Three Valley Copper Initiates Strategic Review and Updates Preliminary 2022 Operating Guidance
Three Valley Copper Initiates Strategic Review and Updates Preliminary 2022
Operating Guidance
TORONTO, Oct. 20, 2021 (GLOBE NEWSWIRE) -- (TSXV: TVC) Three Valley Copper Corp. (“ Three Valley Copper ” or the
“Company”) has initiated a strategic review process to explore alternatives for the enhancement of shareholder value and the
best way forward to maximize production and cash flows from its mining assets in Chile. The Company’s primary asset is its
91.1% owned Minera Tres Valles (“MTV”) property near Salamanca, Region de Coquimbo, Chile.
Strategic Review
The Company and its Board have initiated a strategic review process that encompasses an evaluation of the Company's
development strategy, business plan, market valuation and capital structure and will consider numerous opportunities or
alternatives for the Company. These considerations may include potential mergers, a strategic partner(s), acquisitions or
dispositions, restructuring or refinancing of its long-term debt, and any other options identified with the fundamental objective of
achieving the best value for the Company's shareholders.
The Company has retained PI Financial to review and evaluate potential alternatives that may further maximize value for Three
Valley Copper’s shareholders. There can be no assurance that the Company's strategic review process will result in any
transaction or investment.
Achieving the 2022 production profile at MTV through its ramp-up of Papomono Masivo (“ PPM”) continues to be the
Company’s main priority. The ramp-up will establish the foundation from which the mining operation at MTV can expand to full
production. Following this, Three Valley Copper could recognize the associated operating benefits and further advance its
exploration efforts. The Company’s current exploration program has been temporarily scaled back pending the strategic review
process.
Revised 2022 Outlook and Guidance
The successful development of PPM continues to be the catalyst for the Company to maximize value of the MTV assets. The
positive construction advances experienced over the prior two months are expected to continue at PPM. However, the
management team at MTV has recently reviewed again its preliminary development and mining plans for PPM and has
concluded the best way to improve the net economic value of PPM is to increase its capital expenditures in 2022 rather than
defer some of these into the latter years of the mine life. Consequently, the Company is now forecasting that additional capital
of approximately US$10 million in 2022 will be required to achieve the mine production guidance recently announced.
Previously, the Company had anticipated that copper production from the Don Gabriel open pit mine together with the recent
drawdown of the remaining US$6 million of senior debt, which was completed in early September, would support current
operations and its ongoing PPM construction project. The Don Gabriel mine has to date experienced lower head grades than
forecasted. A number of remedial measures were introduced in the third quarter but the improved results in the mining
operation will take a number of months to appear due to the workflow of a heap leach operation. As the Company’s primary
source of ore to produce copper cathodes for 2021, the underperformance in Don Gabriel production has amplified the
Company’s tight liquidity position with the loss of this revenue and is compounded by having a mostly fixed operating cost
base, increased capital demands of the PPM 2022 development and scheduled debt repayments which are due to begin
March 2022. The Company does not expect that it will generate sufficient cash from operations to fully fund 2021 continuing
operations, planned investment activities and debt service obligations and the revised increased sustaining capital
expenditures required in 2022 for PPM.
The Company is currently in discussions with its senior secured lenders and offtake provider and foresees a continuing
successful partnership with them that may include a number of changes to its existing loan agreement, inter alia, bridge loan
financing, waivers of operating covenants, deferrals of or renegotiation of repayment terms and/or renegotiation of the fixed
price portion of the offtake agreement. At this time there can be no assurance that such actions will be granted by the senior
lenders and/or offtake provider and the Company will continue to report on the progress of such discussions.
The Company has now updated its operating guidance below, which assumes a successful event from its strategic review
and/or negotiations with its senior secured lenders that will provide the Company with sufficient liquidity to allow it to execute
its production expansion at MTV as intended.
