A recent report from Dundee Capital highlighted an update on Trevali Mining Corporation (TSX:TV) and a significant improvement in zinc recovery at their wholly-owned Caribou Mine in New Brunswick.

As quoted in the report:

During May and June the metallurgical team at Caribou has remained focused on bringing zinc recoveries up to the PEA levels.  Zinc recoveries were 78% in May and 79% in June (MTD), up significantly from 74% in April. Getting zinc recoveries up to PEA design values (>80%) has been TV’s primary focus at Caribou, so we consider the progress to be an excellent sign.  Mill throughput has also increased significantly since April, and is approaching the PEA design rate of 3,000tpd.  TV considers the zinc circuit to now be essentially de-risked – we are maintaining our forecast commercial production date of the end of June 2016.

With zinc circuit de-risked, focus turns to underground operations. TV’s main focus at site will now be de-bottlenecking and optimizing underground mining operations. Stope productivity continues to exceed PEA design rates by as much as four times. TV is committed to their goal of ramping up underground production to 2,500 – 2,700 tpd by the end of Q2.

Bottom Line: With Santander performing very well and Caribou commercial production just around the corner in New Brunswick, TV should have two operating zinc mines on line by the time positive zinc S&D fundamentals take hold which we estimate to occur in H2/2016. We are maintaining our BUY, Top Pick rating and $1.00/sh target based on a 7.0x 2016E EV/EBITDA multiple.

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