TREVALI MINING CORPORATION

Transcription

1 For the three-month period ended Dated May 10, 2018 INTRODUCTION Trevali Mining Corporation ( Trevali or the Company ) prepared this Management s Discussion & Analysis ( MD&A ) for the three-month period ended, as a Non-Venture Issuer, in accordance with the requirements of National Instrument Continuous Disclosure Obligations ( NI ), as of May 10, This MD&A provides a detailed analysis of the Company s financial results for the three-month period ended and should be read in conjunction with the Company s audited consolidated financial statements for the years ended December 31, 2017 and 2016 and the condensed consolidated financial statements for the three-month ended and 2017 ( Financial Statements ) which have been prepared in accordance with International Financial Reporting Standards ( IFRS ). All figures in this MD&A are expressed in thousands of United States Dollars except for share, per share, per pound and per ounce amounts, unless otherwise noted. References to CAD$ are to Canadian dollars. This MD&A contains certain forward-looking information within the meaning of Canadian securities legislation and forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, forward-looking statements ). These forward-looking statements are as of May 10, 2018 and the Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required under applicable securities legislation. Forward-looking statements relate to future events or future performance and reflect management s expectations or beliefs regarding future events including, but not limited to, statements with respect to the estimation of mineral reserves and mineral resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, future anticipated property acquisitions, the content, cost, timing and results of future anticipated exploration programs and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as plans, expects or does not expect, is expected, outlook, guidance, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate, or believes, or variations of such words and phrases or statements that certain actions, events or results may, could, would, might, will be taken, occur or be achieved or the negative of these terms or comparable terminology. In this MD&A, certain forward-looking statements are identified by words including guidance, may, future, expected, intends and estimates. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of mineral resources; possible variations in ore reserves, grade or recovery rates; accidents; assumptions related to geotechnical conditions of tailings facilities; dependence on key personnel; labour pool constraints; labour disputes; availability of infrastructure required for the development of mining projects; delays or inability to obtain governmental and regulatory approvals for mining operations or financing or in the completion of development or construction activities; counterparty risks associated with sales of our metals; increased operating and capital

2 costs; operating in foreign jurisdictions with risk of changes to governmental regulation; impact of climatic conditions on the Company s Santander, Caribou, Rosh Pinah and Perkoa mining operations; compliance with debt covenants, and other risks of the mining industry as well as those factors detailed from time to time in the Company s interim and annual financial statements and management s discussion and analysis of those statements, all of which are filed and available for review under the Company s profile on SEDAR at Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Historical results of operations and trends that may be inferred from this MD&A may not necessarily indicate future results from operations. The Company provides no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Please see the Risk Factors section of the Company s most recent Annual Information Form filed on SEDAR. COMPANY BUSINESS AND BACKGROUND Trevali is a natural resource company engaged in the acquisition, exploration, development and production of mineral properties. The Company is actively producing zinc and lead-silver concentrates from its Santander Mine in Peru, its Caribou Mine in the Bathurst Mining Camp, northern New Brunswick, Canada, its Rosh Pinah Mine in Namibia and producing zinc concentrates from its Perkoa Mine in Burkina Faso. In addition, Trevali owns the Heath Steele option, Halfmile Mine, and the Stratmat and Restigouche polymetallic deposits located in New Brunswick, Canada, the Ruttan Mine in northern Manitoba, Canada and an effective 39% interest in the Gergarub project in Namibia. Common shares of the Company are listed under the symbol (i) TV on the Toronto Stock Exchange ( TSX ) and the Bolsa de Valores de Lima in Peru, (ii) TREVF on the OTCQX International Quotation System in the United States, and (iii) 4T1 on the Frankfurt Stock Exchange. The Company acquired the Santander zinc-lead-silver mine in Peru, through a 50-year assignment agreement dated December 11, 2007 with Compania Minerales Santander S.A.C. ( Santander ). The Santander Mine was formerly a producing mine which Trevali returned to commercial production in January The Property is approximately 215 kilometers by road from Lima via the town of Canta. The current infrastructure is comprised of a camp and associated support facilities, 2,000 tonne-per-day mill and processing plant and tailings impoundment. In April 2011, the Company merged with Kria Resources Ltd. ( Kria ), a Toronto Venture Exchange listed Company with base metal properties in New Brunswick and Manitoba, Canada. Kria s properties included Halfmile and Stratmat in New Brunswick and the Ruttan property in northern Manitoba. On November 5, 2012, the Company acquired Maple Minerals Corporation ( Maple ) (now known as Trevali Mining (New Brunswick) Ltd.), a private company located in New Brunswick, by way of amalgamation. This acquisition provided Trevali with a 3,000 tonne-per-day processing plant, the former Caribou base metal mine, and a permitted tailings treatment facility. On July 1, 2016, the Caribou Mine commenced commercial production of zinc and lead-silver concentrates. On August 31, 2017 the Company announced it had completed the acquisition (the Transaction ) of a portfolio of zinc assets from Glencore PLC ( Glencore ), and certain of its subsidiaries, including an 80% interest in the Rosh Pinah Mine in Namibia ( Rosh Pinah ), a 90% interest in the Perkoa Mine in Burkina Faso ( Perkoa ), an effective 39% interest in the Gergarub project in Namibia, an option to acquire 100% 2

