Caribou Mine and Mill Complex

Caribou Mine and Mill Complex in New Brunswick (Image: Trevali)

Trevali Mining - (TV:TSX) - Trevali has released drill results from exploration drilling at the Caribou zinc mine in New Brunswick. Drill hole BR-1014A intersected 50.9 metres grading 5.08 per cent Zn, 1.76 per cent Pb, 0.37 per cent Cu, 59.66 g/t Ag and 1.63 g/t Au. The key piece of information was that this was a ~200m step out away from the current measured and indicated resource.

The Caribou mine is scheduled to restart this quarter with commissioning to begin in the next couple weeks. Robust economics from a 2014 PEA in May show a 56.9% IRR after tax with a 2.1 year payback period at $1 zinc. Caribou will be the second zinc mine Trevali has in production along with Satander in Peru.

A 10,000-metre underground drill program is being planned for the second half of 2015 when the Caribou mines is fully de-watered. The goal of the program will be to convert inferred resources and expansion drilling.

TV 2 year chart

Trevali is an interesting stock to follow as they are the only primary junior zinc producer listed on the TSX. Zinc is a commodity that many analysts are bullish on in the next couple years as mine close down and limited supply comes online. The big wild card in the zinc market remains Chinese production as nobody is really sure what to expect.

I believe personally the big turning point will be when the Century mine in Australia closes down in the third quarter this year. The mine currently supplies  4% of annual zinc production.

Read: Trevali intersects 50.9 metres of massive sulphide mineralization outside current resource at Caribou Zinc Mine

San Gold - (SGR:TSX) -  San Gold is the latest gold producer to suspend mining operations. This is following news of Allied Nevada going bankrupt last month. If the gold price continues at current levels I would expect to see more of this in the next 6 months as these marginal producers can just not make money at these prices.

San Gold stock was $1.50 in 2012 and now can be had for 2 cents.

Other names I feel are vulnerable are Luna Gold and Gran Colombia Gold. These two producers have serious balance sheet issues.

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This is not investment advice. All facts are to be checked and verified by reader. As always please do your own due diligence.