Zinc + Lead = CBH, JML, KZL, PEM, ZFX

[tricha]

Zinc is going off and so are all the Zinc miners!

Bought into zinc today -

ZFX for a high peformance,low risk, huge dividend.
The profit is going to be out there if these prices zinc stays high and they should.
Could even be a takeover contender!

JML - Jabiru Metals for a gamble, medium risk, but high reward, 6 monthes from production, extremely high grade operation. ( risk is another Bendigo or BMA Gold, false drill results and production off track )



Zinc Advances to Highest Ever in London on Production Shortfall

By Chanyaporn Chanjaroen

Oct. 25 (Bloomberg) -- Zinc climbed to a record in London on speculation that demand for the metal used to galvanize steel will keep outpacing supply. Lead also rose to its highest ever.

Inventory tracked buy the London Metal Exchange dropped 1.5 percent to 115,650 metric tons, a 15-year low, the LME said in a daily report today. Production will lag behind demand by 420,000 tons this year, according to Societe Generale.

``The market continues to tighten and we don't see it easing until the middle of next year,'' Giles Lloyd, a London- based analyst at consulting company CRU said by phone.

Zinc for delivery in three months on the LME jumped $160, or 2.9 percent, to $4,060 a ton as of 5:30 p.m. London time. It earlier rose as much as $240, or 6.2 percent, to $4,140, beating the previous record set on Oct. 17 by $120.

The dark gray metal has more than doubled in the past year on soaring demand from China, the world's largest consumer. Global use will increase by 3.9 percent to 11.1 million tons this year, and by 2.6 percent to 11.4 million tons in 2007, the International Lead and Zinc Study Group said Oct. 9.

[edison]

I think it is better to stick with existing miners who have no operational problems such as ZFX/KZL/PEM etc. New mines ALWAYS have 'teething problems'.

CBH had operational problems but they are now almost at full capacity and it gonna do a BIG CATCH UP with the rest. I have most exposure on this at the moment (see CBH thread).

[tricha]

You are probably right Edision "I think it is better to stick with existing miners who have no operational problems such as ZFX/KZL/PEM etc. New mines ALWAYS have 'teething problems'.

CBH had operational problems but they are now almost at full capacity and it gonna do a BIG CATCH UP with the rest. I have most exposure on this at the moment (see CBH thread)."

But for me, I like some sure bets and a gamble, so I devide my stocks in two. CBH will do well, I'm sure![:p] Been up and down this lot with a ruler over the past two weeks.

As I stated JML is with some risk, but the rewards if it comes off are huge. Their grade, if correct, is some of the best in the world and their exploration potential is also huge.

ZFX can also double - Separate market speculation of an $18 per share bid for Zinifex sent its stock up 68¢ to $14.10.

At these zinc prices, there is only one way for all the Zinc producers and that is up.!

Zinc October 26,08:26
Bid/Ask 1.8767 - 1.8812
Change +0.0181 +0.98%
Low/High 1.8494 - 1.8948

[edison]

Just had a quick look at JML without much research at all. It is just an explorer right? How come it already has market cap of $200 million? CBH and PEM is already producing and only has market cap of 500 and 700 million approximately ......

[tricha]

Read it on JML - Edision.

My otherhalf bought CBH on Monday, yes back in full production after the mine collapse last year.
And yes I believe CBH Resources will do extremely well for you both!

But I'm greedy and want another 5 bagger after Mincor.

I thought BMO was my gold 5 bagger, got it horrible wrong there [xx(]

Zinc is the flavour of the year and Jabiru is my selected 5 bagger and hey I may be wrong again.

But nothing ventured, nothing gained, Zinifex is my back stop.

Cheers

[tricha]

Zoom, Zoom, Zoom

It's on fire and the decline shows no sign of slowing, mega profits coming to all Zinc producers.

Zinc October 27,07:48
Bid/Ask 1.9039 - 1.9041
Change +0.0386 +2.07%
Low/High 1.8608 - 1.9175

London Metal Exchange Warehouse Stocks
( October 27 )
Metal Tonnes in Storage Change from
previous day
Aluminum 681425 -2200
Copper 126750 +25
Nickel 7140 +306
Lead 45425 +475
Zinc 110800 -3100

[tricha]

Zinc Climbs to Record After Inventory Slumps to 15-Year Low

By Chanyaporn Chanjaroen

Oct. 27 (Bloomberg) -- Zinc advanced to a record in London after stockpiles of the metal used to galvanize steel plunged to the lowest in 15 years, creating a supply squeeze. Aluminum rose to the highest in five months.

Stockpiles monitored by the London Metal Exchange dropped 2.7 percent to 110,800 metric tons, the exchange said today in a daily report. That's the lowest in April 1991.

``Consumers have become very concerned about the availability of zinc,'' Michael Widmer, a London-based metals analyst at Calyon, said today by telephone. Calyon is one of 11 companies that trade on the LME floor.

Zinc for delivery in three months on the LME rose as much as $70, or 1.7 percent, to $4,170 a metric ton, the highest ever. It traded $54 higher at $4,154 as of 11:28 a.m. Zinc headed for a fourth weekly gain, up 4.6 percent since Oct. 20.

All LME inventories are in a slab form, which typically is not usable for galvanizers, the largest users of the metal, RBC Capital Markets wrote today in a report. Producers of galvanized steel accounted for 55 percent of global zinc consumption last year, according to the report.

Widmer said he is most bullish about zinc for next year, expecting a supply shortfall to persist into at least the first few months of 2007.

Global use will increase 3.9 percent to 11.1 million tons this year and 2.6 percent to 11.4 million tons in 2007, the International Lead and Zinc Study Group said on Oct. 9. China is the world's largest zinc user. The worldwide supply shortfall is forecast at 420,000 tons this year by Societe Generale

[tricha]

Have you got a Zinc Company yet

Does anyone know of any more emerging Zinc companies [?][?][?]

'Commodities supercycle is simply pausing for breath'Published: October 25 2006 03:00 | Last updated: October 25 2006 03:00

The recent strength of base metal prices has confounded the sceptics. Lead, zinc and nickel have all hit record levels while tin has surged to its highest level since 1989. Such gains have defied the forecasts of many investors who believed that the peak in the cycle for metal prices had passed.

US oil prices have declined by a quarter since early August but base metals have largely resisted crude's gravitational influence, displaying unexpected price resilience in the face of a US economic slowdown and concerns about its impact on global demand growth.


ADVERTISEMENT
Base metals markets remain very tight with available stocks - measured as a percentage of daily global consumption - sinking to rock bottom levels. This is reflected in the spreads between cash prices and the three-month futures prices. Cash prices for all base metals currently command a premium over three-month futures prices, reflecting the extreme tightness of short-term physical supplies.

This means that any news that affects potential supplies is having an immediate and dramatic impact on prices, as illustrated by the surge in tin prices after the Indonesian government closed down 20 small smelters for operating without proper permits.

There are concerns that current price levels are unsustainable as new supply is both inevitable and imminent.

This is reflected in the fact that markets are expecting that over the next four years commodity prices will return to their old long-run averages.

Analysts at Morgan Stanley are forecasting an extended period of high base metals prices with supply unlikely to close the gap with demand growth for five to 10 years.

Endemic supply side problems from skilled labour shortages to the challenging nature of many new deposits are leading to structural cost pressures. Long-run prices will need to be significantly higher to justify developing the marginal new capacity required to balance the market, according to Morgan Stanley.

Demand for base metals looks set to remain robust due to the gigantic infrastructure requirements in emerging markets.

Expansion in galvanised and stainless-steel production has generated huge demand for zinc and nickelJeremy Gray, of Credit Suisse, says: "China's new rail and underground spending programme in the next five years could be bigger than the rest of the world's total investment in the last 20 years."

Credit Suisse adds that India's share of global copper demand is forecast to rise from about4 per cent currently to 10 per cent by 2010.

Wiktor Bielski, of Morgan Stanley, says the "supercycle is just pausing for breath". He adds: "Long-term prices should be 50-100 per cent higher than levels used over the past 10 to 20 years."

This could have significant implications for mining equities. The market's unwillingness to price in an extended period of high metals prices has seen mining shares de-rated.

Citigroup's estimates suggest that UK miners are trading on a 2007 price/earnings ratio of just 8.5 times. Low valuations and the certain prospect of further merger activity in the sector has tempted many hedge funds to set up trades, which offset long exposure on mining equities with short positions on metals prices.

More bearish

[Dazza]

tricha

read this, i found it on HC, this is the reason why i left out JML, by the time JML gets into production, i hope that ZFX will be over $20 :D

http://www.silverstockreport.com/email/zinc_explode.html

Zinc Prices set to continue to explode
Silver Stock Report
by Jason Hommel, October 27, 2006

Zinc Prices are up 13% over former highs!

Since I'm such a long term thinker and planner, I'm not used to making predictions that come true so strongly within a month, except when I write up a stock, which can move up 30% the next day.

In my last report on Oct. 11th,
http://silverstockreport.com/email/zinc_lead.html
I wrote that zinc prices were breaking out to new highs, above $1.70/lb., and today, a mere 16 days later, zinc prices hit $1.92/lb., 13% higher.

Most investors don't care about zinc, or don't understand the fundamentals. I'll try to keep it simple.

Zinc inventories at the LME are the primary location for zinc stockpiles in the world. Zinc inventories are being rapidly depleted from a high of about 700,000 metric tonnes in 2004, and yet now stand at just over 100,000 tonnes.
Source:
http://www.kitcometals.com/charts/zinc_historical.html
(You have to check out the kitco graphs at the link above, it says everything!)