3 interest in the Heath Steele project in Canada along with related exploration properties and other assets. The aggregate purchase price totaled $464,659 consisting of $245,216 ( Cash Consideration ) and the issuance of 193,432,310 Trevali common shares to Glencore with a value of $219,443 ($219,288 net of fees) based on the closing share price of CAD$1.43 on August 31, After the completion of this transaction, Glencore became a 25.6% shareholder of Trevali. The Cash Consideration was funded through a combination of: (i) the proceeds of the previously announced bought deal private placement (the Subscription Receipt Offering ) of subscription receipts ( Subscription Receipts ) conducted by a syndicate of underwriters and (ii) advances under a $160,000 senior secured term loan (the Term Facility ) and a $30,000 senior secured revolving working capital loan (the Revolving Facility and together with the Term Facility, the Facility ), in each case made available to the Company by a syndicate of major Canadian and International banks. The Facility bears interest on a sliding scale: (i) at a rate of LIBOR plus between 3.00 percent to 4.00 percent or (ii) at a base rate plus between 2.00 percent to 3.00 percent and includes standard and customary finance terms and conditions including with respect to fees, representations, warranties, covenants and conditions precedent to additional draws under the Revolving Facility. In addition to funding a portion of the Cash Consideration, a portion of the Term Facility was used to refinance debt obligations of Trevali s wholly-owned subsidiary, Trevali Peru S.A., owing to Glencore and its affiliates Summarized Consolidated Financial Highlights During the three-month period ended and March 31, 2017, Trevali: Earned revenues of $114,718 for the three months ended ($39,923 for 2017). Generated $36,608 gross profit for the three months ended ($9,682 for 2017). The Santander Mine generated $5,033 gross profit for the three months ended ($2,946 for 2017). The Caribou Mine generated $10,051 gross profit for the three months ended ($6,736 for 2017). The Rosh Pinah Mine generated $11,633 gross profit for the three months ended. As Trevali acquired the Rosh Pinah Mine on August 31, 2017, no comparatives figures are provided for the three months ended March 31, The Perkoa Mine generated $9,891 gross profit for the three months ended. As Trevali acquired the Rosh Pinah Mine on August 31, 2017, no comparatives figures are provided for the three months ended March 31, Recorded net income before income tax of $40,750 for the three months ended ($4,996 for 2017). Record high EBIDTA* of $58,546 for the three months ended ($13,863 for 2017). Had cash and cash equivalents totaling $120,464 ($94,135 as of December 31, 2017) and $179,505 working capital position as of ($144,350 as of December 31, 2017). Retired $8,000 on the Term Facility as part of the long-term debt repayment schedule. * EBITDA is a non-ifrs measure. The following two tables summarize Trevali s key combined sales and production statistics for the three months ended and The comparative figures for the three months ended March 2017 only include the Santander Mine and Caribou Mine as both the Rosh Pinah and Perkoa Mines were acquired on August 31,

4 2018 Consolidated Sales Statistics and 2017 Comparison Q Q Zinc Concentrate (DMT) 98,171 38,928 Lead Concentrate (DMT) 10,169 13,034 Payable Zinc lbs 89,490,812 33,578,241 Payable Lead lbs 7,956,056 9,708,389 Payable Silver ozs 274, ,636 Average Realized Metal Price 1 Zinc ($/lb) $ 1.49 $ 1.26 Lead ($/lb) $ 1.09 $ 1.05 Silver ($/oz) $ $ Revenues 2 $ 114,718 $ 39,923 Mine Operation Expenses $ 78,110 $ 30,241 1 Provisional Realized Metal Price. 2 Revenues for the quarter includes the effects of settlement adjustments on sales from prior quarters Consolidated Production Statistics and 2017 Comparison Q Q (1) Tonnes Mined 790, ,953 Tonnes Milled 743, ,129 Average Head Grades % Zinc 8.18% 5.06% Lead 1.58% 1.71% Silver - Oz (ounces)/ton Average Recoveries % Zinc 88% 79% Lead 68% 66% Silver 45% 50% Concentrate Produced DMT (dry metric tonne): Zinc 107,906 36,576 Lead 14,933 12,510 Payable Production Zinc lbs 98,738,944 31,946,229 Lead lbs 12,296,555 9,983,664 Silver ozs 336, ,661 Total Cash Operating Cost per Pound of Payable Zinc Produced $ 0.83 $ 0.81 All-In Sustaining Cash Cost per Pound of Payable Zinc Produced $ 0.97 $ 0.96 Site Cash Operating Cost per Tonne Milled $ $ (1) Q production includes Q production from Santander and Caribou only. *Please refer to non-ifrs measures at the end of this document. 4

5 OUTLOOK Peru The 2018 Santander Mine production guidance estimate is: million lbs. of payable zinc in concentrate million lbs. of payable lead in concentrate; and 654, ,000 ozs of payable silver. As previously provided, site operating cost for the three months ended was $64.50 per tonne which is above the 2018 annual cost guidance range of $38-$42 per tonne milled. This was due to planned lower mill throughput during the quarter as maintenance work was conducted on a ball mill resulting in approximately 25% lower processing capacity and hence metal production. Mining extraction during the period was maintained at normal run-rates in order to build a ~65,000 tonne ore stock pile for processing during the remainder of the year. The mill repairs were completed on time and on budget in late March 2018 and the mill is currently operating at higher than design capacity. The April 2018 mill throughput averaged 2,352 tonnes per day. The annual 2018 guidance remains unchanged at $38-$42 per tonne milled (please see non-ifrs measures and at the end of this MD&A and the Cautionary Note on Forward Looking Statements at the beginning of this MD&A). The mine recently commissioned its pumping infrastructure and is exceeding design efficiency with lower than modelled power consumption. The Santander exploration team continues to drill test the Magistrales and Pipe deposit systems in 2018 as part of its annual exploration campaign. Canada The 2018 Caribou Mine production guidance estimate is: million lbs. of payable zinc in concentrate million lbs. of payable lead in concentrate 627, ,000 ozs. of payable silver Site operating cost for the three months ended is $64.12 per tonne reflecting higher costs due to seasonal effects as experienced in prior years. Going forward, site costs will trend lower as we exit spring melt conditions. The annual 2018 guidance remains unchanged at $55-$61 per tonne milled (please see non-ifrs measures the at the end of this MD&A and the Cautionary Note on Forward Looking Statements at the beginning of this MD&A). The 2018 business improvement program anticipates increased production gains and efficiencies as improvements are made to the site power infrastructure, mill control systems, ground control management and ventilation. Halfmile-Stratmat The Company announced the results of a new PEA study on November 6, Please refer to the news release dated November 6, 2017 and the Exploration and Development section of this MD&A for further details. 5

