Investor Presentaiton
Zinc inventories and TCs demonstrate a tight market
Low inventories and declining treatment charges provide fundamental support
for higher zinc prices
TREVALI
ZINC INVENTORY AT HISTORICAL LOWS
ILME Zinc Inventory
Shanghai Zinc Inventory
Zinc Price (US$/lb)
$2.00
1,600
•
•
•
Refined zinc inventories ended 2019 at record lows.
Seasonal inventory build-up related to Chinese new
year in February has had a modest impact on stocks.
LME zinc inventories have seen an average daily
increase of ~525 kt since December 2019.
Further zinc mine curtailments precipitated by COVID-
19 may lead to additional concentrate supply shocks
beyond the 1.4 Mt impact forecast for the year and a
further reduction to metal inventories, supporting a
higher zinc price.
Zinc Price (US$/lb)
$1.50
$1.00
$0.50
1,200
800
400
Zinc Inventory (kt)
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
ZINC TREATMENT CHARGES ARE DECREASING
•
Mine curtailments have outpaced smelter demand.
Benchmark TC
Imported Spot TC (China)
Domestic TC (China)
$350
•
•
•
•
Concentrate market surplus has receded rapidly.
Spot zinc treatment charges have decreased from $310
per tonne in January 2020 to $85 per tonne at the end of
December 2020.
Benchmark negotiations for 2021 have begun and are
forecast to be set lower giving Trevali exposure to savings.
Trevali estimates a $100 per tonne decrease in treatment
charges equates to a ~$0.10/lb increase in margin or ~$35
million when considering 2021 full year production
guidance midpoint of ~345Mlbs.
Source: Zinc inventories per Bloomberg and treatment charges per Wood Mackenzie as at January 21, 2020.
$300
TC (US$/t)
$250
$200
$150
$100
$50
$215/tonne difference between Benchmark
TC and Imported Spot TC (China)
2017 2018 2019 Jan Feb Mar Apr May Jun Jul Aug Sep Oct-Nov-Dec-
20 20 20 20 20 20 20 20 20 20 20 20
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