These zinc tonnes are 3.5 days worth of world demand, and will last about 100 days. Confused? The 3.5-day figure assumes all zinc mining in the world stops completely. The 100-day figure assumes zinc mining will continue, and that the deficit between demand and supply will consume the stockpile in about 100 days, unless things change in the next 100 days.

The only thing that can change, and must change, is the zinc price. Prices must rise to choke off world zinc demand.

Think about that for a moment. Mildly rising interest rates are probably not capable of slowing down the growth of the world economy. It has come down to the lack of zinc that is more likely going to do it, because about 75% of zinc is used to galvanize steel, for use in things like cars and building construction.

The annual deficit in zinc is about 420,000 metric tonnes.
Source:
http://www.financialexpress.com/fe_full_story.php?content_id=144642

Again, you can see that the 113,000 tonnes of zinc left will only last just over 3 months, unless prices rise high enough to choke off world zinc demand.

The reason why mine supply will not increase in the next 3 months is that it takes about 5-10 years to bring new mines to production. In short, people do not understand how slow, how difficult, and how expensive it is to rev up the "old economy". It's not as easy as throwing up a web site, or writing an article, or buying a stock tomorrow. Even if many of the zinc projects were fully funded, and they are not, it would still take years from today to increase zinc production!

Many of the zinc market leaders are saying that it will take at least 2 years from today to increase zinc production. That includes projects in the mine construction phase, such as Apex Silver in Bolivia, which seems to be having trouble with the newly elected Bolivian dictator repeatedly saying he will confiscate the entire mining industry! Many zinc production estimates were counting on projects such as Yukon Zinc's Wolverine deposit coming to production, which recently hit feasibility difficulties. Feasibility was also delayed on Metalline Mining, which recently announced that they may take up to 12 to 18 months more to complete feasibility. And after feasibility then comes project financing, which may take 6-12 months, and then mine construction that can also take a few years!

I'm absolutely convinced that we must see a bubble in zinc prices within the next 3 months to choke off world zinc demand, or else we will run out of zinc. Furthermore, such higher zinc prices must stay high for the next 2 years! The reason is that the paper futures market manipulators cannot short to death a physical commodity that requires delivery! But zinc prices may continue higher even after 2 years! Two years from now, supply and dem

[edison]

Tricha/Dazza,

Should have a look at MLS (Metals Australia) as well. It is only $20 million cap with $6 million cash (no cap raising anytime soon). That values their zinc project (and their unexplored Uranium project) at $14 million .....

[tricha]

read this, i found it on HC, this is the reason why i left out JML, by the time JML gets into production, i hope that ZFX will be over $20
Yes Dazza, totally agree ZFX will be $20 by then, 2 billion profit for the half year, $1 for the half year dividend.

Good story Dazza - Again, you can see that the 113,000 tonnes of zinc left will only last just over 3 months, unless prices rise high enough to choke off world zinc demand

Key point - no Zinc left, what price to pay

[SEC]

I was one of the original zinc bugs on this site (from late 2004) and am pleased that there's enough interest to generate a dedicated zinc thread!

Because I've held ZFX since 2004 I now have a gorilla sized holding and zinc stocks (ZFX KZL) comprise about 30% of my portfolio (cf Nickel 11% since I haven't held MCR IGO for as long).

Zinc was one of the last of the base metals to rally, but since mid 2005 it has rallied the fastest. Given we're only about 16 months into the zinc boom it's going to take a while to develop those (now economic) zinc deposits and restart those (now economic) zinc mines. But have no doubt that the supply side has awoken and will start kicking into production from 2008 onwards. I'll start looking to reduce holdings before then but for now am enjoying the ride on the back of the smelly metal.

SEC

PS If you want to research some more zinc plays have a look at TZN and UCL.

[SEC]

Thought I'd beat Tricha to post this interesting article about Teck Cominco's insights into the dwindling global zinc and lead stockpiles.

SEC

[i]
Zinc and lead stocks so low, metal consumption could be constrained
By: Dorothy Kosich
Posted: '01-NOV-06 09:00' GMT © Mineweb 1997-2006

RENO, NV (Mineweb.com) --Teck Cominco executives Tuesday forecast that world zinc stocks will contain only 11 days of supply by the end of this year, and may sink so low that it could “constrain metals consumption.”

In a conference call to discuss third-quarter financial results, the Vancouver-based miner also noted that lead LME stocks have declined to only two days of global consumption.

Mike Agg, Vice President Refining & Metal Sales for Teck Cominco, said the shortage of zinc concentrates is already limiting global metal production, as the globally tight concentrate market continues through 2006 and 2007. As a result, Agg said the deficit will cause the drawdown on zinc stocks to continue and could actually “constrain metals consumption. He noted that only 18 days of total global zinc stocks remained at the end of September. London Metals Exchange stocks have fallen 73% so far this year to only 3.8 days of global consumption, according to Agg. Meanwhile, zinc has hit a record high of $1.95 per pound.

Agg explained that zinc spot premium prices are rising in most markets, including that “strong demand is outstripping supply” and “a lack of availability [of zinc] in local markets.” Global zinc demand is up 5.5% in the Americas, 5.7% in Europe, and 4.9% in Asia, as of the end of August.

Meanwhile, although LME stocks of lead rose to 70,000 tonnes during the first half of this year, Agg said the stocks have now declined to the mid-40,000-tonne range. Currently, he estimated LME stocks only contain two days of global lead consumption. In the meantime, the lead price hit the historic high of 75-cents per pound on Tuesday.

Teck Cominco Manager of Market Research Andy Roebuck forecast a deficit in the copper concentrate market for the remainder of this year and in 2007. Since available stockpiles are still low, Roebuck suggested restocking of copper concentrates could continue well into next year. He estimated that 129,000 tonnes of copper remain in LME stocks, or 25 days of global consumption, noting that 90% of those stocks are being stored in warehouses in South Korea and Singapore.

Teck has experienced its own zinc woes as zinc sales at the Alaskan Red Dog mine were 80,000 tonnes lower during the third quarter due to adverse weather conditions, which delayed the start of the shipping season, and further delayed loading and shipment. Teck Cominco President and CEO Don Lindsay said that due to the tight concentrate market and the delays, the company wasn’t able to get enough zinc to market rapidly enough during the third quarter.

The company also experienced headaches at its Pogo gold project in Alaska as an excavator cut through a power cable, resulting in a fire which damaged a power substation. Power is expected to be fully restored by the end of the year.

Meanwhile, the company also will take a $9 million charge for “social contributions” to be made by its sahre of the Antamina mine in Peru. The Peruvian Government has been pressuring mining companies to finalize a “voluntary” windfall profits program to pay for local Peruvian social programs. However, Teck Executive Vice President and COO Peter Kukielski told analysts that he doesn’t believe there will be a “fixed royalty” at Antamina, due to a contractual agreement.

FINANCIAL RESULTS

CEO Lindsay told analysts that the company will focus on international growth projects, such as the possibility of building a copper smelter at its Highland Valley project, and doesn’t expect to attempt another large acquisition. The company dropped its bid for Inco, and will sell its Inco stock to CVRD.

The company reported $504 million in net profit or $2.34 per share for the third quarter of this year, compared with a net profit of $405 million or $2 per share

[tricha]

Interesting stuff, which one wil be the 1st to be taken out!

Anyway Dazza, switched my JML for CBH. So have ZFX and CBH same as you.
Reason - got a 25% gain in a week and mining risk a lot greater with JML, all new mines these days seem to attach a big chance of not meeting targets, cash strapped, etc.

JML unlikely to be taken out, as CSM hold 35%.

CBH 20% interest from Japanese Company from memory.

My Pick with limited knowledge, ZFX, far to cheap at the moment [:p]
No Major holders except superfunds.

Cheers

[Dazza]

good on ya tricha

ive learnt from my first year of investing, that u can still make 1-4 baggers by investing in undervalued PRODUCERS, all doesnt have to be explorers


i tink CBH is in the phase of being re-rated..

it held the 20-5 cent gain this month, and has rocketed up another 7 cents today

ive been trying to top up on CBH but finding it keeps getting away from me!!

yes CBH has got the japs 25% from TOHO

KZL has got the koreans

and ZFX well they are ZFX


i was so close to buying TRO, but decided not to, its nearly a 10 bagger in 1 year very good returns.

but in the mean time, i want to stick with producers

cause i tink in a few more years time, the main producers will have their big mines coming up..


yes sec 2008 maybe even 10 looks like the time to start exiting some stocks.

i reackon Zinc still has a long way to run though, on HC there is a Zn bull, his signiture is this graph of zinc demand , supply and new mines coming in.


i tink Zn still has a lot more to run.


Funny that lead now seems to be the next explosion... maybe the last of the metals to be rerated


we have gold/oil up

copper was first to go up
or was it coal - steal - aluminim

then nickel and zinc came up

whats next?

cobolt?

i know its definately uranium, so mainly my spec stocks are uranium comopanies

[tricha]

Consolidation in the OZ Zinc Players - Any thoughts on this one Sec, I've only been into Zinc in the last month. Not like you, since 2004.
I've been too busy concentrating on nickel, but the potential for all zinc producers to explode like what has happened to Nickel producers, must be huge.

[tricha]

Zinc Bull Market

Scott Wright
Zeal LLC
November 3, 2006

The recent and infamous scourging of the price of oil off its July highs has taken its toll on the greater commodities markets. Commodities losses in this time have left a bad taste in investors' mouths and have given fuel to a vicious Wall Street campaign that touts the end of the commodities bull market.