6 Murray Brook On March 2, 2018, Trevali announced that it had entered into a Letter of Intent with Puma Exploration Inc. for the acquisition of an option to acquire an interest in the Murray Brook Deposit and to form a proposed Strategic Exploration Alliance in the northern portion of the Bathurst Mining Camp in New Brunswick. Trevali, at its option, will provide all or part of the remaining CAD$7,500 in funding to Puma in order for Puma to finalize the 100-percent acquisition of the Murray Brook Deposit ultimately leading to a 75:25 percent ownership interest between Trevali and Puma, respectively, and a 51:49 percent ownership in the Murray Brook East Property, respectively. Trevali has advanced CAD$2,000 to Puma and invested CAD$500 in Puma units consisting of 5,555,556 common shares at CAD$0.09 per share and 2,777,777 warrants exercisable at CAD$0.12 per share (each warrant is fully transferrable and has a three-year term). The proceeds will be used to advance the Strategic Exploration Alliance (see March 2, 2018 News Release). Namibia Trevali acquired the Rosh Pinah Mine on August 31, There are no comparative figures for the threemonths ended March 31, The Rosh Pinah Mine 2018 production guidance estimate is: million pounds of payable zinc in concentrate; million pounds of payable lead in concentrate; and 123, ,000 ounces of payable silver Site operating cost for three months ended is $54.41 per tonne marginally above the annual 2018 guidance ranging from $49-54 per tonne milled (please see non-ifrs measures the at the end of this MD&A and the Cautionary Note on Forward Looking Statements at the beginning of this MD&A). The 2018 mine plan is processing lower grade stopes during the first half of the year with modeled headgrades anticipated to range from 7 to 8% Zn. During the second half of the year higher grade stopes are scheduled to be extracted (zinc head grades ranging from ~9-10%) to meet annual production guidance. The site is commissioning the Mill re-grind project and anticipates improved zinc and lead recoveries. The 2018 improvement program has identified key operational areas including production drilling support, introduction of raise-boring to improve the stope production cycle and mobile fleet optimization to improve mine site operational efficiencies. Burkina Faso Trevali acquired the Perkoa Mine on August 31, There are no comparative figures for the threemonths ended March 31, The Perkoa Mine 2018 production guidance estimate is: million pounds of payable zinc in concentrate. Site cash operating costs for three months ended is $ per tonne and the annual 2018 guidance remains unchanged at $ per tonne milled (please see non-ifrs measures at the end of this MD&A and the Cautionary Note on Forward Looking Statements at the beginning of this MD&A). 6

7 During the first quarter, the Company 2018, Trevali approved the procurement and installation of a more efficient site power generating system. Phase I of the project entails the installation of two 2.5Mw Heavy Fuel Oil (HFO) generators with an estimated budget, including contingency, totaling $9.2 million. The project has an anticipated cost savings of approximately $5 - $7 per tonne milled. The 2018 improvement program expects further mine site efficiencies in supply and procurement, operational and technical support. Discussion of Mining Operations Santander Mine, Peru Santander 2018 Sales Statistics and 2017 Comparison Q Q Zinc Concentrate (DMT) 12,715 13,579 Lead Concentrate (DMT) 1,111 2,077 Payable Zinc lbs 10,993,766 11,804,614 Payable Lead lbs 1,134,093 1,834,682 Payable Silver oz's 67, ,557 Average Realized Metal Price 1 Zinc ($/lb) $ 1.49 $ 1.27 Lead ($/lb) $ 1.11 $ 1.03 Silver ($/oz) $ $ Revenues 2 $ 16,602 $ 13,500 Mining Operation Expenses $ 11,569 $ 10,554 1 Provisional Realized Metal Price 2 Revenues for the quarter includes the effects of settlement adjustments on sales from prior quarters. 7

8 Santander 2018 Production Statistics and 2017 Comparison Q Q Tonnes Mined 187, ,689 Tonnes Milled 150, ,249 Average Head Grades % Zinc 4.46% 3.80% Lead 0.48% 0.58% Silver - Oz (ounces)/ton Average Recoveries % Zinc 89% 88% Lead 79% 79% Silver 58% 63% Concentrate Produced DMT (dry metric tonne) Zinc 12,549 14,037 Lead 1,109 2,120 Concentrate Grades % Zinc 48% 48% Lead 51% 43% Ag - Oz/ton Payable Production Zinc lbs 10,953,272 12,326,834 Lead lbs 1,170,588 1,875,891 Silver oz's 70, ,576 Total Cash Operating Cost per Pound of Payable Zinc Produced $ 1.08 $ 0.76 All-In Sustaining Cash Cost per Pound of Payable Zinc Produced $ 1.44 $ 0.96 Site Cash Operating Cost per Tonne Milled $ $ Please refer to non-ifrs measures at the end of this document. Three months ended and 2017 All concentrates are purchased by Glencore International plc s Peruvian subsidiary, Empresa Minera Los Quenuales S.A. ( Glencore Peru ), under the Company s offtake agreement with Glencore Peru. During the quarter, the Company sold 10.9 million lbs of zinc (Q million lbs), 1.1 million lbs. of lead (Q million lbs.), and 67,626 ozs. of silver (Q ,557ozs). Revenues for the first quarter of 2018 were $16.6 million (Q $13.5 million), with the average realized metal prices of $1.49 (Q $1.27) per pound of zinc, $1.11 (Q $1.03) per pound of lead, and $16.52 (Q $17.69) per ounce of silver. Revenue for the three months ended increased 23% compared to the three months ended March 31, 2017 because of higher realized Zinc and lead prices offset by an 8% reduction of zinc pounds sold due to the mill motor failure. Mine operating expenses for the three months ended at the Santander operation totaled $11,569 (Q $10,554). 8