The Company’s revised preliminary operating outlook1 for 2022 at MTV is as follows:
Revised Original
Operating information Year Ended Year Ended
Copper (MTV Operations) Dec. 31, 2022 Dec. 31, 2022
Cu Production (tonnes) 8,000 – 10,000 8,000 – 10,000
Cu Production (pounds) 17.6M – 22.0M 17.6M – 22.0M
Cash Cost per Pound Produced2 $2.75 - $3.25 $2.75 - $3.25
Capital Expenditures3 ($ millions) $15 - $20 $5 - $10
In the absence of a successful strategic review event and/or renegotiations with its senior secured lenders which will require
financial liquidity solutions for MTV before the end of 2021, additional material changes to the Company’s revised preliminary
outlook above will then be required.
1. Preliminary guidance is based on certain estimates and assumptions, including but not limited to, mineral reserve
estimates, grade and continuity of interpreted geological formations, metallurgical performance and foreign exchange
rates. Please refer to the amended and restated technical report prepared by Wood Independent Mining Consultants,
Inc., in respect of the Minera Tres Valles Copper Project (the “Technical Report”) dated May 27, 2021 and to the
Company’s SEDAR filings for complete risk factors related to the Company and MTV.
2. Cash Cost is a non-IFRS measure – Cash costs of production include all costs absorbed into inventory less non-cash
items such as depreciation. Cash costs per pound produced are calculated by dividing the aggregate of the applicable
costs by copper pounds produced.
3. Planned capital expenditures (“CAPEX”) for 2022 are focused primarily on open pit expansion, plant CAPEX and
sustaining CAPEX of PPM for the inclined block-caving mining project. It is expected that by early 2022, the
underground operation at PPM will begin production and the resulting production growth is expected to lower per unit
operating costs in 2022 and 2023 as the results of this CAPEX are realized.
About Three Valley Copper
Three Valley Copper, headquartered in Toronto, Ontario, Canada is focused on growing copper production from, and further
exploration of, its primary asset, Minera Tres Valles. Located in Salamanca, Chile, MTV is 91.1% owned by the Company and
MTV's main assets are the Minera Tres Valles mining complex and its 46,000 hectares of exploratory lands. For more
information about the Company, please visit www.threevalleycopper.com.
Cautionary Statement Regarding Forward-Looking Information
Certain statements in this news release, contain forward-looking information (collectively referred to herein as the " Forward-
Looking Statements ") within the meaning of applicable Canadian securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are
intended to identify Forward-Looking Statements. In particular, but without limiting the foregoing, this news release contains
Forward-Looking Statements pertaining to: the significance of any particular exploration program or result and the Company’s
expectations for current and future exploration plans including, but not limited to, planned areas of additional exploration; the
estimation of mineral reserves; development progress of the Company’s mineral projects; statements with respect to the
timing and production of copper at the Don Gabriel and PPM sites; planned capital and operating costs; advancement of
ongoing projects, including the progress and timing of completion of the inclined block-caving mining project, and the
estimated capital costs required for completion; future operating costs given the completion of the block -caving mining project;
the expectation that the Company will continue to receive mineralized materials from ENAMI and third-party miners; and the
status and timing of the arbitration process with the minority shareholder.
Although TVC believes that the Forward-Looking Statements are reasonable, they are not guarantees of future results,
performance or achievements. A number of factors or assumptions have been used to develop the Forward-Looking
Statements, including: there being no additional significant disruptions affecting the development and operation of MTV; the
availability of certain consumables (including water) and services and the prices for power and other key supplies; expected
labour and materials costs and available supply; expected fixed operating costs; permitting and arrangements with
stakeholders; certain tax rates, including the allocation of certain tax attributes, being applicable to MTV; the availability of
financing for the Company's and MTV’s planned operations and development activities; assumptions made in mineral resource
and mineral reserve estimates and the financial analysis based on these estimates, including (as applicable), but not limited
to, geological interpretation, grades, commodity price assumptions, metallurgical performance, extraction and mining recovery
rates, hydrological and hydrogeological assumptions, capital and operating cost estimates, and general marketing, political,
business and economic conditions, the continued availability of quality management, critical accounting estimates, all terms
of the restructuring agreement and facility agreement to which MTV and the Company are parties will be satisfied in the future
including no events of default, existing water supply will continue, supplemental water availability will continue, the geopolitical
risk of Chile will remain stable, including risks related to labour disputes, the construction and expansion of mining operations
including the Papomono Masivo incline block caving underground mining project, as well as the timing thereof and production
therefrom; favorable outcomes of litigation and /or arbitration initiated by the minority shareholder of the Company’s operating
subsidiary, MTV; the timing of production and results for the recently restarted Don Gabriel mine; and expected timelines for
drawdown and repayment of indebtedness of MTV.