Oil has fallen around $20 per barrel in the last three months, shaving over 25% of its value, and has taken other commodities along for the ride. From the date of the oil high, gold had dropped over $100 per ounce to its recent October low losing 16% itself before a slight recovery in the last few weeks. And the stocks of the oil and gold companies have also plunged in sympathy.

But through the fog of commodities hate lie the few exceptions that have bucked the trend. While energy and precious metals have taken a beating in recent months, base metals have remained strong with several of them even eclipsing all-time highs.

Base metals are those industrial metals that have been so pivotal in the massive build-out of the global economy led by Asia. And as with the fundamentals driving the movement of energy and precious metals prices, supply and demand imbalances have found their way into the base metals realm.

There is a finite supply of base metals in the earth and the process of extracting them is very capital intensive and time consuming. So when growing demand for these metals outpaces supply on a recurring basis, an economic imbalance creates itself. This imbalance drives up prices until either demand shrinks or supply is able to catch up with it, ultimately creating sustainable surpluses.

In the last few years, even with year-over-year increases in production on the mining front for all the base metals, suppliers have not been able to keep pace with demand. And though this imbalance is supposed to tighten in the coming years as the global economy takes a breather, shortfalls are still expected.

Copper has taken the limelight among the base metals as an investor favorite and has held strong over the last few months hovering around the $3.50 per pound level as global supply disruptions continue to surface. And aluminum has been consolidating nicely following its May spike that surpassed its previous all-time high in the late 1980s.

After a bumpy ride the first half of this year, lead has had an incredible run since June rocketing 81% higher and exceeding its all-time nominal high just this month. And nickel has hardly let up since June as it also continues to shatter its highs. I recently penned an essay focused on nickel that highlights the incredible fundamentals for this metal.

The next major base metal that I'd like to focus on is zinc. Zinc just recently achieved a nominal all-time high and along with its fellow base metals counterparts has bucked the commodities trend in recent months. Zinc has had just an amazing run in its own bull market. From its 2003 low of $0.34 per pound, zinc has climbed an incredible 479% to a new all-time high of $1.95 per pound just achieved a few days ago.

Even with this enormous gain, zinc's importance and future potential is still relatively unknown to most investors. The largest and most important application of zinc is its use in galvanizing steel which protects the steel from corrosion. Zinc's galvanizing effects have been measured to increase steel's life by a factor of five.

Interestingly, according to a study that Battelle Laboratories performed in 1995 updating a National Bureau of Standards study in the 1970s, metallic corrosion costs the U.S. over $300 billion per year, which is in excess of 4% of the GNP. While the average person thinks of zinc as a primary vitamin supplement, in reality its economic implications are staggering.

Other major uses for zinc include its utility in brass and bronze among many alloys, die casting, batteries, ch

[Dazza]

up over $16 today

nearly 1 bagger for me since may/june

its good to be in the markets :D

[edison]

Got up too early .... hehe

Live Spot Prices
SPOT MARKET IS OPEN
closes in 100 hrs. 58 mins. 4 secs.
change since 19:00 London Time
Price: US$/lb

Zinc November 06,13:32
Bid/Ask 2.0086 - 2.0222
Change +0.0604 +3.10%
Low/High 1.9391 - 2.0222

London Metal Exchange Warehouse Stocks
( November 6 )
Metal Tonnes in Storage Change from previous day
Aluminum 680900 +25
Copper 142675 +275
Nickel 7278 +594
Lead 47975 +375
Zinc 101350 -1625

Courtesy to KitcoMetals.

Fantastic news for all Zinc stock owners ....... Looks like tomorrow it will go under 100000!!!!!!!!!!!!!!!!!

Base on current depletion rate, after 63 days all Zinc stocks will be gone!!!!!!!

[edison]

quote:Originally posted by edison


Got up too early .... hehe

Live Spot Prices
SPOT MARKET IS OPEN
closes in 100 hrs. 58 mins. 4 secs.
change since 19:00 London Time
Price: US$/lb

Zinc November 06,13:32
Bid/Ask 2.0086 - 2.0222
Change +0.0604 +3.10%
Low/High 1.9391 - 2.0222

London Metal Exchange Warehouse Stocks
( November 6 )
Metal Tonnes in Storage Change from previous day
Aluminum 680900 +25
Copper 142675 +275
Nickel 7278 +594
Lead 47975 +375
Zinc 101350 -1625

Courtesy to KitcoMetals.

Fantastic news for all Zinc stock owners ....... Looks like tomorrow it will go under 100000!!!!!!!!!!!!!!!!!

Base on current depletion rate, after 63 days all Zinc will be gone!!!!!!!

[tricha]

Sold ZFX today, great profit in a couple of weeks. The price should keep going up, but bought into PEM on Monday morning, ran through it in the weekend.

Cheers [B)][}:)]

[tricha]

Dazza -" ive learnt from my first year of investing, that u can still make 1-4 baggers by investing in undervalued PRODUCERS, all doesnt have to be explorers"

You are onto it Dazza, stuff the explorers and find the most undervalued Producer.


Zinc November 07,08:00
Bid/Ask 2.0532 - 2.0555
Change +0.0446 +2.22%
Low/High 1.9995 - 2.0585

Edision - you r a bit late today. yep zinc right on schedule, below the magical number.

$ ding, $ ding, $ ding the tills are rattling so fast the cogs are falling off/

[Bobbyvee]

I notice TZN get little mention on this thread despite their potential involvement in three significant zinc projects.
I have been holding them for some time (in and out for profits along the way). They are rising steadily with news on drilling in Algeria and Menninnie (Zinifex supported)due very soon.

Welcome comments from other zinc followers.

BobbyVee

[edison]

Tricha,

Yes a bit late because I am waiting for the close of European/US Markets.


Zinc November 07,12:11
Bid/Ask 2.0577 - 2.0623
Change +0.0491 +2.45%
Low/High 1.9995 - 2.0713

London Metal Exchange Warehouse Stocks ( November 7 )
Metal Tonnes in Storage Change from previous day
Aluminum 679200 -1700
Copper 141325 +350
Nickel 7416 +138
Lead 47050 -925
Zinc 99550 -1800

Less than 100000 tonnes now!!!!!!!!!!!! [8D]

[tricha]

Have you bought your Zinc yet [?]

Zinc May Rise Above $5,000 on China, Macquarie Says (Update3)

By Debarati Roy

Nov. 8 (Bloomberg) -- Prices for zinc, used to rust-proof steel, may rise 11 percent to trade above $5,000 a metric ton by the end of the year because of rising demand from China and supply disruptions, Macquarie Bank Ltd. said.

``Zinc looks as though it's running out,'' said Adam Rowley, London-based analyst in an interview yesterday in Mumbai. ``When a commodity runs the price can go anywhere as we have seen in copper and nickel.''

Zinc rose to a record on the London Metal Exchange after inventories of the best performing commodity in 2006 fell to a 15-year low. Chinese zinc demand will exceed output by 400,000 tons this year, according to government-affiliated Beijing Antaike Information Development Co.

Zinc for delivery in three months on the London Metal Exchange rose as much as $35, or 0.8 percent, to $4,535 a ton, the highest ever. It traded at $4,518 as of 9:29 a.m. London local time.

``Zinc supply looks extremely tight, while the drawdown has increased in the past three years, demand has risen,'' Rowley said. This year's supply will lag demand by in excess of 300,000 tons, he said.

Prices for zinc may average 9 percent more next year, beating other industrial metals such as copper and nickel, because of disruption to shipments from the U.S., RBC Capital Markets said Oct. 28.

`Uncharted Prices'

``These prices are uncharted and so it is difficult to predict a target but in the short-term we may see $4,700,'' said Rajini Panicker, head of research at Man Financial India Commodities Ltd.

Prices of industrial metals have soared in the past three years partly as China's booming economy stokes demand for the raw materials needed for factories, cars and appliances. Nickel has more than doubled and copper has risen 69 percent this year. China's economy expanded 10.4 percent in the third quarter.

``Consumption still exceeds production,'' Boliden AB, a Swedish copper and zinc producer, said Oct. 31 in a statement. Global zinc consumption rose 3.5 percent in the first nine months of the year, driven by China, the world's largest consumer of the metal, the Stockholm-based company said.

`Zinc Plays'

Shares of Korea Zinc Co., the world's largest producer of the metal, rose 1 percent to close at 108,000 won ($115). They rose 7 percent yesterday. Zinifex Ltd., the world's second- largest producer, fell 1.1 percent to A$16.552 after closing at a record yesterday. Both stocks have more than doubled this year.

Shares of Hindustan Zinc, India's largest producer, dropped 1.6 percent to 965.8 rupees in Mumbai. The stock has gained four times in value this year.

OAO Chelyabinsk Zinc Plant, Russia's largest producer of the metal, yesterday raised a greater-than-expected $336 million selling shares in London. Russia is one of the world's 10 largest producers of zinc.

``Zinc is one of the strongest-performing base metals and there are few zinc plays available globally, so this was a successful offering,'' Vladimir Katunin, a metals analyst at Aton brokerage in Moscow, said yesterday in a telephone interview.

Global use will increase by 3.9 percent to 11.1 million tons this year, and by 2.6 percent to 11.4 million tons in 2007, the International Lead and Zinc Study Group said Oct. 9.

``The market is now testing how resilient the demand is,'' Macquarie's Rowley said.