9 During the three months ended, the Santander Mine produced 10.9 million payable lbs of zinc (Q million lbs), 1.2 million payable lbs of lead (Q million lbs) and 70,046 payable ozs of silver (Q ,576 ozs). Underground production was 187,073 tonnes for the quarter (Q ,689 tonnes). Average head grades were 4.46% zinc, 0.48% lead, and 0.77 oz/tonne silver, with production of 12,549 tonnes of zinc concentrate averaging 48% Zn, and 1,109 tonnes of lead-silver concentrate averaging 51% Pb and oz/tonne Ag. Recoveries during the quarter averaged 89% for zinc, 79% for lead, and 58% for silver. Mine production was maintained at budgeted rates of approximately 2,000 tonnes-per-day, for 187,073 tonnes of ore for the quarter. Mill throughput for the quarter was 150,627 tonnes (Q ,249 tonnes) or approximately 25% below design processing capacity due to previously disclosed mill maintenance. Mill maintenance is now complete and planned production has increased in Q We expect to achieve full year production guidance. The mine was able to develop ROM inventory during Q1 which will allow the mill to achieve full production capability through for the remainder of the year. Caribou Mine, Canada Caribou 2018 Sale Statistics and 2017 Comparison Q Q Zinc Concentrate (DMT) 21,409 25,349 Lead Concentrate (DMT) 9,058 10,956 Payable Zinc lbs 17,821,252 21,773,627 Payable Lead lbs 6,821,963 7,873,706 Payable Silver oz 207, ,078 Average Realized Metal Price ($)/lbs 1 Zinc $ 1.49 $ 1.25 Lead $ 1.09 $ 1.05 Silver $ $ Revenues 2 $ 28,072 $ 26,423 Mining Operation Expenses $ 18,021 $ 19,687 1 Provisional Realized Metal Price. 2 Revenues for the quarter includes the effects of settlement adjustments on sales from prior quarters. 9

10 Caribou 2018 Production Statistics and 2017 Comparison Q Q Tonnes Mined 238, ,264 Tonnes Milled 235, ,880 Average Head Grades (%) Zinc 5.94% 6.15% Lead 2.43% 2.68% Silver - ozs/ton Average Recoveries (%) Zinc 75% 75% Lead 62% 64% Silver 41% 38% Concentrate Produced (DMT) Zinc 22,769 22,539 Lead 9,556 10,390 Concentrate Grades (%) Zinc 46% 47% Lead 37% 38% Silver - ozs/ton Payable Production Zinc lbs 19,079,123 19,619,395 Lead lbs 7,200,955 8,107,773 Silver ozs 216, ,085 Total Cash Operating Cost per Pound of Payable Zinc Produced $ 0.73 $ 0.85 All-In Sustaining Cash Cost per Pound of Payable Zinc Produced $ 0.90 $ 0.95 Site Cash Operating Cost per Tonne Milled $ $ Please refer to non-ifrs measures at the end of this document. Three months ended and 2017 Revenues for the first quarter of 2018 were $28.1 million (Q million), with average realized metal prices for the quarter of $1.49 per lb of zinc, $1.09 per lb of lead, $16.53 per oz of silver (Q $1.25 per lb of zinc, $1.05 per lb of lead, $18.03 per oz of silver). Revenue during the first quarter of 2018 increased 6.24% over the quarter of 2017 due to the higher realized Zinc and lead prices offset by the decrease in the payable metals sold as compared to the same period last year. Mine operation costs for the first quarter of 2018 were $18.0 million and $1.7 million lower than first quarter of 2017 ($19.7 million) due to the steady improvement in production efficiency. Site cash operating cost per tonne milled during the first quarter of 2018 was $64.12 per tonne milled. The mine costs were planned to be higher in Q due to winter related costs - higher reagent consumption, heating the mine and mill, snow clearing etc. Total cash operating cost per zinc payable lb produced was $0.73 per lb (Q $0.85 per lb). 10

11 Production results from the Caribou Mine for the three months ended were 19.1 million payable lbs of zinc (Q million), 7.2 million payable lbs of lead (Q million) and 216,087 payable ozs of silver (Q ,085 ozs). During the first quarter of 2018, the Caribou Mine sold 17.8 million lbs of zinc (Q million lbs), 6.8 million lbs of lead (Q million lbs) and 207,122 ozs of silver (Q ,078 ozs). Sales were impacted due to seasonal weather constraints for the haulage of concentrate from the mine. Mill throughput for the quarter was 235,531 tonnes (Q ,880 tonnes) with recoveries averaging 75% for zinc (Q %), 62% for lead (Q %), and 41% for silver contained in lead concentrate (Q %). Recoveries were similarly impacted by the cold weather conditions as per the prior year. Mill throughput for the quarter averaged 2,617 tonnes-per-day (Q ,588). Underground production was 238,650 tonnes for the quarter versus 222,264 tonnes for the first quarter of 2017 due to the initial efficiency gains of the owner operated fleet. Average head grades of the tonnes milled were 5.94% of Zn, 2.43% of Pb, and 2.14 oz/ton of Ag (Q % of Zn, 2.68% of Pb and 2.29 oz of Ag), with production of 22,769 tonnes of zinc concentrate (Q ,539 tonnes) averaging 46% Zn and 9,556 tonnes (Q ,390 tonnes) of lead-silver concentrate averaging 37% Pb and oz/ton Ag. Rosh Pinah Mine, Namibia Trevali acquired the Rosh Pinah Mine on August 31, There are no comparatives figures for the threemonths ended March 31, Rosh Pinah 2018 Sale Statistics Q Zinc Concentrate (DMT) 30,386 Lead Concentrate (DMT) - Payable Zinc lbs 28,077,201 Payable Lead lbs - Payable Silver oz - Average Realized Metal Price ($)/lbs 1 Zinc $ 1.49 Lead $ - Silver $ - Revenues 2 $ 33,192 Mining Operation Expenses $ 21,559 1 Provisional Realized Metal Price. 2 Revenues for the quarter includes the effects of settlement adjustments on sales from prior quarters. *Due to its relatively limited Lead concentrate production, the Rosh Pinah operation typically ships Lead concentrates approximately twice per year. 11

