Report
FREE
• Trigon announced that its two underground pumps failed at its Kombat Mine, halting operations.
• All personnel and mining equipment have been removed from the underground mine.
• The Company stated that despite the issues, Horizon still plans to proceed with its commitment to purchase TM’s interest in Kombat.
• Our valuation of TM remained unchanged.
Yesterday after market close, Trigon Metals (TM:TSXV) announced that both of its underground pumps failed at its Kombat Mine in Namibia. As a result, the Company has halted operations from the underground mine as it expected the mine to flood over the coming days. As a precaution to ensure the safety of all mine workers, all personnel have exited the affected areas, and the underground equipment has been removed. This news comes as an untimely knock to operations as the underlying transaction continues. We are maintaining our BUY rating and our C$1.50/share target price on TM.
As stated in the press release, TM intends to complete the previously announced transaction with Horizon Corporation Ltd. Horizon is aware of the situation and has notified the Company that it is standing by its commitment to complete the purchase of the mine.
As a reminder, last year, one underground pump failed at the mine which did not disrupt production. TM addressed the issue quickly, demonstrating its ability to manage such challenges effectively and reinforcing our confidence in its capacity to resolve this situation promptly. With two pump failure now recorded, we are optimistic that TM, in collaboration with Horizon, will implement a permanent solution (and redundancies) to prevent this from occurring again.
Despite TM’s limited capital, there is potential for business interruption insurance to offset some of the related costs, a standard provision for mining operations. While the previous pump failure was not covered due to operations being unaffected, the current situation, should qualify for insurance.
Valuation Unaffected
Given that Horizon remains committed to the deal, we are leaving our valuation assumptions unchanged. This is because our valuation no longer relies on operational performance under Trigon’s management, and just on the acquisition terms. For a full breakdown on the transaction and our model, please refer to our last two notes here and here. We continue to assume US$40M for the Kombat Mine (or $1.30/share) with the removal of the debt. We then add $0.10/share for Silver Hill and $0.06/share for Kalahari along with the remaining net debt to obtain our unchanged $1.50/share target price.
TM: Operations Halted; Valuation Stands
What you need to know:• Trigon announced that its two underground pumps failed at its Kombat Mine, halting operations.
• All personnel and mining equipment have been removed from the underground mine.
• The Company stated that despite the issues, Horizon still plans to proceed with its commitment to purchase TM’s interest in Kombat.
• Our valuation of TM remained unchanged.
Yesterday after market close, Trigon Metals (TM:TSXV) announced that both of its underground pumps failed at its Kombat Mine in Namibia. As a result, the Company has halted operations from the underground mine as it expected the mine to flood over the coming days. As a precaution to ensure the safety of all mine workers, all personnel have exited the affected areas, and the underground equipment has been removed. This news comes as an untimely knock to operations as the underlying transaction continues. We are maintaining our BUY rating and our C$1.50/share target price on TM.
As stated in the press release, TM intends to complete the previously announced transaction with Horizon Corporation Ltd. Horizon is aware of the situation and has notified the Company that it is standing by its commitment to complete the purchase of the mine.
As a reminder, last year, one underground pump failed at the mine which did not disrupt production. TM addressed the issue quickly, demonstrating its ability to manage such challenges effectively and reinforcing our confidence in its capacity to resolve this situation promptly. With two pump failure now recorded, we are optimistic that TM, in collaboration with Horizon, will implement a permanent solution (and redundancies) to prevent this from occurring again.
Despite TM’s limited capital, there is potential for business interruption insurance to offset some of the related costs, a standard provision for mining operations. While the previous pump failure was not covered due to operations being unaffected, the current situation, should qualify for insurance.
Valuation Unaffected
Given that Horizon remains committed to the deal, we are leaving our valuation assumptions unchanged. This is because our valuation no longer relies on operational performance under Trigon’s management, and just on the acquisition terms. For a full breakdown on the transaction and our model, please refer to our last two notes here and here. We continue to assume US$40M for the Kombat Mine (or $1.30/share) with the removal of the debt. We then add $0.10/share for Silver Hill and $0.06/share for Kalahari along with the remaining net debt to obtain our unchanged $1.50/share target price.
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
Other Reports on these Companies
Other Reports from Atrium Research Corporation
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.