Canada's Teck Cominco Ltd., the world's largest producer, said Oct. 30 that shipments of zinc concentrate were delayed in the third quarter by bad weather at the Red Dog

[tricha]

Would not surprise me if ZFX eats one or two of the above, now which one 1st [?]

Hmm, JML tied up by CSM
CBH tied up by some Japanese firm.
PEM tied up by the Bank Super funds, ding!!!!

Havn't looked at KZL or quite a few others out there.


Zinifex casts an eye overseas for growth Could be a red herring, going to say an OZ company, yeah right [}:)]
Email Print Normal font Large font Jamie Freed
November 9, 2006

Advertisement
AdvertisementAFTER breaking the $1 billion annual profit mark in August, Zinifex is looking overseas for production growth.

Chief executive Greig Gailey said his company expected to announce joint venture deals with junior explorers in areas such as Mexico and South America this year to help it increase production in the longer term.

Although zinc prices hit a record this week due to a steep fall in stocks on the London Metal Exchange, Zinifex and other producers are unable to increase production to capitalise on the high prices because of capacity constraints.

At the current rate, LME stocks will be exhausted completely by early next year. "That raises the question of what price will the zinc price rise to to kill off demand," Mr Gailey said. "I don't have an answer to that."

The only globally significant zinc mine expected to begin production next year is Apex Silver's San Cristobal mine in Bolivia.

But the Bolivian Government has threatened to nationalise mines, which has added uncertainty to the already tight zinc market.

Mr Gailey said it was becoming more difficult to develop new mines due to political risk in unstable countries or the high cost of building projects in areas of the US and Canadian Arctic.

But by the end of the decade the supply shortage could ease somewhat, due to projects like Zinifex's Dugald River venture in Queensland.

The potential $500 million project is in the pre-feasibility stage and a bankable feasibility study could be approved early next year. Dugald River would add about 200,000 tonnes, or one-third, to Zinifex's annual production.

Zinifex, which was reborn from the ashes of failed miner Pasminco, plans to spend $27 million on exploration in the 2007 financial year, up from $12 million in 2006 and $4 million in 2005.

Zinifex is also keeping an eye out for potential acquisitions. Although Zinifex mainly produces zinc and lead, Mr Gailey said in the longer term it would make sense to diversify into other LME traded metals or specialty metals such as tantalum.

[edison]

What the .....

Zinc November 08,13:18
Bid/Ask 2.0286 - 2.0400
Change -0.0291 -1.41%
Low/High 2.0218 - 2.0827

London Metal Exchange Warehouse Stocks
( November 8 )
Metal Tonnes in Storage Change from
previous day
Aluminum 679050 -150
Copper 144250 +925
Nickel 7500 +84
Lead 46325 -725
Zinc 97725 -1825

Oh well cannot go up all the time ..

[SEC]

quote:Originally posted by tricha

Consolidation in the OZ Zinc Players - Any thoughts on this one Sec, I've only been into Zinc in the last month. Not like you, since 2004.
I've been too busy concentrating on nickel, but the potential for all zinc producers to explode like what has happened to Nickel producers, must be huge.


Tricha, I don't think there'll be any major consolidation of fellow Oz zinc players. Just cast your mind back to 2001, the ZFX, PEM and CBH zinc assets were owned by one player - Pasminco. After Pasminco went into administration, Zinifex was able to grab the best performing mines - Century and Rosebery. It chose not to purchase Broken Hill (PEM) or Elura (now Endeavour - CBH) because of operational problems and limited mine life (at the time). Both mine owners have struggled to make a profit until the surging zinc price saved them. PEM made a loss in FY05 and CBH made a loss in FY06.

I can't see ZFX going for either of these companies, despite having increased their mineral resources from 2001. It would be an about face for ZFX.

Kagara is a different story. Profitable from Day 1, it is bigger than PEM or CBH and has higher quality mineral resources. I can't see it as a ZFX target since there wouldn't be many operating efficiency improvements. However other parties have already shown an interest (refer to article below).

As I have mentioned earlier I reckon KZL will be taken out sooner rather than later. Probably by a foreign player. But given some extremely bullish reports circulating, including one by some gold bugs that reckon Zinc will be $5+/lb before long, ZFX may also be in the firing line.

SEC

From Mining Journal:

Kagara Zinc approached for takeover

Australian Zinc producer Kagara has been "informally approached" by a number of interested parties as a takeover target.

Perth-based Kagara, worth A$1.2 billion, has been the best performer on the Australian Stock Exchange in 2006 on the back of record zinc prices.

None of the offers have been attractive to the company and executive chairman Kim Robinson confirmed in a statement: "We are not currently in discussions with any interested parties," although he declined to elaborate on the offers.

Kagara supplies all its zinc to Korea Zinc Co, the world`s biggest smelterer of the metal which has a 14% stake in the company.

Zinc prices have gained as supplies of the metal have failed to keep pace with surging demand. The metal will average US$1.95/lb next year, up from a previous forecast of US$1.30/lb said Goldman Sachs.

Shares rose 3.6% to A$7.72 at the close of trade on Thursday - a tripling of their price since January. (November 10)

[tricha]

Sec - But given some extremely bullish reports circulating, including one by some gold bugs that reckon Zinc will be $5+/lb before long, ZFX may also be in the firing line.

That would be nice Sec, Zinc at $5+ lb, the way the LME stock is still falling, anything is possible.[:p]

London Metal Exchange Warehouse Stocks
( November 21 )
Metal Tonnes in Storage Change from
previous day
Aluminum 683650 +6300
Copper 157925 +100
Nickel 6864 -168
Lead 44325 -250
Zinc 89450 -950

I'm sticking with PEM as my 1st choice takeover zinc stock Sec. Reading betweeen the lines, they are smoking, looks like Pasminco did not run the Broken Hill mine too well.

Cheers

[SEC]

I personally think $5/lb is out of the question, for zinc to reach such a price would make it more expensive in real terms than at anytime in history since zinc was discovered as a separate element and people found a use for it!

Far more feasible is $2.30/lb, the inflation-adjusted record high of recent history (1974). This high may be sorely tested in the coming weeks. If it tops $2.30 I think you'll have to go back to 1951 (Korean War) or 1915 (WWI) to find higher real zinc prices!

SEC

[tricha]

The way I'm reading it Sec, $3.00 is certainly on the cards with Zinc stocks still plummenting.
Which would add $1.5 billion to Zinifex's bottom line. KZL, PEM, CBH will all be raking in hundreds of millions more.
Let the good times roll, cause the wheels are turning!


Zinc Climbs for Fourth Day as Inventory Drops to 15-Year Low

By Chanyaporn Chanjaroen

Nov. 23 (Bloomberg) -- Zinc gained for a fourth straight day in London as declining stockpiles showed production keeps lagging behind demand for the metal used to galvanize steel.

Inventory monitored by the London Metal Exchange dropped 1.2 percent to 87,925 metric tons, the LME said today in a daily report. That's the lowest since April 1991. Zinc consumption beat output by 167,000 tons in the nine months to September on increased demand from China, the world's largest consumer of the metal, the World Bureau of Metal Statistics said yesterday.

``Continued declines in stockpiles are positive for zinc,'' said Roy Carson, a London-based trader at Triland Metals Ltd., one of 11 companies dealing on the LME's floor. ``I'm looking for the metal to test previous highs,'' he said in an interview.

Zinc for delivery in three months on the LME rose $50, or 1.2 percent, to $4,410 a ton as of 9:51 a.m. in London. The metal has more than doubled this year, and traded at a record $4,580 on Nov. 10.

China's zinc use increased by 29 percent during January to September, the Hertfordshire, England-based WBMS said. Consumers have tapped stockpiles to fill the production shortfall, and inventory has plunged 80 percent in the past year.

Among other LME-traded metals, copper rose $55 to $6,960 a ton, nickel advanced $100 to $31,250 and lead added $7 to $1,540. Aluminum gained $5 to $2,680 and tin advanced $25 to $9,950.

To contact the reporter on the story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

Last Updated: November 23, 2006 04:59 EST

[tricha]

The prelude of whats coming with all Zinc producers

Kagara forecasts 2007 bumper profit
Source: Associated Press



See also
Base Metals Mining Board
Base Metals Mining CatalogBase metal miner Kagara Zinc Ltd says it expects to substantially increase its net profit in the 2007 financial year.

Chairman Kim Robinson told Kagara's annual general meeting (AGM) in Perth that the company was expecting a substantial increase on the 2005/06 result of $35.6 million.

[tricha]

No wonder all Zinc producers are going off today against the Market trend, on a day the ASX went down :)
The panic button must hit the zinc price soon, huge re-rating coming up in 2 months with the half yearly accounts.

London Metal Exchange Warehouse Stocks
( December 1 )
Metal Tonnes in Storage Change from
previous day
Aluminum 678650 -1425
Copper 156725 +375
Nickel 6066 -660
Lead 43150 -650
Zinc 85200 -600
Charts

[tricha]

Stolwyk posted this under TRO

This is crucial reading if you are or want to follow the Zinc story!

http://www.angelnexus.com/getreport/c84f96386846ce3ec29da631a29e5d03.pdf

[tricha]

Zinc, nickel price forecasts boosted
ANGELA BARNES , Globe and Mail Update




Two brokerage firms have hiked their zinc and nickel price forecasts substantially, in the face of robust metal demand, supply constraints and continued strength in metal prices. The changes promoted a round of profit-estimate and price-target revisions for a number of mining stocks.

RBC Dominion Securities Inc. boosted its zinc price forecast for 2007 to $2 (U.S.) a pound from $1.50 and to $1.85 from $1.40 for 2008. It adjusted forecasts for zinc in 2009 and 2010 to $1.75 from $1.30 and to $1.90 from $1.30, respectively.

