand for refined lead and zinc will exceed supply by a modest amount in 2015 in the case of lead (23 million tonnes) and by a significant amount in the case of zinc (366 million tonnes).

This supply situation seems to bode well for Trevali’s growth plans for the Caribou mine, and with the company having started commercial production at the 2,000-tonne per day lead-zinc-silver Santander mine in Peru in 2014; Trevali has caught the attention of some Canadian mining experts. Derek Macpherson, a mining analyst with Toronto-based investment bank M Partners, had high praise for the company in January. “Our favourite base metal company remains Trevali Mining, as it remains one of the only pure-play zinc miners with an attractive growth profile,” Macpherson commented. “We believe the combination of execution at Santander and continued re-start progress at Caribou are likely to be the main drivers of the share price over the near term. We maintain our “buy” rating and increase our price target to $1.90 (was $1.80).”

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Bathurst and the surrounding area, which has a long history of mining operations in the area, appear to be keen to see the Caribou mine re-open. Bernard Cormier, president of the Greater Bathurst Chamber of Commerce, says the region’s economy could use a shot in the arm. “We’ve come through some tough times in northeastern New Brunswick,” Cormier says. “It would have a very positive impact. You’ve got new jobs, families moving into this area and people more willing to come back to our stores to shop.”

Cormier is even hopeful that the work Trevali is doing around Bathurst will entice more junior mining companies to explore in the area. And Trevali’s work in the Bathurst area encompasses more than just re-opening Caribou. Trevali also has two other Bathurst mining properties in its portfolio – the Halfmile mine and Stratmat. Both properties are located less than 70 kilometres southwest of Bathurst and both have large deposits of zinc, lead, gold, silver and copper. The Halfmile Mine is a fully permitted underground operation where trial mining occurred for seven months in 2012. Cruise describes the properties as “deposit rich and mill poor.”

What Trevali is doing now is conducting studies and exploration drilling to see whether it would make sense in the future to have a second mill built to process ore at Halfmile and Stratmat. Another option would be to truck the ore to Caribou for processing once that mine shuts down. If Halfmile and Stratmat can be developed, Trevali’s stay in Bathurst could last much longer than six years.

It’s a prospect that Cruise would like to see become a reality. But nothing is certain in the mining business, and Cruise says the company is doing its best to not get the hopes of the people of Bathurst too high. “If you work at Caribou, you can live in Bathurst and go back home at the end of your shift. That’s a major draw,” Cruise says. “I’m incredibly excited about this, but we’re trying to manage expectations.” |nrm