Actual results, performance or achievements could vary materially from those expressed or implied by the Forward-Looking
Statements should assumptions underlying the Forward-Looking Statements prove incorrect or should one or more risks or
other factors materialize, including: (i) possible variations in grade or recovery rates; (ii) copper price fluctuations and
uncertainties; (iii) delays in obtaining governmental approvals or financing; (iv) risks associated with the mining industry in
general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to
exploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to mineral
reserves, production, costs and expenses; and labour, health, safety and environmental risks) and risks associated with the
other portfolio companies' industries in general; (v) performance of the counterparty to the ENAMI Contract; (vi) risks
associated with investments in emerging markets; (vii) general economic, market and business conditions; (viii) market
volatility that would affect the ability to enter or exit investments; (ix) failure of the strategic review to result in a strategic review
event; (x) failure to secure additional financing in the future on acceptable terms to the Company, if at all; (xi) commodity price
and foreign exchange fluctuations and uncertainties; (xii) risks associated with catastrophic events, manmade disasters,
terrorist attacks, wars and other conflicts, or an outbreak of a public health pandemic or other public health crises, including
COVID-19; (xiii) those risks disclosed under the heading "Risk Management" in TVC’s Management’s Discussion and
Analysis for the period ended December 31, 2020; and (xiv) those risks disclosed under the heading "Risk Factors" or
incorporated by reference into TVC’s Annual Information Form dated March 3, 2021. The Forward-Looking Statements speak
only as of the date hereof, unless otherwise specifically noted, and SRHI does not assume any obligation to publicly update
any Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as may be
expressly required by applicable Canadian securities laws.
Cautionary Note to United States Investors Concerning Estimates of measured, indicated and inferred mineral
resources
This news release may use the terms "measured", "indicated" and "inferred" mineral resources. Historically, while such terms
were recognized and required by Canadian regulations, they were not recognized by the United States Securities and
Exchange Commission (the “ SEC”). The SEC has adopted amendments to its disclosure rules to modernize the mineral
property disclosure requirements for issuers whose securities are registered with the SEC under the Securities and Exchange
Act of 1934, as amended (the “ Exchange Act ”). These amendments became effective February 25, 2019 (the “ SEC
Modernization Rules ”) with compliance required for the first fiscal year beginning on or after January 1, 2021. The SEC
Modernization Rules replace the historical property disclosure requirements for mining registrants that were included in SEC
Industry Guide 7, which will be rescinded from and after the required compliance date of the SEC Modernization Rules. As a
result of the adoption of the SEC Modernization Rules, the SEC now recognizes estimates of “measured”, “indicated” and
“inferred” mineral resources. In addition, the SEC has amended its definitions of “proven mineral reserves” and “probable
mineral reserves” to be substantially similar to the corresponding Canadian Institute of Mining, Metallurgy and Petroleum
definitions, as required by NI 43-101. Investors are cautioned that "Inferred mineral resources" have a great amount of
uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to
assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United
States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists or is economically
or legally mineable.
For further information:
Michael Staresinic
Chief Executive Officer
T: (416) 943-7107
Renmark Financial Communications Inc.
Joshua Lavers: [email protected]
T: (416) 644-2020 or (212) 812-7680
www.renmarkfinancial.com
Source: Three Valley Copper.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.