RBC Dominion also increased its nickel price forecasts, going to $12.50 a pound from $10 for 2007 and to $12.50 from $6 for 2008.

While the RBC team led by Fraser Phillips said their analysis suggests that spot commodity prices, with the exception of uranium, have peaked, metal prices seem set to continue at historically high levels because of strong demand and supply constraints. “Despite our forecast of a modest slowdown in global economic growth in 2007 and some signs of softness in certain end-use markets, metal demand continues at very high levels,” the team said in a market comment this morning.

“At the same time, supply remains constrained by years of under-investment and production disruptions are exacerbating the problem,” they said. Furthermore, they added “inventories for all the metals are currently well below critical levels and are forecast to remain there throughout our forecast period.”

The upbeat report suggests that there will be opportunities for investors to outperform the overall market by investing in mining shares next year, though the analysts warn that investors will need to be more selective in 2007 than they were this year.

Analysts John Redstone and John Hughes of Desjardins Securities Inc. also picked up on the strong metal price theme and boosted their forecasts for zinc and nickel. They expect inventories of both metals “to be completely depleted by the end of 2007.” They said in a report that the metal market is relying on China becoming a net exporter of zinc and zinc alloy in order to reduce the gap between supply and demand next year. However, China has remained a net importer through the first 10 months of this year, they noted. They boosted their 2007 price projection for zinc to $1.80 a pound from $1.40.

As for nickel, they noted that world stainless steel production is expected to rise by more than four per cent next year, following a 14-per-cent-plus increase this year. Stainless steel production accounts for roughly 70 per cent of nickel end use. They accordingly raised their 2007 forecast for nickel to $13 a pound from $10.

RBC Dominion also made changes in its copper price forecast -- increasing the 2007 forecast, for example, to $3 a pound from $2.50. The team, which also raised its long-term price assumptions for copper, zinc and nickel, ranks zinc first in order of preference among the base metals, followed by nickel, copper and aluminum, in that order.

[tricha]

Still time to get into Zinc Miner or two, before the world runs out and the price increases again! Cheers and happy Zinc hunting for the new year [}:)];)

Myra Saefong's Commodities Corner

Zinc supplies are quietly running out

SAN FRANCISCO (MarketWatch) -- It's zinc's turn to shine.
Spot prices for high-grade zinc have more than tripled on the London Metal Exchange in the last two years -- and the price rally won't likely end soon with demand for the industrial metal far outpacing supplies, analysts said.
After many years of languishing at low levels caused by abundant supplies, spot prices for high-grade zinc climbed to over $4,400 per metric ton as of Wednesday on the LME -- up almost 270% from 2004's levels.
That's quite a change for the metal that's mostly used to coat steel and to act as a rust inhibitor.
"Zinc has been perhaps the worst investment in major metals during the past several decades, which has resulted in significant underinvestment in exploration," said Dr. Harlan Meade, president and chief executive officer of both Pacifica Resources Ltd. (CA:PAX: news, chart, profile) and Yukon Zinc Corp. (CA:YZC: news, chart, profile) .
"The addition of several large mines in the mid 1990s simply flooded the market with zinc," he said.
New zinc output, in part, was made possible because of byproduct credits such as copper and silver that sometimes provided enough added revenue to offset zinc prices that really weren't high enough to encourage exploration or development, he said.
Now the zinc market faces a supply deficit, "caused by the depletion of many of our large mines," Meade said.
Exacerbating the problem, China, "who dumped zinc on the market during the 1980s and 1990s, became a net importer of the metal in 2003 as the country's consumption took off," he said.
China's influence
Indeed, China's zinc demand has been "rising at an amazing rate," said Eric Coffin, co-editor of HardRockAnalyst.com, which offers publications focused on resource stocks.
He blamed "extremely high capital investment growth," much of which is centered on construction, for the increase in Chinese consumption, which climbed 35% between 2003 and 2005.
"Zinc is a pretty basic industrial material," said Lawrence Roulston, editor of Resource Opportunities. "Most consumers would not even be aware that they come in contact with it many times a day," he said, pointing out that a typical car uses about 22 pounds of zinc.
"Car makers will pay whatever they need to pay to get enough zinc to keep making cars," he said, and "an extra dollar on the zinc price will not reduce demand for cars."
Similarly, demand won't slow even if "couple of tens of bucks" is added to the cost of a new house because of the zinc used in galvanized steel for construction, he said.
The recent run in the zinc price has "demonstrated ... the critical shortage of metals supply coming from the mining industry," said Roulston. "There are many small new mines constantly being developed, but no big mines."
Meanwhile, "mines are constantly being shut down as the ore bodies are depleted, [so] the net result is that production has been flat at a time of rising demand," he said.
Overall, the zinc industry will "have a hard time at any price bringing on enough new supply to balance supply and demand in 2010 and thereafter," Meade said.
Eating up supply
Against that backdrop, warehouse stocks of zinc have been depleted.
On the LME, supplies were down to around 85,750 metric tons as of early December -- down from 450,000 a year ago and close to their lowest level since March 1991, according to Martin Hayes, a senior correspondent at London-based BaseMetals.com.
And inventories are "set to keep on falling," he said.
The supply deficit this year will likely be close to 300,000 metric tons, h

[tricha]

Uranium and zinc top investor picks for 2007 and silver and nickel to benefit too
By: Dorothy Kosich
Posted: '26-DEC-06 11:26' GMT © Mineweb 1997-2006



RENO, NV (Mineweb.com) --Scotiabank Vice President, Industry and Commodity Market Research Patricia Mohr has forecast uranium and zinc as her top picks for investors in 2007, with precious metals, particularly silver, expected to benefit from further weakness in the U.S. dollar.

In her recently published analysis, Mohr said uranium was the third-best performing commodity this year “and will likely be the top performer in 2007.” She forecast that spot uranium prices are expected to average US$80 a pound in 2008, possibly ending 2007 close to $90.

“The current upswing in uranium prices represents a ‘secular’ transformational change in global energy markets—related partly to a shift by utilities from high-priced fossil fuels—rather than a ‘cyclical’ upswing,” Mohr asserted. “Nuclear energy is used for ‘base load’ electricity generation and will be little affected by an expected modest slowdown in global growth in 2007 (4.7% down from 5.2% in 2006), using ‘purchasing power parity’ estimates.”

Mohr noted that international utilities are currently seeking 60 million pounds of term commitments from miners, although U.S. utilities have built up some inventory. “While exploration activity has surged for uranium—across Canada, Australia, Africa and in Kazakhstan—there has been little improvement in mine production,” she said, explaining that a 10-year lag between deposit discovery and new mine development is typical. While higher prices have encouraged the reactivation of some mines and increased production at others, actual mine output probably dropped this year, Mohr suggested, noting the technical difficulties of Australia’s Olympic Dam and the fact that the McArthur River expansion in northern Saskatchewan has yet to receive regulatory approval.

Mohr forecast that mine production gains will be limited next year. The woes of Cigar Lake compound the supply problem because it would have been “the first big increase in global supply in many years (ramping up to 18 million pounds).”

BASE METAL SHIFTS
Within base metals, Mohr suggested that leadership has shifted from copper to zinc and nickel, and to a lesser extent, lead. “The correction in U.S. housing activity and Big Three auto assemblies is taking a toll on U.S. copper demand—with most of the recent increase in LME inventories occurring in U.S. warehouses.”

Nevertheless, Mohr asserted that the U.S. corrections “had only a limited impact on overall zinc demand. China’s share of global zinc consumption is 2.6 times bigger than that of the United States, limiting the negative fallout on zinc.” She also noted that strong U.S. non-residential construction is more zinc-intensive than is home-building.

With global zinc consumption surpassing supplies, Mohr claimed that “zinc is likely to move even higher in the first half of 2007, before significant mine expansion begins to trim prices in late 2007 and 2008.”

Meanwhile, Mohr’s analysis revealed that as LME nickel prices surged to a record high this month, China’s “enormous growth in stainless steel production is likely to continued in 2007 (up a projected 35%).” Of the 32 commodities covered in Scotiabank’s commodity index, “nickel was the top performing commodity in 2006—climbing an extraordinary 159% over the past year.” Mohr forecast a “supercycle is expected in nickel, with prices staying strong through 2008.”

[SEC]

Zinc and nickel - victims of their own success - weighting being reduced in the DJ-AIG Commodities Index. Have cash on hand when the moron fund managers and the weak willed sell their zinc/nickel stocks in the coming days.

SEC

From Metalsplace:

LME zinc and nickel are particularly affected by the rebalancing of the DJ-AIGCI Fund as the two metals were particularly strong performers in 2006. Nickel and zinc increased around 135% and 110%, respectively, during 2006.

According to DJ-AIG, zinc's weighting for 2007 is 2.798069%, up from 2006's weighting of 2.702377%, while nickel's 2007 weighting is 2.715318%, up slightly from 2.659153% in 2006.

"Further weakness looks assured this week as the DJ-AIG index is reweighted with heavy selling of nickel and zinc in particular expected," said UBS in a note.

However, the LME trader said the concern is overdone. "I think prices will begin to stabilize and consolidate after the latest shake-out because they are now closer to fairer values," said the trader.

Barclays Capital said in a note that the issue of rebalancing "has been blown up out of all proportion" since the amount of selling is relatively small compared with typical market volumes and the process of reweighting itself is very transparent.