12 Rosh Pinah 2018 Production Statistics Q Tonnes Mined 172,334 Tonnes Milled 177,837 Average Head Grades (%) Zinc 7.92% Lead 1.40% Silver - ozs/ton 0.58 Average Recoveries (%) Zinc 88% Lead 77% Silver 51% Concentrate Produced (DMT) Zinc 25,175 Lead 4,268 Concentrate Grades (%) Zinc 49% Lead 45% Silver - ozs/ton Payable Production Zinc lbs 22,831,575 Lead lbs 3,925,012 Silver ozs 50,794 Total Cash Operating Cost per Pound of Payable Zinc Produced $ 0.90 All-In Sustaining Cash Cost per Pound of Payable Zinc Produced $ 1.06 Site Cash Operating Cost per Tonne Milled $ Please refer to non-ifrs measures at the end of this document. Three months ended During the first quarter of 2018, the Rosh Pinah Mine sold 28.1 million lbs of zinc generating $33.2 million in revenues with an average realized metal price of $1.49 per lb of zinc. Mine operation costs for the quarter were $21.6 million. Site cash operating cost per tonne milled during the period was $54.41, and total cash operating cost per zinc payable lb produced was $0.90 per lb. Costs were marginally higher on a per tonne basis due to one-time costs associated with negotiating a 3 year-labour agreement. There were also no lead sales for the quarter and as such no by-product credits were applied on a total cash cost per zinc payable basis. Please refer to the non-ifrs table at the end of this MD&A for additional disclosures. Production results from Rosh Pinah Mine for three months ended were 22.8 million payable lbs of zinc, 3.9 million payable lbs of lead and 50,794 payable ozs of silver. Zinc concentrate production totaled 25,175 dry metric tonnes averaging 49% Zn; 4,268 dry metric tonnes for lead averaging 45% Pb and oz/ton Ag. Planned concentrate / metal production for the year is asymmetrical with planned lower grade zinc stopes being extracted during H1 with higher grade stopes planned in the second half of

13 Underground production was 172,334 tonnes for the quarter with average head grades 7.92% for Zn, 1.40% for Pb, and 0.58 oz/ton of Ag. Mill throughput for the quarter totaled 177,837 tonnes with recoveries averaging 88% for zinc, 77% for lead, and 51% for silver. Perkoa Mine, Burkina Faso Trevali acquired the Perkoa Mine on August 31, There are no comparatives figures for the threemonths ended March 31, 2017 Perkoa Q Sale Statistics Q Zinc Concentrate (DMT) 33,660 Lead Concentrate (DMT) Payable Zinc lbs 32,598,594 Payable Lead lbs - Payable Silver oz - Average Realized Metal Price ($)/lbs 1 Zinc $ 1.49 Lead - Silver - Revenues 2 $ 36,852 Mining Operation Expenses $ 26,961 1 Provisional Realized Metal Price. 2 Revenues for the quarter includes the effects of settlement adjustments on sales from prior quarters. *Perkoa produces zinc only 13

14 Perkoa 2018 Production Statistics Q Tonnes Mined 192,158 Tonnes Milled 179,940 Average Head Grades (%) Zinc 14.49% Lead - Silver - ozs/ton - Average Recoveries (%) Zinc 94% Lead - Silver - Concentrate Produced (DMT) Zinc 47,413 Lead - Concentrate Grades (%) Zinc 52% Lead - Silver - ozs/ton - Payable Production Zinc lbs 45,874,974 Lead lbs - Silver ozs - Total Cash Operating Cost per Pound of Payable Zinc Produced $ 0.78 All-In Sustaining Cash Cost per Pound of Payable Zinc Produced $ 0.84 Site Cash Operating Cost per Tonne Milled $ Please refer to non-ifrs measures at the end of this document. Three months ended During the three months ended, Perkoa Mine sold 32.6 million lbs of zinc. Revenues for the quarter totalled $36.9 million with average realized metal prices for the month of $1.49 per lb of zinc. Mine Operation costs for the quarter were $27.0 million. Site cash operating cost per tonne milled during the period was $111.72, and total cash operating cost per zinc payable lb produced was $0.77 per lb. Perkoa remains on track to meet its 2018 cost guidance. Production results from Perkoa Mine for the quarter ended was 45.9 million payable lbs oz zinc. Mill throughput for the quarter was 179,940 tonnes with recoveries averaging 94% for zinc. Average head grades of the tonnes milled were 14.49% of Zn, with production of 47,413 dry metric tonnes of zinc concentrate, averaging 52% Zn. Underground production was 192,158 tonnes for the quarter. 14

