Trevali Resources Corp.
FRANKFURT : 4TI
TSX : TV
OTCQX : TREVF

Trevali Resources Corp.

December 30, 2010 09:15 ET

Trevali Awards Mine Power Transmission Line Contract for its Santander Mine Project in Peru: Signs Power Purchasing Agreement with SN Power

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 30, 2010) - Trevali Resources Corp. ("Trevali" or the "Company") (TSX:TV)(OTCQX:TREVF)(FRANKFURT:4TI) is pleased to announce that Trevali Renewable Energy, a wholly-owned subsidiary, has awarded TECSUR of Peru the contract to construct the power transmission line from the Santander mine to the interconnection on the Peruvian National Grid - Sistema Eléctrico Interconectado Nacional (SEIN) at Shelby.

TECSUR is a subsidiary of Luz del Sur of Lima, one of Peru's largest power distribution and energy solution providers, that is owned by international power companies SEMPRA and AEI Energy. TECSUR has extensive experience in designing, constructing and delivering power solutions throughout Peru to industrial end-users in the minerals, oil and gas and industrial industries. Mineral industry customers include companies such as Teck Resources Limited, Barrick Gold Corporation, Glencore International A.G., Pan American Silver Corp. and Southern Copper Corporation.

TREVALI POWER GENERATION PLAN

Trevali Renewable Energy is currently in the process of upgrading its 100% owned 1.6MW Tingo run-of-river hydroelectric power plant to 8.8MW capacity (~10MW peak generation potential during wet-season – see News Release NR10-14 for details). Construction of the Santander – Shelby transmission line is a core component in the Company's plans to become a power generation company in addition to becoming 100% power self-sufficient. It is anticipated that access to low-cost reliable renewable power will be a major strategic and operational advantage at the Santander Mine and in the surrounding district.

The current status of the Company's power expansion plans may be summarized as follows:

  • Connect Santander Mine to Peruvian National Energy Grid – contract awarded
  • Obtain temporary power sufficient for planned mining operations during Tingo power expansion – Power Purchase Agreement executed with SN Power
  • Commence construction of Tingo power plant – lead items to be ordered first quarter 2011 and contract to be awarded second quarter 2011
  • Commission Tingo - sell excess power – anticipated late 2012

"The Company continues to fast-track construction of both the Tingo hydroelectric power station and the Santander Mine project to meet our planned mill commissioning in late-2011," stated Dr. Mark Cruise, Trevali's President and CEO. "We anticipate that access to low-cost, reliable power will provide a significant operational advantage to Santander with the added bonus of potential power sales going forward."

POWER PURCHASE AGREEMENT (PPA)

Trevali has signed a PPA with SN Power of Peru to purchase 2.4MW of power over a 12-month period with the provision to extend it for an additional 6-months if required. This, coupled with currently available power from the Tingo power plant, will provide sufficient power for the anticipated initial open-pit production from Santander prior to planned initiation of underground mining operations.

TINGO HYDRO-ELECTRIC POWER PLANT

The Tingo run-of-river hydroelectric power plant is located 17 kilometres 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.

WARRANT EARLY EXPIRY NOTICE

The Company announces that warrant holders of 6,014,814 (total number issued, including Finders warrants and Finders Commission warrants) common share purchase warrants issued on December 10, 2009, with an exercise price of $1.15 (the "Warrants") are now subject to a 30-day forced exercise provision as the Company's daily volume weighted average share price has been greater than $1.30 for 20 consecutive trading days.

SANTANDER PROJECT

A recently completed independent resource estimate update by Golder Associates reviews a total Indicated Mineral Resource of 5.858 million tonnes with an average grade of 3.86% zinc, 1.35% lead, 44 g/t silver and 0.08% copper (using a 3% ZnEQ* cut-off grade) for an estimated in-situ metal inventory of 498 million lbs. zinc, 174 million lbs. lead, 8.25 million oz. silver and 9.7 million lbs. copper. An additional Inferred Mineral Resource of 4.806 million tonnes grading 5.08% zinc, 0.44% lead, 21 g/t silver and 0.07% copper for an estimated in-situ metal inventory of 538 million lbs. zinc, 46 million lbs. lead, 3.19 million oz. silver and 7.8 million lbs. copper using the same cut-off grade.