[tricha]

China's zinc consumption to rise 4.5% in 2007
Source: Interfax



See also
Zinc Board
Zinc CatalogChina's zinc consumption will rise 4.5% to 3.1 million metric tonnes this year, resulting in a supply shortage of around 370,000 metric tonnes, said Lei Wanjun, an analyst at Great Wall Securities.

"Zinc consumption will maintain its rapid growth in 2007, which may push average prices higher to around RMB 32,000 ($4,156) in 2007," said Lei. Zinc prices in the physical market stand at around RMB 31,000 ($4,025) in the current market.

"Technical upgrades and industrial consolidation in the domestic steel industry will boost zinc consumption this year," said Lei. Zinc is mainly used in the steel industry.

China's galvanized sheet output grew by 40% per year during the past three years. Current domestic capacity stands at 10 million metric tonnes and is expected to exceed 15 million metric tonnes by the end of this year.

Domestic galvanized sheet output will reach 10.5 million metric tonnes in 2006, up 45% from the previous year, and increase zinc consumption by 145,000 tonnes from last year.

Lei added that the currently low LME zinc stocks will also push prices up this year. LME stocks are at less than 10,000 metric tonnes, equivalent to four days of world consumption.

World zinc output reached 10.669 million metric tonnes in 2006. China's output was 2.75 million metric tonnes, and it been the largest zinc producing country in the world for 15 straight years.

China became a net zinc importer in 2004 and imported about 400,000 metric tonnes zinc per year in the past couple of years. China's net imports of zinc products, including mined output, or so-called concentrates, were at 860,000 tonnes last year.

Interfax recently reported that the Shanghai Futures Exchange may launch zinc futures trading soon.

Jianjun, general manager of the trading body of Zhu Zhou Smelter Company Ltd., China's biggest Zinc production company, said the contract would be launched in February or March of this year. Tong Leshen, director of the market information department at Shanghai Nonferrous Metals Association, said zinc futures would be launched sometime in the first half of the year.

However, a senior official from Shanghai Futures Exchange refused to comment on the news.

Commentary
A 4.5% rise in consumption would be at the low end of estimated growth which may turn out to be 8% or more. Forecasts for demand to 2010 are suggesting up to a 50% increase and these figures have been the driver of prices, which saw new highs in November last year.

Prices have retreated 16% or so since then and continue to ease off. China is committed to exporting high end finished steel products and, until that industry reaches an apex, demand for zinc will continue to grow.

[tricha]

Pinched this from Stolwyk (TRO) I was at a loss to understand why Zinc stocke were on the rebound and the price drop.


Great Investments
Great investments with tremendous potential in a modernizing world.
Saturday, December 23, 2006

Why LME Zinc Inventory Depletion has Paused
Some readers have asked us if we had an explanation for the recent short-term change in trend for the LME zinc inventories (which has caused recent weakness in zinc mining stocks). The trend change is hardly noticeable on the 5-year and 1-year charts:




but it’s apparent on the 60-day and 30-day charts:



Why has the downtrend in LME zinc inventories paused in the 85,000-89,000 tonne range the last few weeks?

We believe 2 short-term factors have created a short-term surge in zinc supply which has caused the pause in the LME inventory downtrend.

The world's biggest zinc mine, Teck Cominco's Red Dog in Alaska, had some delays in shipments in Q3, increasing their Q4 shipments significantly. Red Dog only can ship a few months out of the year because of their Alaskan climate, so the Q4 spike in zinc supply is much bigger than normal this year. Because of weather conditions, about 50,000 tonnes of zinc in concentrate that was expected to be shipped in Q3 2006 was delayed to Q4 2006 and Q1 2007, with 25,000 additional tonnes of sales in each quarter


There was a surge in zinc exports from China ahead of a December 14 deadline for the ending of export tax rebates. With the extra 5% rebate disappearing, apparently Chinese smelters drew down any inventory they had and exported all they could by the December 14 deadline. The rebate didn't end for the special high-grade zinc (99.995%+ SHG zinc), "which is required by the LME for delivery against its zinc contract," so most of the surge was probably lower grade zinc. The surge in lower grade zinc probably meant some users had less need for SHG zinc, and thus there was likely a resultant short-term decrease in orders for SHG zinc, which is now being reflected in the buildup of inventories in the Singapore LME warehouse.
We believe that the Chinese rebate surge will be absorbed by the market fairly quickly as the Chinese smelters drop back their exports and build back their inventories. On the other hand, the effect of the Red Dog shipment spike will last into Q1. However, with the previous pace of LME Zinc depletion at around 80,000 tonnes per quarter, the additional 25,000 tonnes from Red Dog in Q1 shouldn’t prevent the downtrend in LME inventories from resuming, albeit at a temporarily decreased pace. We expect the zinc crisis to become very evident after the effects of the Red Dog shipment spike have dissipated by the end of Q1.

After the short term surge in supply from these 2 temporary events is absorbed by the market, we expect zinc to remain very strong because of the dearth of sizable projects in the pipeline for the next few years combined with growing demand and depletion of reserves at existing mines. We believe the fears in the market that the recent short-term trend change in zinc LME inventories could indicate a permanent shift in the supply/demand situation are misguided, and we expect that to become apparent in coming months. If the downtrend resumes as we expect, we believe the only way the LME Zinc inventories will avoid complete depletion is with zinc prices increasing enough to curtail demand.



posted by GreatTrades # 4:56 PM

[Zephyrus]

Kagara (KZL) getting close to good value now. Looking to buy in if it hits $4.50.

Intec (INL) is looking like a bargain at $0.20. Their first shipment of zinc/lead/silver left port the other day. Should be cashflow positive from now on with huge upside due to their patented technologies (royalties). Only risk is the price of zinc. I think this current downturn is just a blip though, so IMO a good time to get into zinc stocks.

[SEC]

quote:Originally posted by whiteheron


I believe that the current price pull back for zinc is of a temporary nature and that the price will hold up well for at least the next couple of years ( but dont take my word as gospel )



quote:Originally posted by SEC



Perfect storm at the moment, and almost all of the issues are transient.

1. Red Kite Hedge fund in trouble. Looks like a similar situation to the Amaranth losses on natural gas late last year. That was short term - just look at the gas price now!
2. The Chinese were paid rebates to export as much as they could prior to mid December, the ramifications of which were felt in increasing stockpiles over the following weeks. Looks to have settled down now.
3. Surplus of concentrate at the moment (commented on by Greig Gailey) since shipments from Alaska delayed in Q306 were delayed into Q406 and Q107. Witness the acceleration of zinc stockpile depletion around September-October. Any drawdown in stocks in the next month will be muted as a result but should accelerate again from March-April.
4. Market perception that the US housing recession is having an impact on zinc demand. If true, why are US zinc stockpiles still decreasing?
5. Market perception based on a Bloomberg article that China is a net exporter of zinc. Wrong. There was no account of zinc concentrates, of which China still imports millions of tonnes. China is still a huge net importer of zinc products. The report only shows that the global zinc smelting capacity is shifting to China from elsewhere.

As I've mentioned previously, the real supply response may start to kick in from late 07. In the meantime the chequebook is ready for topping up on some quality zinc miners.

SEC


I might also add:

6. Chinese zinc smelters taking advantage of arbitrage opportunities as and when they arise to ship zinc to the LME Singapore warehouse.

The following article vindicates my suspicion that the story about China being a net exporter of zinc is wrong if you take concentrates into account. China zinc consumption is still increasing big time:

[i]
China's 2007 zinc demand to grow, set to resume exports: CHR

Palm Springs, California (Platts)--27Feb2007
Chinese zinc demand in 2007 is set to rise by almost double-digit
figures, similar to growth figures seen in 2006, analyst Claire Hassall, of
CHR Metals, told Platts on Tuesday.
Speaking on the sidelines of the American Zinc Association annual
conference in Palm Springs, the UK-based analyst also suggested that the
China's ability to export zinc in the short term would also increase on the
back of domestic stockpiles. "The [zinc demand] figures for 2006 are in the
region of 9.2% growth, although it is very difficult to put an exact figure on
it. For 2007, I would think we're looking at 9.5% growth," she said, adding:
"I would expect the 2008 number to be around the same." She did suggest that
going forward this growth would slow.
Looking at supply, Hassall noted that China's exports would grow in the
short term and this has already begun. During her presentation, the UK-based
analyst indicated that Chinese exports grew in the second half of 2006 to
61,000 mt of refined zinc. The first half of 2006 saw net imports of 54,000 mt
of refined material.
"Zinc demand in 2006 rose by 9.5% to 3.15 million mt with refined output
up 15% to 3.19 million mt," she said, adding: "Mine production rose by 12.5%
to 2.87 million mt." [b]Concentrate imports to China also rose in 2006, by a
staggering 47% the analyst said, to 400,000 mt contained in zinc. Imports of
ore in concentrate in the first half amounted to 284,000 mt, while in

[FarmerGeorge]

The Shanghai Futures Exchange seems to be setting up to include zinc futures trading. Any thoughts on what this development means for the zinc price? I'm not sure but would more trading mean a more efficient market or am I just showing my naivete and inexperience?

[SEC]

Yay, some good news on zinc for a change:


China contemplates canceling export rebate on 0# zinc

Source: Xinhua


China's relevant department is contemplating canceling the export rebate on zinc concentrate with purity of more than 99.995 percent, namely 0# zinc, according to sources with the China Nonferrous Metals Industry Association.

0# zinc is the only product retaining five percent export rebate when China revoked all the export rebates on zinc concentrate last year.