15 MINERAL RESOURCE AND RESERVE ESTIMATES Internal Qualified Persons and Quality Control/Quality Assurance Dr. Mark D. Cruise, Trevali's President; Paul Keller, Senior Vice-President and Daniel Marinov, Vice President of Exploration are qualified persons, as defined by NI , and have supervised the preparation of the scientific and technical information that form the basis for various news releases issued by the Company. Dr. Cruise is not independent of the Company as he is a senior officer, director and shareholder of the Company. Mr. Keller and Mr. Marinov are not independent of the Company as they are senior officers and shareholders of the Company. The exploration, definition, construction, pre-production development and production work programs at the Company s properties were designed and supervised by the Company s President and Chief Executive Officer, Senior Vice-President Major Projects & Technical Support, and Vice President of Exploration who together are responsible for all aspects of the work including the quality control/quality assurance programs. On-site personnel at the Company s respective projects rigorously collect and track samples which are then security sealed and shipped to internationally accredited geochemical assay laboratories. At Santander, production mine samples are assayed at the independent on-site SGS geochemical laboratory ( SGS ). In the case of the Company s properties in New Brunswick, samples are shipped to Bureau Veritas Minerals Laboratories ( BVML formerly ACME) preparation facility in Val D Or, Quebec, then forwarded to Vancouver, British Columbia for assay. SGS and BVML s quality systems comply with the requirements for the International Standards ISO with CAN-P-1579 designation. Analytical accuracy and precision are monitored by the analysis of reagent blanks, reference material and replicate samples. Quality control is further assured by the use of international and in-house standards. External Technical Reports and Experts (1) The mineral reserve and resource estimates for the Rosh Pinah and Perkoa mines were prepared by Roscoe Postle Associates Inc. The Caribou, Halfmile, Stratmat and Santander Pipe mineral resource estimates were prepared by SRK Consulting Canada Inc. The Santander Magistral mineral reserve and resource estimates were prepared under the supervision of and approved by Professional Geologist Aline Cote (OGQ), a Qualified Person as defined in National Instrument Standards of Disclosure for Mineral Projects ( NI ). Ms. Cote is an employee of a related party to the Company and accordingly, is not independent. Canadian Institute of Mining, Metallurgy and Petroleum ( CIM ) definitions were followed for Mineral Reserves and Resources calculations. All the Company s public disclosure filings, including its most recent management information circular, annual information form, material change reports, press releases and other information, may be accessed at and readers are urged to review these materials, including the technical reports as stated above, which are filed with respect to the Company s mineral properties. (Zn = Zinc, Pb = Lead, Cu = Copper, Ag = Silver (Oz/t = troy ounce/metric tonne) Santander, Caribou, Perkoa, and Rosh Pinah Consolidated mineral reserves and mineral resources are tabulated below on a contained metal basis (Tables 1 and 2). Detailed breakdowns for each of the active mines (Santander, Caribou, Perkoa and Rosh Pinah) are provided by category on a grade-tonnage-contained metal basis in Tables 3 through 10. Mineral resources in this document are reported inclusive of mineral reserves. 15

16 Table 1. Total Mineral Reserves (Contained Metal) as of December 31, 2017 (1, 2) Change Change Change Zn Pb Ag Zn Pb Ag Zn Pb Ag Project Category M lbs M lbs K oz M lbs M lbs K oz M lbs M lbs K oz Santander Magistral Proven & Probable , ,769 (66) (7) (858) Caribou Mine Proven & Probable , ,945 Perkoa Mine Proven & Probable Rosh Pinah Mine Proven & Probable 1, , , ,487 Total Proven & Probable 3, ,732 2, ,158 1, ,574 (1) For additional detail respecting the mineral reserve contained zinc, lead and silver grades, see "Detailed Mineral Reserve and Mineral Resource Disclosure" and "Additional Information" in the Company's New Release dated April 16, 2018 (2) The M lbs (million pounds) and K oz (thousand ounces) contained metal is the total combined proven and probable mineral reserve estimates of all the mines on a 100% basis. Trevali s proportionate ownership interest pursuant to the applicable joint venture/option agreements is: Santander (100%); Caribou (100%); Perkoa (90%); and Rosh Pinah (80%). Table 2. Total Mineral Resources (Contained Metal) as of December 31, 2017 (1, 2, 3) Change Change Change Zn Pb Ag Zn Pb Ag Zn Pb Ag Project Category M lbs M lbs K oz M lbs M lbs K oz M lbs M lbs K oz Santander Magistral Measured & Indicated , ,342 (80) (6) (1,045) Inferred , , ,383 Santander Pipe Inferred , , Puajanca Prospect Indicated Inferred Caribou Mine (4) Measured & Indicated 1, ,449 1, , (19) (176) Inferred , , ,382 Halfmile Mine Measured & Indicated 1, ,980 1, , ,783 Inferred , ,008 (90) (29) 712 Stratmat Indicated , , Inferred , , Perkoa Mine Measured & Indicated 1, , Inferred (331) - - Rosh Pinah Mine Measured & Indicated 1, ,702 1, , Inferred , , Total Measured & Indicated 6,585 1,528 48,041 6,285 1,437 45, ,530 Inferred 3, ,478 3, , ,599 16

