Trigon Metals: Driving Innovation And Sustainability in Mining
With a rich history of copper and silver production dating back to the 1920s, Trigon is dedicated to increasing production and expanding the resources at the Kombat Mine.
The company’s flagship asset is the Kombat Mine, an underground copper and silver mine located in the Otavi Mountains of northern Namibia.
What is Trigon Metals’ Main Focus?
The Canadian mining company focuses on copper and silver production in Otavi Mountains, Namibia, and Silver Hill, Morocco where additionally cobalt resources were explored. In the future, the goal will be to scale copper and silver production.
Copper is a versatile metal that is used for various purposes, from making coins and jewellery to building infrastructure and powering homes and businesses or building vehicles. This metal is an excellent conductor of heat and electricity, making it an essential component in modern technology and electrical systems that will be needed more than ever in a futuristic green world.
Kombat Mine: Geology
In general, it is characterised by the presence of sedimentary rocks, such as sandstone, shale, and limestone, which can display layered or bedded structures and a variety of textures and colours due to differences in mineral composition. The formation may also contain fossil remains, which can provide information about the Earth’s history and the life that existed during that time.
The Namibian project operations are open pit and underground and therefore vary in costs. An Open pit means the material is already on and close to the surface and extraction is cheaper but usually comes with worse resource quality. Underground means deeper and more expensive mining but higher resource concentration.
Kombat open pit and Underground Mineral Resource Estimation:
|Mineral resource estimate||TonnesMT||CU%||PB%||AGG/T|
|Inferred (previous low- level expectations)||1.91||2.19||1.79||6.13|
|Indicated (realistic expectations)||12.22||1.94||0.7||13.67|
The Indicated Mineral Resource estimates 5.28Mt from open pit grading at 1.00% copper, and 6.93Mt from the underground grading at 2.66% copper. The open pit is limited to a depth of 160 m with a copper equivalent grade of 0.65% concentration. The mine has a potential life of 5 years, mining a total of 1.5Mt ore, at an average grade of 1.14% copper and 7.49 g/t silver.
Silver Hill Project
The Trigon Silver Hill project is a mining venture that will extract different types of minerals, such as copper and silver. 3 months ago, the silver stream was sold for $37,5 million, not $27,5 million as previously predicted.
This agreement includes 100% of the silver and 1,625% of the copper extracted. There is a buyback option to acquire half of the stream for 1,5X of the original price, $28,125 million until 2027. By selling the stream Trigon has enough capital to produce 30 million pounds of copper in 2024 without third-party capital.
Geology of Morocco Project Environment
The Property is found in the Eastern Anti-Atlas belt, which is widely renowned for its mineral resources, particularly copper and silver. Copper and silver are the principal target metals, and the area geology is characterised by Cambrian outcrops with enormous sandstone units.
Initial structural interpretations point to two significant tectonic events. One is the existence of a folding system that has a significant impact on the Paleozoic cover to the south of the Precambrian group, and the other is the existence of a significant north-east to south-west overlap brought about by some kind of vertical movement that elevated the Cambrian formations on the northern side above the Devonian formations on the southern side.
Cambrian outcrops typically consist of sedimentary rocks, such as sandstone, shale, and limestone, that were formed from ancient seas and rivers. The rock formations can vary in appearance, but they often display distinct layers that represent different stages of sediment deposition.
Silver Hill is located in Morocco and just like Kombat will be operated by open pit and underground mining. Trigon will not do the production by itself.
- Dependency on Kombat after selling Silver stream
- Copper price still recovers from crash
+ No debt and $35 million cash at a market cap of $36 million
+ Low enterprise value and massive production increase
+ Enterprise value is the amount of a valuation of the company (including debt, cash, and equity)
+ This metric’s function is to offer a means of evaluating the relative worth of various copper-producing businesses or projects.
A corporation may be producing copper more effectively or may be viewed more favourably in the market if its EV/lb of copper produced is lower. On the other side, the production will be increased by more than 664% which is good for a company’s revenue and valuation.
+ Next 2 years expected copper production of 9000t and 14.500t, would be around $81.675.000 and $131.587.500 in revenue at a tonne price of $9075.
+ Next 2 years’ expected silver production of 4,082t and 6,577t, would be around $3.206.737,56 and $5.166.759,66 at a tonne price of $785.580.
+ Expected operating costs per USD/Copper EQ.LB of $2.60-$2.80/lb (expresses these costs on a per pound of copper equivalent basis)
+ Mine costs $1,21 + CAPEX of $0.36 (provides insight into the level of investment required to produce one pound of copper equivalent)
+ Fully allocated costs of $3.27 (refers to all the costs associated with a specific product or project, including both direct and indirect costs)
+ Future copper demand and price are expected to be higher
+ Copper supply shortages to be expected as existing mines get exhausted and too little exploration was done the last years
+ Net turnover of 3.46 USD/COPPER EQ. LB
+ $0.55 million EBITDA in 2022 despite relatively low mining activity of 3500t copper, and 1,81t of silver in Kombat (a measure of company revenue minus expenses, aiming to provide insights into how efficiently a company is generating profit through its daily operations)
+ Good relations with local people and authorities, prevent future problems
Trigon will try to expand mining operations and streamline its procedures to increase production and revenue. Along with cost management and risk mitigation, they also emphasise social and environmental responsibilities. If Kombat Hill production is successful profits could be used to buy back part of the silver stream, despite the 1.5X higher price. This would increase mining operations, therefore revenue and production which could reflect in the share price/market cap.
In the future copper will be an essential resource to help make the world more sustainable and environmentally friendly as electric vehicles or solar/wind power will replace existing technology step by step. This will not happen overnight, but it makes sense to keep an eye on a project that can benefit from this opportunity in the long term. As an investor, the future could be bright regarding expected copper demand and price increase, while production will also increase. Having no debt and being able to finance operations with cash is good regarding financial stability and reducing risk while keeping a good credit score for tough times. Regarding production, operations are expected to be cheaper due to the currency decrease. This will increase profitability and affect the massive production increase. Lastly, the low production still left the company’s net income before non-operating expenses (EBITDA) positive, and with a production increase of 664% it shows the potential Trigon has.
Please note that this is not financial advice in any form and investments should only be done after research was made. Also, be aware that I did not invest in Trigon Metals. However, my opinion might be biased. This article only shows my opinion and can only be viewed as a presentation, not an inducement for investing. No liability is assumed for incorrect balance sheet figures and information leading to an investment! Please double-check all information before making investments!
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