According to Zhou Guobao, head of the Lead and Zinc Department of the association, China exported 340,000 tons of zinc in 2006, rising about 10 percent year on year.

Zhou forecast that the market demand for zinc would increase about 10 percent this year.

Zhou held that the price of zinc is expected to fluctuate at a high level, but ruling out the possibility of sharp ups and downs of the price.

The price of zinc is estimated at 28,000-30,000 yuan per ton in China, and 3,200-3,500 US dollars per ton on international market.

It is learned that the policy on canceling the export rebate on 0# zinc will be soon submitted to the State Council for approval, and is expected to be published soon.

China has adopted tariff policy in control of export of iron and steel, ferrous metal and nonferrous metals, which is regarded as a measure taken by the state to balance the trade and control export of resource-based products.



This is the LME grade zinc. I'm wondering whether Chinese suppliers already got wind of this and started shipping to the LME in anticipation of the rebate cancellation. In any case, expect the increase in LME stockpiles in the Asia region to continue. At least the zinc price is starting to increase too, particularly tonight.

SEC

[tricha]

Zinc 99175 -1525

The zinc stocks are due for a re-rating. ZFX cheap as chips, ;)

Cheers [B)][}:)]

[wedgetail]

not any more!!!!!!!!!!!!!!!!!!
GO ZINNIE

[Viking]

The announcement of ZFX acquired 95% of Wolfden Resources~
On the first look of the Canadian company seems to be a good quality miner~
Their Izok project seems to be quite a good mine. They are similar operator who has Zinc, Copper, Silver and Gold~

Zn 8.65 billion lbs
Cu 1.97 billion lbs
Pb 675 million lbs
Au 1.14 million oz
Ag 86.3 million oz

Just wondering if anyone had look into this one in depth and what your view on it?

[Shrewd Crude]

Hey tricha....
I've got a spec Zinc play that Im you maybe interested in....
Great Gold Mines GNL.... 4.6cents per share...
Im not able to intrepret the data, but looked rather attractive...
Have alook, tell me what you think... may have a shot at it blind as my first ever Zinc play...
lata...
[8D]
.^sc

[tricha]

Shrewd Crude - "I've got a spec Zinc play that Im you maybe interested in....
Great Gold Mines GNL.... 4.6cents per share...
Im not able to intrepret the data, but looked rather attractive... "

.................................................. ....................

Imm with a quick look, data did not quantify very much at all.

Heres a bonus dog, CUL Cullen Resources, 4.5 cents. I bought 200,000 shares today;)

Cheers [B)][}:)]

[Shrewd Crude]

thanks Tricha...
an oiler here,looking at spilling over into other mineral plays as an confessed amateur to these news stocks on my radar...
I will stay away from GNL
keep up the good work...
[8D]
.^sc

[tricha]

I wonder how long till the market smells the coffee and realises there ain't much Zinc left and propells it past $2.00 [?][?][?]

Then we will see the sparks fly!

London Metal Exchange Warehouse Stocks
( May 24 )
Metal Tonnes in Storage Change from
previous day
Aluminum 832475 -400
Copper 136100 -1475
Nickel 7200 +366
Lead 47925 -475
Zinc 78925 -275

[FarmerGeorge]

Tricha, I was thinking that when stockpiles dipped under 100,000, then again at 90,000, and now under 80,000 it seems a little strange but perhaps negative copper sentiment is having an effect? Still increasing CBH holding at bargain basement prices.

[Hommel]

CBH is one I have been buying too FarmerGeorge. Way under valued compared to it's peers. In fact I have bought a few more today!

[tricha]

A big day out today

Maybe Lead has something to do with it, as Whiteheron says, maybe it is not a byproduct any more.

Disclosure hold PEM and CBH.

Cheers [B)][}:)]

[Huang Chung]

I posted this link to an article in the Bulletin magazine on the PDZ thread, but its also relevant to this thread.

http://bulletin.ninemsn.com.au/article.aspx?id=276485

[tricha]

Zinc Rises to 3-Week High on Revived Demand; Lead Is at Record

By Chanyaporn Chanjaroen

July 12 (Bloomberg) -- Zinc rose to a three-week high on signs of revived demand for the metal used to galvanize steel. Lead pared gains that drove it to a record and aluminum was little changed.

Stockpiles of zinc tracked by the London Metal Exchange dropped 475 metric tons, or 0.7 percent, to 69,350 tons, the exchange said today in a daily report, the lowest in 16 years. World demand growth will exceed supply this year by 20,000 tons, said Kona Hague, an analyst at the Economist Intelligence Unit.

``Demand is fairly healthy,' London-based Hague said today in a telephone interview. ``We've seen good consumption growth from China,'' the world's largest user of the metal, she said.

Zinc added $85, or 2.5 percent, at $3,556 a ton as of 10:08 a.m. London time. The contract earlier rose to $3,580 a ton, the highest since June 21.

Zinc has gained 16 percent from this year's low on Feb. 2 as consumers increased purchases and tapped into stockpiles. World demand will rise to 4 percent this year, after 3.7 percent growth in 2006, according to EIU estimates.

Lead pared gains after rising to $3,030 a ton, an all-time high for a second consecutive day. The three-month contract added $10 to $2,990 a ton as of 10:08 a.m. London time.

Demand for the metal, used in car batteries, will exceed production by 74,000 tons this year, according to Macquarie Bank Ltd., forcing consumers to tap inventories. Stockpiles tracked by the LME fell 975 tons to 41,950 tons, the exchange said today. They have declined 62 percent in the past 12 months.

Aluminum was little changed, dropping $4 to $2,830 a ton. Rio Tinto Group, the world's third-largest mining company, agreed to buy aluminum producer Alcan Inc. for $38.1 billion, leapfrogging United Co. Rusal as the world's biggest producer of the metal used in cans and airplanes.

Among other metals traded on the LME, copper rose $3 to $7,943 a ton, nickel climbed $200 to $33,500 and tin gained $15 to $14,175.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net .

Last Updated: July 12, 2007 05:39 EDT

[Viking]

Just sold my ZFX the other day when hit $20~ was anticipating perhas there be a correction in Zinc~ then find a entry point to come back in~

Not sure whether my strategy is correct or not~ I was doing that with my MCR though the stock price did track downward... but my entry point was little ealier I though 38 cents is a good enough gain~ but it went further~

Now had to bite my finger nails that ZFX will do better~ [8)][B)][|)]

[tricha]

"Maybe Lead has something to do with it, as Whiteheron says, maybe it is not a byproduct any more."

Hmm Viking ZFX still cheap on fundamentals, and they produce one hell of a lot of lead as well, same as CBH and PEM, interesting times ;)

[FarmerGeorge]

Agreed Tricha, a lot of these companies seem to be priced to anticipate a zinc correction. If it doesn't happen they are due for a re-rate. I've been holding CBH for a while now, the 'P' hasn't changed, but the 'E' just keeps growing. Hopefully patience is a virtue in this case!

[Viking]

Thanks~ Master Tricha,

Since with both my MCR and ZFX I was plan to hold it for long~~ but I was just been naughty~ and thought I could make little short-term profit to buy myself a PS3 or a big TV~~~ [xx(][:p]

Since I do like ZFX and its foundamentals~ I had been opportunistic a little bit, and thought maybe I sell high and come back in with few cents gain~ then ZFX/MCR will both grow in long-term anyway~ and could make my little profit~~~[:o)] well, it proves that I am no good at picking SP~~ at least need to know more before act anyway~

[chrisito]

Hi Trisha, still holding CUL it looks like it's on it's way. Nice call. The posts on HC are positively gushing.

[Bobbyvee]

Yes interesting times for zinc and lead. The one I really like is Terramin (TZN). Big announcements from Algeria and the ZFX joint venture in South Australia can be expected in coming months.

Cheers
BobbyVee

[tricha]

The way the stock pile of zinc is falling we should see $2.00+ a ilb soon.
Which will be a double banger for most Zinc producers with Lead as an bonus. The way the price is going up it should get a speeding ticket from the ASX

Zinc May Outperform Other Metals on China Demand

, Scotia Says
July 17 (Bloomberg) -- Zinc, used to galvanize steel, may perform better than other base metals in the ``near'' term as falling Chinese exports and rising steel production will boost prices, said Scotia Capital Inc.

China became a net buyer of refined zinc in April and May, depleting global inventories. Without Chinese exports, the rest of the world would face a shortage of the metal, analysts Na Liu and Eric Yan said in a weekly note e-mailed to Bloomberg today.

China's demand for zinc, which helped to boost prices more than fourfold in the past five years, is increasing as economic growth averaging 9.5 percent a year in the past decade has made cars and appliances more affordable. General Motors Corp. and its rivals sold 25 percent more vehicles in China last year.

``In our view, fast-increasing galvanized steel production, the largest zinc consumer, will help domestic zinc prices find a higher floor,'' said the analysts with the Toronto-based investment bank. They didn't provide a price forecast.

Baosteel Group Corp., China's biggest steelmaker, said June 28 it will double zinc purchases by 2012 as it raises galvanized steel output. The company will need 140,000 tons of zinc metals, including refined zinc and alloys, in 2012, up from an estimated 70,000 tons this year, Chen Xiangming, an official in charge of alloy developing and trading, said.

China's production of galvanized steel more than doubled in May from a year earlier and rose 59 percent from April to 2.03 million tons, Scotia Capital said.

Chinese imports of zinc concentrates, the raw material used to make refined zinc, almost tripled as zinc producers increased production 22 percent in the first five months. Chinese smelters are relying on overseas concentrates as domestic mine production only rose 9.7 percent, said the report.