17 (1) For additional detail respecting the mineral resources contained zinc, lead and silver grades, see "Detailed Mineral Reserve and Mineral Resource Disclosure" and "Additional Information" in the Company's New Release dated April 16, (2) All mineral resources referred to in in the Company's New Release dated April 16, 2018 are inclusive of stated mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. (3) The M lbs (million pounds) and K oz (thousand ounces) contained metals is the total measured + indicated and inferred mineral resource estimation of all the mines on a 100% basis. Trevali s proportionate ownership interest pursuant to the applicable joint venture/option agreements is: Santander (100%); Caribou (100%); Perkoa (90%); and Rosh Pinah (80%). (4) A mineral resource estimate was not completed for the Caribou Mine in 2016; instead the comparison change references the previous mineral resource estimate for the Caribou Mine with an effective date of May 14, Santander Mine The annual mineral reserve and mineral resource estimate at the Company s Santander mine utilized a more conservative approach compared to prior years, increasing the net smelter return cut-offvalue from US$40 to $50 per tonne for reserves as a result of the increased 2017 water ingress. (1, 2) Table 3. Santander (Peru) Mineral Reserves as at December 31, 2017 Grade Metal Quantity Zn Pb Ag Zn Pb Ag Category Mt % % g/t M lbs M lbs K oz Santander Magistral (3) Proven Probable ,504 Proven & Probable ,911 (1) All mineral reserves have been estimated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum ( CIM ) Definition Standards adopted by CIM Council on May 10, 2014 (the CIM Definition Standards ). Numbers may not add due to rounding. (2) The technical report entitled Mineral Reserve Estimation Technical Report for the Santander Zinc Mine, Province de Huaral, Perú dated March 31, 2017, is the current technical report for the Santander property. (3) The Santander Magistral Underground Mine mineral reserve estimate is reported based on optimized stopes designed on an incremental net smelter return cut-off-value of US$50/tonne with metal prices of: US$1.16/lb zinc, US$0.91/lb lead, US$18.50/oz silver. The Santander Magistral Underground Mine mineral reserve estimate has been prepared by technical consultants to the Company with an effective date of December 31, 2017, under the supervision of and approved by Professional Geologist Aline Cote (OGQ), a Qualified Person as defined in National Instrument Standards of Disclosure for Mineral Projects ( NI ). Ms. Cote is an employee of a related party to the Company and accordingly, is not independent. (1, 2) Table 4. Santander (Peru) Mineral Resources as at December 31, 2017 Grade Metal Quantity Zn Pb Ag Zn Pb Ag Category Mt % % g/t M lbs M lbs K oz Santander Magistral (3) Measured Indicated ,370 Measured & Indicated ,297 Inferred ,135 Santander Pipe (4) Inferred ,871 Puajanca Prospect (5) Indicated Inferred (1) All mineral reserves have been estimated in accordance with the CIM Definition Standards. Numbers may not add due to rounding. 17

18 (2) The technical report entitled Mineral Reserve Estimation Technical Report for the Santander Zinc Mine, Province de Huaral, Perú dated March 31, 2017, is the current technical report for the Santander property. (3) The Santander Magistral Underground Mine mineral resource estimate is reported based on net smelter return cutoff-value of US$40/tonne with metal prices of: US$1.16/lb zinc, US$0.91/lb lead, US$18.50/oz silver. The Santander Magistral Underground Mine mineral resource estimate has been prepared by the mine geology department and non-independent resource geology consultants to the Company with an effective date of December 31, 2017, under the supervision of and approved by Professional Geologist Aline Cote (OGQ), a Qualified Person as defined in NI Ms. Cote is an employee of a related party to the Company and accordingly, is not independent. (4) The Santander Pipe Underground Deposit mineral resource estimate is reported based on Gross Metal Value cutoff-value of US$40/tonne with metal prices of: US$1.13/lb zinc, US$1.00/lb lead, US$18.00/oz silver. The Santander Pipe Underground Deposit mineral resource estimate was prepared and approved by Gilles Arseneau (P.Geo.), a consultant with Arseneau Consulting Services Inc, who is an independent Qualified Person as defined in NI , with an effective date of November 6, (5) The Santander Puajanca Underground Deposit mineral resource estimate is reported based on Gross Metal Value cut-off-value of US$40/tonne with metal prices of: US$1.15/lb zinc, US$0.95/lb lead, US$16.50/oz silver. The Santander Puajanca Underground Deposit mineral resource estimate was prepared and approved by Gilles Arseneau (P.Geo), a consultant with Arseneau Consulting Services Inc., who is an independent Qualified Person as defined in NI , with an effective date of November 6, Bathurst Mining Camp Operations Caribou Mine The Company s inaugural mineral reserve statement at the Caribou mine documents material increases across all mineral resource and mineral reserve categories. The 2017 program more than replaced mined inventory from 2015 onwards, particularly in the Measured, Indicated and Inferred categories. Table 5. Caribou (New Brunswick) Mineral Reserves as at December 31, 2017 (1) Grade Metal Quantity Zn Pb Cu Ag Zn Pb Ag Category Mt % % % g/t M lbs M lbs K oz Caribou Mine Proven ,516 Probable ,429 Proven & Probable ,945 (1) All mineral reserves have been estimated in accordance with the CIM Definition Standards. Numbers may not add due to rounding. (2) The Caribou Underground Mine mineral reserve estimate is reported based on optimized stopes designed on an incremental net smelter return cut-off-value of US$75/tonne with metal prices of: US$1.21/lb zinc, US$1.00/lb lead, US$18.50/oz silver, FX: US$/CAD$0.80. The Caribou Underground Mine mineral reserve has been prepared by the mine engineering department of the Company with an effective date of December 31, The Caribou Underground Mine mineral reserve has been reviewed and approved by Professional Engineer Torben Jensen (P.Eng.), a consultant with Roscoe Postle Associates Inc., who is an independent Qualified Person as defined in NI and will be detailed in the technical report entitled Technical Report on the Caribou Mine, New Brunswick Canada to be dated April 12, 2018, which will be available under the Company s profile on SEDAR at within 45 days of April 16,