Additionally, a further 100 million contained lbs. of zinc are estimated to be present in the 1,656,000 indicated tonnes grading at 2.74% zinc (using a 2.0% zinc cut-off grade) at the Santander Tailings Impoundment.

*ZnEQ = ((Ag Price(g) x Ag Recovery x Ag Grade) + (Pb Price(t) x Pb Recovery x (Pb Grade(%)/100)+(Zn Price(t) x Zn Recovery x (Zn Grade(%)/100)))/Zn Price(t). Golder utilized the three year rolling average price for all three metals. Price for silver is ($14.90/oz) and that for Pb ($2,174), Zn ($2,079) and Cu ($6,504) is per tonne. A recovery of 85% was applied to Ag, 90% for Pb, 85% for Zn and 60% for Cu for calculating the ZnEQ formula. The pounds metal are in-situ and have not had any mining factors applied to them.

Qualified Person and Quality Control/Quality Assurance

EurGeol Dr. Mark D. Cruise, Trevali's President and CEO and a qualified person as defined by National Instrument 43-101, has supervised the preparation of the scientific and technical information that forms the basis for this news release. Dr. Cruise is not independent of the Company, as he is an officer and shareholder.

The work programs at Santander were designed by, and are supervised by, Mark D. Cruise, President & CEO, Trevali, and Tim Kingsley (Senior Geologist), who together are responsible for all aspects of the work, including the quality control/quality assurance program. On-site personnel at the project rigorously collect and track samples which are then security sealed and shipped to ACME Laboratories, Vancouver, for assay. ACME's quality system complies with the requirements for the International Standards ISO 9001:2000 and ISO 17025: 1999. 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. Blind certified reference material is inserted at regular intervals into the sample sequence by Trevali personnel in order to independently assess analytical accuracy. Finally, representative blind duplicate samples are routinely forwarded to ACME and an ISO compliant third party laboratory for additional quality control.

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 zinc-lead-silver 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.

Trevali has also recently entered into a Letter of Intent with Kria Resources Ltd. (Kria) to complete a business combination whereby Trevali will acquire all of the issued and outstanding common shares of Kria and Kria will become a wholly owned subsidiary of Trevali (see News Release NR10-18 for details).

The common shares of the Company are currently listed on the TSX (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, President

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.

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. Many factors, both known and unknown, could cause actual results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements contained in this news release and the company has made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: fluctuations in spot and forward markets for silver, zinc, base metals and certain other commodities (such as natural gas, fuel oil and electricity); fluctuations in currency markets (such as the Peruvian sol versus the U.S. dollar); risks related to the technological and operational nature of the Company's business; changes in national and local government, legislation, taxation, controls or regulations and political or economic developments in Canada, the United States, Peru or other countries where the Company may carry on business in the future; risks and hazards associated with the business of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected geological or structural formations, pressures, cave-ins and flooding); risks relating to the credit worthiness or financial condition of suppliers, refiners and other parties with whom the Company does business; inadequate insurance, or inability to obtain insurance, to cover these risks and hazards; employee relations; relationships with and claims by local communities and indigenous populations; availability and increasing costs associated with mining inputs and labour; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits and the presence of laws and regulations that may impose restrictions on mining,; diminishing quantities or grades of mineral reserves as properties are mined; global financial conditions; business opportunities that may be presented to, or pursued by, the Company; the Company's ability to complete and successfully integrate acquisitions and to mitigate other business combination risks; challenges to, or difficulty in maintaining, the Company's title to properties and continued ownership thereof; the actual results of current exploration activities, conclusions of economic evaluations, and changes in project parameters to deal with unanticipated economic or other factors; increased competition in the mining industry for properties, equipment, qualified personnel, and their costs.

Investors are cautioned against attributing undue certainty or reliance on forward-looking statements. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. The Company does not intend, and does not assume any obligation, to update these forward-looking statements or information to reflect changes in assumptions or changes in circumstances or any other events affecting such statements or information, other than as required by applicable law.

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