|October 28, 2010|
Trevali receives final key transmission line permit for the Tingo Hydroelectric Plant
Awards tender to the ABB Group to supply transformers to the Santander Silver-Lead-Zinc mine project in Peru
Vancouver, British Columbia...Trevali Resources Corp. ("Trevali" or the "Company") (TSX: TV, Frankfurt: 4TI, Pink Sheets: TREVF) is pleased to announce that it has received its final permit, or CIRA (Certificado de Inexistencia de Restos Arqueológicos), required in order to upgrade the 17-km transmission line from its wholly-owned Tingo run-of-river power plant to its Santander silver-lead-zinc mine in west-central Peru.
The Company has also awarded the ABB Group, an international leader in power and automation technology, the tender to supply and install transformers and ancillary equipment for new substations at the Santander mine and at the interconnection to the Peruvian National Grid - Sistema Eléctrico Interconectado Nacional (SEIN).
Trevali Renewable Energy, a wholly owned subsidiary of Trevali Resources, is currently in the process of a Phase I upgrade of the 1.6MW Tingo power plant to 8.8MW capacity (~10MW generation potential during wet-season). Under the current mine-plan, presently being designed by the Company's partner Glencore International, it is envisaged that the Santander minesite will require approximately 4 to 5MW of power supply to support a 2,000-tonne-per-day underground mining operation. Excess power will be sold to third parties under standard long-term power-purchase agreements until such time as the unused power may be required to support potential production increases at the Santander mine -- thereby potentially providing an additional revenue stream to contemplated metal concentrate sales (silver-lead, zinc +/- copper).
TINGO: A LOW-COST RELIABLE POWER PRODUCER
The Tingo run-of-river hydroelectric power plant (Fig. 1) is located 17 kilometers west of the Santander minesite and has been continually producing inexpensive, reliable power to the site since 1958. Work to date by the Company indicates that the new Tingo power plant is anticipated to produce power at an operational cost ranging from approximately US 1-to-1.5 cents per kilowatt hour (kW-h) versus power costs currently ranging from US 10-to-15 cents per kW-h from power generation companies or US 20-to-30 cents per kW-h for an on-site diesel generated power supply.
Furthermore due to its advantageous location with year-round water supply it is estimated that Tingo will have an online availability of 95%. This is in contrast to the majority of Peruvian hydroelectric power plants that have an industry average availability of 60 to 70% due to seasonal water flow in their catchment areas. Consequently, Tingo will have the availability of a thermal power plant but at the significantly lower operational costs of a hydroelectric plant.
"One of the biggest hurdles to new mine development or expansion in the district is the lack of power supply - having access to our own inexpensive, reliable and renewable power will be a major operational and strategic advantage to the Company going forward." stated Dr. Mark Cruise, president and chief executive officer of Trevali. "In addition to being a potential significant revenue generator in its own right, it will also assist in shielding the Company from potential future commodity price downturns."
OVERVIEW OF THE PERUVIAN POWER INDUSTRY
As the Peruvian economy has rapidly expanded over the past decade and in particular the last 5-years industrial end-users, of which the mining industry is the largest customer accounting for approximately 50 - 55% of supply usage (Fig. 2), have found it increasingly difficult to obtain cheap reliable power.
Given the approximately US $41 billion of mining investment in large scale mining operations (copper and gold primarily) anticipated in Peru over the next 5-year period it is an understatement that power demand and pricings are anticipated to remain robust in the medium to long-term.
In the last 12-month period there have been three long-term bids (up to 15 years) to purchase energy from new hydropower plants (large and small hydros), organized by the Peruvian Investment Agency (ProInversión) and the Energy Regulator (Osinergmin) with all-in prices ranging between US$55/MWh and US$74/MWh.
The most recently available information indicates that the current average cost of energy ranges from approximately US 10-to-15 cents per kW-h. Furthermore on a sector basis, the mineral industry's average cost of power is in the upper quartile of all Peruvian-end users - according to Osinergmin's recent energy bulletin (May 2010) the mining sector as a whole is paying US 14 cents per kW-h for power.