19 Table 6. Bathurst Mining Camp (New Brunswick) Mineral Resources as at December 31, 2017 (1) Grade Metal Quantity Zn Pb Cu Ag Au Zn Pb Cu Ag Au Category Mt % % % g/t g/t M lbs M lbs M lbs K oz K oz Caribou Mine (2) Measured ,634 - Indicated ,815 - Measured & Indicated , ,449 - Inferred ,597 - Halfmile Mine (3) Measured Indicated , , Measured & Indicated , , Inferred , Stratmat (4) Indicated , Inferred , (1) All mineral resources have been estimated in accordance with the CIM Definition Standards. Mineral resources are inclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Numbers may not add up due to rounding. (2) The Caribou Underground Mine mineral resource estimate is reported based on 5% zinc equivalent cut-off grade with metal prices of: US$1.21/lb zinc, US$1.00/lb lead, US$18.50/oz silver, FX: US$/CAD$0.80. The Caribou Underground Mine mineral resource estimate has been prepared by the mine geology department and nonindependent technical consultants to the Company with an effective date of December 31, The Caribou Underground Mine mineral resource estimate has been reviewed and approved by Professional Geologist Ian Blakley (P.Geo), a consultant with Roscoe Postle Associates Inc., who is an independent Qualified Person as defined in NI , and will be detailed in the technical report entitled Technical Report on the Caribou Mine, New Brunswick Canada to be dated April 12, 2018, which will be available under the Company s profile on SEDAR at within 45 days of April 16, 2018 (3) The Halfmile Underground Project mineral resource estimate is reported based on 5% zinc equivalent cut-off grade with metal prices of: US$1.05/lb zinc, US$0.95/lb lead, US$20.00/oz silver, FX: US$/CAD$0.80. The Halfmile Underground Project mineral resource estimate was prepared and approved by Professional Geologist Gilles Arseneau (P.Geo.), a consultant with SRK Consulting (Canada) Inc., who is an independent Qualified Person as defined in NI , with an effective date of October 26, (4) The Stratmat Underground Project mineral resource estimate is reported based on 5% zinc equivalent cut-off grade with metal prices of: US$1.00/lb zinc, US$1.00/lb lead, US$21.15/oz silver, FX: US$/CAD$0.85. The Stratmat Underground Project mineral resource estimate was prepared and approved by Professional Geologist Gilles Arseneau (P.Geo.), a consultant with SRK Consulting (Canada) Inc., who is an independent Qualified Person as defined in NI , with an effective date of October 26, Perkoa Mine Resource definition and exploration drilling successfully replaced 2017 mined inventory and halted the downward mineral reserve depletion trend. Significant gains were realized to mineral reserves and to measured and indicated mineral resource categories following the inferred mineral resource conversion program. (1, 2) Table 7. Perkoa (Burkina Faso) Mineral Reserves as at December 31, 2017 Grade Metal Quantity Zn Zn Category Mt % M lbs Perkoa Mine Proven Probable Proven and Probable

20 (1) All mineral reserves have been estimated in accordance with the CIM Definition Standards. Numbers may not add due to rounding. The mineral reserve is shown at 100% ownership; Trevali holds a 90% joint venture interest in the Perkoa mine. (2) The Perkoa Underground Mine mineral reserve estimate is reported based on planned stopes with a net smelter return cut-off-value of US$100/tonne with incremental stopes greater than US$80/tonne included based on individual financial analysis, metal prices of: US$1.20/lb zinc, FX: /US$1.08. The Perkoa Underground Mine mineral reserve has been prepared by the mine engineering department of the Company with an effective date of December 31, 2017 and has been reviewed and approved by Professional Engineer Torben Jensen (P.Eng.), a consultant with Roscoe Postle Associates Inc., who is an independent Qualified Person as defined in NI and will be detailed in the technical report entitled Technical Report on the Perkoa Mine, Burkina Faso to be dated April 12, 2018, which will be available under the Company s profile on SEDAR at within 45 days of April 16, (1, 2) Table 8. Perkoa (Burkina Faso) Mineral Resources as at December 31, 2017 Grade Metal Quantity Zn Zn Mt % M lbs Perkoa Mine Measured Indicated Measured & Indicated ,467.6 Inferred (1) All mineral resources have been estimated in accordance with the CIM Definition Standards. Mineral resources are inclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Numbers may not add up due to rounding. The mineral resource is shown at 100% ownership, Trevali holds an 90% joint venture interest in the Perkoa mine. (2) The Perkoa Underground Mine mineral resource estimate is reported based on 5% zinc cut-off grade with metal prices of: US$1.20/lb zinc, FX: /US$1.08. The Perkoa Underground Mine mineral resource estimate has been prepared by the mine geology department and non-independent technical consultants to the Company with an effective date of December 31, 2017 and has been reviewed and approved by Consulting Professional Geologist Ian Blakley (P.Geo.), a consultant with Roscoe Postle Associates Inc., who is an independent Qualified Person as defined in NI and will be detailed in the technical report entitled Technical Report on the Perkoa Mine, Burkina Faso to be dated April 12, 2018, which will be available under the Company s profile on SEDAR at within 45 days of April 16, Rosh Pinah Mine Exploration and mineral resource conversion continued the deposits roughly 50-year track record of replacing mined inventory. The 2017 conversion drilling program increased mineral reserves by approximately 2.6 million tonnes, or an additional 3 years of mine life at current operating rates. Measured, indicated and inferred mineral resource categories also increased modestly. (1, 2) Table 9. Rosh Pinah (Namibia) Mineral Reserves as at December 31, 2017 Grade Metal Quantity Zn Pb Ag Zn Pb Ag Category Mt % % g/t M lbs M lbs K oz Rosh Pinah Mine Proven ,553 Probable ,323 Proven & Probable , ,876 (1) All mineral reserves have been estimated in accordance with the CIM Definition Standards. Numbers may not add due to rounding. The mineral reserve is shown at 100% ownership, Trevali holds an 80% joint venture interest in the Rosh Pinah mine. 20