Mining in the Cobalt region largely ceased in the late 1980s due to a global drop in the price of silver. Today, due to higher commodity prices that make reprocessing tailings ponds and other stockpiles economical as well as the availability of new exploration technologies, which can identify new areas of mineralization not previously explored, miners are refocusing their attention on Cobalt, Ontario, and its surrounding land.
Trio owns 100% of the 94-acre Duncan Kerr property located in the former Cobalt Mining Camp approximately three kilometers from the town of Cobalt, Ontario. During the 20th century, mines in the Cobalt Mining Camp produced over 445 million ounces of silver. In addition to continued exploration potential, the Duncan Kerr property holds 1.3 million tons of existing, aboveground mineralized material and a small mill as a result of historical mining operations on the property.
These mineralized stockpiles and ability to mill represent key competitive advantages for Trio versus many other junior exploration and development companies. Based on being able to conduct onsite processing of its inventory and then ship it to an experienced refinery for metal recovery, Trio believes that it possesses the ability to be cash flow positive while it conducts exploration activities. Revenue generated from the sale of Trio’s stockpiles is intended to support the Company’s advanced exploration programs.
Trio has entered into a five-year, off-take agreement with United Commodity AG, which the Company has stated has a potential value of up to $30 million. The Company began shipping its material to United Commodity in early 2013, which has been able to recover 95% to 99% of the residual silver, cobalt, and nickel present in Trio’s ore. Trio expects to earn $236,000 from the first shipment, and up to $500,000 per month for future shipments (which are double the volume of material initially processed).
Due to its proximity to town and long history of mining activity, the Duncan Kerr property is well served by existing infrastructure, which includes access to major highways, rail spurs, power, and fresh water. Trio views its existing infrastructure as a competitive advantage in that it helps address some of the challenges common for new exploration and milling companies, such as permitting and financing the construction of new infrastructure as well as ensuring that there are adequate power and water resources to conduct operations.
In the near term, Trio is focused on monetizing its existing, aboveground mineralized assets while simultaneously conducting an exploration program at the Duncan Kerr property. Preliminary diamond drilling and bulk sampling of trenches in 2012 returned favorable results; thus, Trio plans to continue with exploration in 2013, including 5,000 meters of additional diamond drilling, a GIS compilation, and additional work required to complete an NI 43-101 Technical Report. Trio expects to publish NI 43-101 resource valuations for the property’s stockpiles by August 2013, followed by SEC Industry Guide 7-compliant values in September 2013.
A major initiative for Trio is to upgrade its mill to a 360 ton/day capacity, which the Company estimates could lead to gross profits in the first year of silver/cobalt production of $7.8 million, for a net profit of $4.8 million. With further development and an increase in capacity, Trio believes that it has the potential to yield $1.5 million to $2 million in gross output per month (Source: Trio’s Corporate Presentation as of April 2013).
Trio further seeks to acquire 900 acres of land adjacent to the Duncan Kerr property. These properties also include historical mine workings, muck piles, and other mineralized materials. The Company believes such an acquisition could give it an opportunity to be a leader in this region and provide a barrier to entry for potential competitors, as well as enable economies of scale for processing and exploration.
Trio’s management has expertise in business development and finance for both public and private companies. CEO J. Duncan Reid has over 30 years of senior leadership experience, with more than a decade in the mining industry, and is currently leading Trio’s expansion efforts.
The Company presently seeks to raise $2.5 million to fund growth.