The management team at Revett is doing everything they can to get Troy back up and running again, as the project provides enough cash flow to continue work at both the surroundings of the Troy Mine as well as advancing the Rock Creek project.
The 2012 financial results
Revett Minerals announced their full year 2012 earnings, posting an EBITDA of $9.7M or $0.28/ share. The results are lower than last year’s because of lower mine throughput during the year which culminated with the suspension of underground activities in mid December 2012.
The Troy Mine
The operations at the Troy Mine have been temporarily suspended since mid December, after unusual seismic activity caused some rockslide. As CEO John Shanahan’s first priority is the safety of his people, he voluntarily ceased all operations at Troy. The company is currently voluntarily working together with the MSHA to make sure the mine can re-open sometime in Q2 this year.
The company has put April 2013 forward as target date to re-open the mine, but we don’t expect operations to run at full capacity before the end of May. Our current production guidance for 2012 is 550,000 ounces of silver and 4Mlbs of copper at a average cash cost of approximately $12.5 per ounce of silver.
Revett’s monthly cash burn is approximately $2M per month, so we expect them to still have $16-18M in cash by the time the mine re-opens again in Q2.
The Rock Creek Project
Meanwhile, the company is making steady progress at its gigantic Rock Creek Project, which is in Montana as well. Over the past few years, more and more politicians have become supportive of the project, as they see Revett is capable of running a safe operation with respect for the human capital and the wildlife environment.
The US Forest Service is completing a Supplemental Environmental Impact Statement, which should be ready by mid-2013. This SEIS will – together with the Biological Opinion – be the basis of the Record of Decision which will be the start sign for Revett to start underground exploration and development at Rock Creek.
Troy is a nice little operation which brings in cash flow, but Rock Creek is the big prize for the Revett-investor. With in excess of 200M ounces of silver and 2.5B pounds of copper, this is one of the largest silver-copper resources in the northern hemisphere.
Conclusion
The management team at Revett is doing everything they can to get Troy back up and running again, as the project provides enough cash flow to continue work at both the surroundings of the Troy Mine as well as advancing the Rock Creek project.
We hope the company is able to bring Troy back into production in the second quarter, so they can build up their cash position again.
Disclosure: Revett Minerals Inc. is a sponsoring company. The author owns shares of Revett Minerals Inc. and has visited the Troy and Rock Creek projects in Montana. These site visit costs were reimbursed by the company. Please see our disclaimer for current sponsors.
