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• Trigon announced initial production results from its first copper concentrate. The newly commissioned mill produced a concentrate grade of 33.5% copper (well above the 20% expected) at 79.5% recoveries.
• On Aug 21, TM secured an $8.9M equipment order with Epiroc for the underground fleet. $7.6M is financed with Epiroc Financial Solutions.
• Find our recently publish management interview here.
Yesterday, Trigon Metals Inc. (TM:TSXV) announced the production results from its first copper concentrate. The Company reported its first sale-ready dried concentrate on August 18th and on August 21st, the mill ran for its first full day of concentrate production, processing 436 tonnes of ore (nearly 44% of its 1,000 tpd capacity). The Company is targeting production to 70% of capacity by the end of September. We note that we are modelling zero production in 2023 as the Company works out the kinks and ramps to full commercial production.
The initial results were highly impressive with the mill producing a concentrate grade of 33.5% copper (vs. 20% expected) and 79.5% recoveries (see Table 1). This is well above our expectations considering the mill was fed lower-grade material of ~0.73% copper. TM highlighted that higher-grade concentrate will translate to higher profitability given the lower shipment and treatment charges per pound of copper produced. Additionally, the 79.5% average recovery (in line with our model) has potential to improve further with higher-grade feed, providing further upside to our valuation. We believe the announcement significantly reduces start-up risk as the mill was previously a key risk to commercial production. As such, we have increased our P/NAV multiple from 0.5x to 0.6x given the operational progress. However, TM’s decrease in working capital due to project spend offsets the multiple increase, causing our target price to remain unchanged. We are maintaining our BUY rating and C$0.60/share target price on Trigon Metals Inc.
The run-of-mine stockpiles now total ~27,000 tonnes of ore at an average grade of 1.2% Cu, representing one month’s supply of ore feed. A more detailed breakdown of the status of the open pit mining operations as well as all the work being done to the underground restart can be found in our previous note here.
Underground Fleet
On August 21st, TM announced its $8.9M order to purchase underground mining equipment from Epiroc. The order will comprise of the majority of the underground mining fleet for the restart of underground operations from the Asis West shaft. Production from the underground is expected to commence in April 2024. TM will be financing 85% of the purchase (~$7.6M) from Epiroc Financial Solutions AB, with a 15% down payment of ~$1.3M. The facility term is 60 months from the date of shipment with interest accruing at 10.95%/year.
TM: Initial Concentrate Recovery Exceeds Expectations
What you need to know:• Trigon announced initial production results from its first copper concentrate. The newly commissioned mill produced a concentrate grade of 33.5% copper (well above the 20% expected) at 79.5% recoveries.
• On Aug 21, TM secured an $8.9M equipment order with Epiroc for the underground fleet. $7.6M is financed with Epiroc Financial Solutions.
• Find our recently publish management interview here.
Yesterday, Trigon Metals Inc. (TM:TSXV) announced the production results from its first copper concentrate. The Company reported its first sale-ready dried concentrate on August 18th and on August 21st, the mill ran for its first full day of concentrate production, processing 436 tonnes of ore (nearly 44% of its 1,000 tpd capacity). The Company is targeting production to 70% of capacity by the end of September. We note that we are modelling zero production in 2023 as the Company works out the kinks and ramps to full commercial production.
The initial results were highly impressive with the mill producing a concentrate grade of 33.5% copper (vs. 20% expected) and 79.5% recoveries (see Table 1). This is well above our expectations considering the mill was fed lower-grade material of ~0.73% copper. TM highlighted that higher-grade concentrate will translate to higher profitability given the lower shipment and treatment charges per pound of copper produced. Additionally, the 79.5% average recovery (in line with our model) has potential to improve further with higher-grade feed, providing further upside to our valuation. We believe the announcement significantly reduces start-up risk as the mill was previously a key risk to commercial production. As such, we have increased our P/NAV multiple from 0.5x to 0.6x given the operational progress. However, TM’s decrease in working capital due to project spend offsets the multiple increase, causing our target price to remain unchanged. We are maintaining our BUY rating and C$0.60/share target price on Trigon Metals Inc.
The run-of-mine stockpiles now total ~27,000 tonnes of ore at an average grade of 1.2% Cu, representing one month’s supply of ore feed. A more detailed breakdown of the status of the open pit mining operations as well as all the work being done to the underground restart can be found in our previous note here.
Underground Fleet
On August 21st, TM announced its $8.9M order to purchase underground mining equipment from Epiroc. The order will comprise of the majority of the underground mining fleet for the restart of underground operations from the Asis West shaft. Production from the underground is expected to commence in April 2024. TM will be financing 85% of the purchase (~$7.6M) from Epiroc Financial Solutions AB, with a 15% down payment of ~$1.3M. The facility term is 60 months from the date of shipment with interest accruing at 10.95%/year.
Underlying
TRIGON METALS INC.
Provider
Atrium Research Corporation
Atrium Research provides institutional quality issuer paid research on North American public equities using deep fundamental analysis. Our research reports are disseminated through Bloomberg, FactSet, Capital IQ, Reuters and many more, as well as through our social media and email distribution lists.
Ben Pirie
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