The Santander zinc-lead-silver mine project is located approximately 215 km by road from Lima, in the western extent of Peru's Central Polymetallic Belt. Site infrastructure includes a fully refurbished 200-man camp and the Tingo hydroelectric power-station located 17 km down-valley to the west. The Company commenced exploration at Santander in November 2007 discovering four new high-grade silver-lead-zinc replacement and massive sulphide bodies to date. Mineralization remains open in all three Magistral deposits, the Puajanca zone and the past-producing Santander Pipe, and numerous high-priority targets remain to be tested.
Results from the successful 2009-2010 resource expansion, definition and geotechnical drilling program is currently being incorporated into an updated, independent N.I. 43-101 resource estimate that is anticipated in Q4 of this year.
ABOUT TREVALI RESOURCES CORP.
The Company in conjunction with its partner, Glencore International A.G., has entered into a definitive development agreement for the Santander silver-lead-zinc project in west-central Peru that will see Glencore provide and operate on the property, a 2,000-tonne-per-day concentrate plant, undertake mining operations on a 'contractor/toll basis' and enter into a long-term concentrate offtake agreement with the Company for 100% of the Santander project's production at benchmark terms.
Additionally, through its wholly owned subsidiary Trevali Renewable Energy Inc., the Company is undertaking a significant upgrade of the Tingo run-of-river hydroelectric generating facility along with transmission line upgrades and extensions to allow, in addition to supplying power to the mining operation on the property, the potential sale of surplus power into the Peruvian National Energy Grid.
The common shares of the Company are listed on the Toronto Stock Exchange under the symbol TV. For further details on the Company, readers are referred to the Company's web site (www.trevali.com) and to Canadian regulatory filings on SEDAR at www.sedar.com.
On Behalf of the Board of Directors of
TREVALI RESOURCES CORP.
"Mark D. Cruise" (signed)
Mark D. Cruise, President
Contact Information: Steve Stakiw, Manager - Corporate Communications
Phone: (604) 488-1661 / Fax: (604) 408-7499
THIS NEWS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND "FORWARD-LOOKING INFORMATION" WITHIN THE MEANING OF APPLICABLE CANADIAN SECURITIES LEGISLATION. STATEMENTS CONTAINING FORWARD-LOOKING INFORMATION EXPRESS, AS AT THE DATE OF THIS NEWS RELEASE, THE COMPANY'S PLANS, ESTIMATES, FORECASTS, PROJECTIONS, EXPECTATIONS, OR BELIEFS AS TO FUTURE EVENTS OR RESULTS AND THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION TO, UPDATE SUCH STATEMENTS CONTAINING THE FORWARD-LOOKING INFORMATION. SUCH FORWARD-LOOKING STATEMENTS AND INFORMATION INCLUDE, BUT ARE NOT LIMITED TO STATEMENTS AS TO: THE ACCURACY OF ESTIMATED MINERAL RESERVES AND RESOURCES, ANTICIPATED RESULTS OF FUTURE EXPLORATION, AND FORECAST FUTURE METAL PRICES, ANTICIPATED RESULTS OF FUTURE ELECTRICAL SALES AND EXPECTATIONS THAT ENVIRONMENTAL, PERMITTING, LEGAL, TITLE, TAXATION, SOCIO-ECONOMIC, POLITICAL, MARKETING OR OTHER ISSUES WILL NOT MATERIALLY AFFECT ESTIMATES OF MINERAL RESERVES. THESE STATEMENTS REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE NECESSARILY BASED UPON A NUMBER OF ASSUMPTIONS AND ESTIMATES THAT, WHILE CONSIDERED REASONABLE BY THE COMPANY, ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, COMPETITIVE, POLITICAL AND SOCIAL UNCERTAINTIES AND CONTINGENCIES.
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