True to their word, Trevali Mining (TSX: TV) failed to make a scheduled interest payment that was due August 17, as it announced the day before as part of its second-quarter earnings release. Following the default, in a move that will come as no surprise, the company formally filed for creditor protection under the Companies’ Creditors Arrangement Act.
The filing for the petition for creditor protection was filed in the Supreme Court of British Columbia yesterday, with Trevali and its subsidiary Trevali Mining (New Brunswick) Ltd filing. The original order was received the same day.
The company currently intends to continue operating throughout the process, with management remaining responsible for day-to-day operations, while being monitored by FTI Consulting. The process is being sought as a way to obtain a stay of creditor claims and proceedings in favor of the company, with the company now ready to begin the process of identifying available transactional and restructuring options.
Meanwhile, operations at the Caribou mine in New Brunswick have been placed under care and maintenance, following the company’s indictment of the mine on Tuesday. The company also cut its forecast for the mine earlier this week, citing poor performance due to low productivity rates as well as the availability of mining contractor equipment and operators. Mining and milling activities have now been halted at the site, with general maintenance and environmental compliance employees remaining on site to preserve the asset.
It is not known if a reboot at the mine will take place.
“The decision to suspend operations is a difficult but necessary step to meet the challenges of the Caribou mine. This was not an action taken lightly and we are aware of the uncertainty created and the impacts of this decision on the community and on our team,” commented CEO Ricus Grimbeek.
The suspension of operations at the Caribou mine is the second of its kind to suspend an operation this year for Trevali. It follows the suspension of operations at the Perkoa mine in Burkina Faso, after a major flood on April 16 breached the mine, killing eight employees who were caught underground. Mining and milling remain suspended at the mine, with an equally uncertain restart schedule for the operation.
Prior to the flood, the Perkoa mine was the largest revenue-generating asset for Trevali, posting revenues of $148.3 million in 2021, or approximately 52% of all revenue generated by the company during the period. .
The filing for creditor protection follows the company’s failure to prepay $7.5 million on some of its debts on August 17. In particular, the company has debt of $97.2 million due in September, for which it has not been able to find the necessary capital. Settle a debt. The company reported a cash position of $41.7 million as of June 30, along with a working capital deficit of $41.4 million.
The company currently expects its only remaining mine, the Rosh Pinah mine in Namibia, to provide the necessary cash flow, combined with available liquidity, to continue to fund itself through the CCAA proceeding.
Trevali Mining last traded at $0.205 on the Toronto Stock Exchange.
Information for this analysis was found via Sedar and Trevali Mining Corp. The author has no security or affiliation related to this organization. Not a buy or sell recommendation. Always do additional research and consult a professional before purchasing a title.
As founder of The deep dive, Jay focuses on all aspects of the business. This includes operations, as well as serving as lead writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay writes freelance for a number of companies and has been published on Stockhouse.com and Canna Investor Magazine among others.