Still, there are concerns about potential increase of zinc supplies, the bank said. The spot treatment and refining charge, known as TC/RC, has risen to $300 a metric ton from a low of $20 a ton in the first half of 2006, indicating the global zinc concentrate market has eased.

Zinc futures for delivery in three months on the London Metal Exchange traded at $3,530 a ton at 1:25 p.m. local time.

To contact the reporter on this story: Xiao Yu in Beijing at yxiao@bloomberg.net .

Last Updated: July 17, 2007 09:08 EDT

[tricha]

2007-07-25 09:28:26

ZINC looks set to rally from here

By Sneh Mankani
Zinc prices continued to rise in 2006, bolstered by strong demand, supply constraints and the continued draw down of stocks. Prices increased 137 per cent year on year to average US$3250 a tonnes in 2006 and are forecasted to rise another 9 per cent to average over US$3550 a tonnes in 2007 as demand continues to expand faster than supply.

Total zinc stocks held by consumers, producers and in London Metal Exchange (LME) warehouses fell to 500,000 tonnes by the end of 2006, equal to 2.3 weeks of consumption and the lowest since 1991. Global stocks are expected to fall further in 2007, as consumption exceeds production, but are projected to increase over the medium term to 2.6 weeks of consumption by 2012.

One uncertainty in the outlook for prices is the potential for zinc production in China to be substantially higher than anticipated. The majority of zinc mine production in China is sourced from relatively small mines, with between 10,000 and 20,000 tonnes capacity, which have relatively short lead times to start up. Production from these small mines is highly responsive to prices, and hence, if prices remain high for longer than, say two or three years, more of these mines may begin production, resulting in significant additional supply.

Demand

Zinc Consumption Increasing

Global consumption of zinc grew by 3.4 per cent to 11 million tonnes in 2006 and is forecast to grow a further 4 per cent in 2007 to 11.45 million tonnes. Over the medium term, growth in consumption is projected to average 4 per cent a year, bringing world consumption of zinc to 14 million tonnes by 2012.

Data from the International Lead and Zinc Study Group show that galvanised steel currently accounts for about 50 per cent of zinc consumption. Galvanising (zinc coating) protects steel from corrosion and can increase the life of the steel by at least 500 per cent. Approximately 35 kilograms of zinc are used per tonne of galvanised steel sheet. The largest two consumers of galvanised steel are the construction industry and the automotive industry.

Galvanised steel is used for applications such as sheet roofing, car bodies and housing construction frames. The demand for zinc is therefore highly responsive to movements in the residential construction and motor vehicle manufacturing industries. Other uses of zinc include the production of zinc-based alloys such as brass and bronze, used in the manufacturing of household appliances, rubber and pharmaceuticals and in the purification of water.

China and India to drive consumption growth

China is the world’s largest producer and consumer of zinc. In China, zinc is used principally in the country’s growing steel industry for galvanising and as China’s steel industry expands, its demand for zinc will continue to rise. The majority of the increase in demand for galvanised steel in China is expected to come from the construction and manufacturing sectors. Construction growth driven by rural–urban migration in China is projected to flow through to growth across a range of major infrastructure developments. Building construction itself and the additional infrastructure required to service this construction will require large quantities of galvanised steel.

Strong growth in industries such as motor vehicle manufacturing is also increasing the demand for zinc. As incomes in China rise, local demand for cars is rising rapidly. China is now the world’s second largest market for new vehicles after the United States, with new vehicle sales reaching 7.22 million in 2006. Production and sales of cars grew by 25 per cent and vehicle exports more than doubled in 2006.

Increased infrastructure development is a main driver of demand for galvanised steel in India. The steel is used in many structural applications such as bridges, electricity transmission towers, utility poles, roads, ra

[scorp57]

PEM and ZFX. Zfx generating so much cash, and great dividend, even without the float of nyrstar!!

Pem generating an unbeleivable amount of cash, with another mine comming online also!! very undervalued!

definately my tips

[Maggie]

Any news on CBH? Still holding some of this but not really sure...

[FarmerGeorge]

Maggie I have been buying CBH anytime it gets around the 55c mark. Currently I think it is still undervalued but I've thought that for about eight or nine months now. I've given up trying to predict a re-rate as every announcement (see recent quarterly) is consistently positive but we don't see any significant movement. New mine coming on line will double production and lower over all per lb costs which should give it a boost.

[Maggie]

Thanks FarmerGeorge. I think the stock is undervalued as well. I thought that the recently quarterly was really positive but there wasn't much movement. Time will tell I guess!

[FarmerGeorge]

Their current producing mine has quite high costs per pound relative to other companies which I see as the main thing holding them back just now. Also there may be some residual nervousness following the mine collapse last year. I see good news on progress from Rasp today although any good news today has of course been swamped by the falling market.

[tricha]

Farmer George "Maggie I have been buying CBH anytime it gets around the 55c mark. Currently I think it is still undervalued but I've thought that for about eight or nine months now. I've given up trying to predict a re-rate as every announcement (see recent quarterly) is consistently positive but we don't see any significant movement."

55 cents is a good entry price. But do not expect it to go to the moon, maybe a dollar in good time. Has potential, but

CBH has a lot of shares,

The grade of their metals isn't great.

The Panorama mine is also high risk because of cost blow out potentials and time frame adjustments. ( Hopefully Mr Wall has learnt a lot from the demise of BMA Gold where he was also the chairman and CEO.

Actually CBH reminds me a lot like AGM, same amount of shares, grades, blowouts and management related to former dusters.

Probably being biased, but if u want quality, u can't go past PEM.

[Huang Chung]

PEM does look good at these prices, hey Tricha.

For Nickel, WSA is also looking good.

So many choices....no little cash. :(

[FarmerGeorge]

Tricha I haven't done a comparison with AGM but generally agree with your points: relatively low grades (higher costs), lot's of shares and potential for development cost blowouts. I maintain that CBH is undervalued and have a similar price in mind (about a dollar) for what it is really worth. I see the risks as fairly low actually but if you have some further insight as to what I may be missing of course I'd love to hear it: I don't mind holding a stock that's not moving right now as long as I know the reasons for it and I'm not missing any information. I'd hate to be one of those blind 'hold 'til you die' investors that doesn't sell due to myopia. Thanks for the comments.

[fihr]

I understand from their reports that AGM has relatively low grades but after processing will achieve a very high concentrate of around 20% nickel. I think this is similar to Jubilee's final result at Cosmos. Correct me if I'm wrong. Is CBH like this? Do your comparisons take into account a higher price for the concentrate produced based on its quality relative to other producers, as well as the costs of production? Is this an unnecessary comparison?

Forgive me if I am talking in utter ignorance here - I am no miner.

[FarmerGeorge]

Just a note that LME stocks of zinc continue to drop (below 65000 last I checked) yet the price has not reacted greatly, perhaps due to concerns over the current falls in markets everywhere. Proably worth checking the hedging policies of your zinc producers :)

[tricha]

Tricha I haven't done a comparison with AGM but generally agree with your points: relatively low grades (higher costs), lot's of shares and potential for development cost blowouts. I maintain that CBH is undervalued and have a similar price in mind (about a dollar) for what it is really worth. I see the risks as fairly low actually but if you have some further insight as to what I may be missing of course I'd love to hear it: I don't mind holding a stock that's not moving right now as long as I know the reasons for it and I'm not missing any information. I'd hate to be one of those blind 'hold 'til you die' investors that doesn't sell due to myopia. Thanks for the comments.

You are right Farmer George, CBH is undervalued, what an absolute bargin.

Oh and they produce one hell of a lot of Lead :)

[SectorSurfa]

we hear you

are you on drugs?

[Huang Chung]

More info on the rise and rise of lead. Nearly reached parity with POZ.

http://www.bloomberg.com/apps/news?pid=20601012&sid=aEg7Ln0sZSf0&refer=commodities

[tricha]

Yes Huang Chung, who would believe lead would get to the same price as Zinc.

And who produces a lot of lead :confused: ZFX for sure and .......................

LeadAugust 23,10:05Bid/Ask1.4216-1.4303Change+0.0526+3.84%Low/High1.3690-1.4416

Could be something to do with China producing 10,000 cars a day, how much lead in 10,000 batteries ??????????????????????????

[shasta]

Yes Huang Chung, who would believe lead would get to the same price as Zinc.

And who produces a lot of lead :confused: ZFX for sure and .......................

LeadAugust 23,10:05Bid/Ask1.4216-1.4303Change+0.0526+3.84%Low/High1.3690-1.4416

Could be something to do with China producing 10,000 cars a day, how much lead in 10,000 batteries ??????????????????????????

Better keep those ADY Tricha, for when they change to Li

[tricha]

Better keep those ADY Tricha, for when they change to Li

Hmm, maybe Zinc will go back to 80 cents a ilb :confused:

BASE METALS

MOVING TO SURPLUS
Short and medium term decline in zinc price projected

A timely reminder that base metal prices can fall as well as rise was the theme of the opening presentation at a London one-day zinc-focused event.
Author: Lawrence Williams
Posted: Wednesday , 05 Sep 2007

LONDON - Speaking at Mining Journal's 20:20 Zinc Day yesterday, zinc market expert Claire Hassall of CHR Metals opened proceedings with a note of gloom for those companies presenting their zinc projects to the assembled audience of mining investors analysts and corporate representatives. CHR Metals is a provider of internet-based analysis of the lead and zinc markets. Prior to setting up the company in 2000, Ms Hassall was Director of Metals Services of specialist metals consultancy Brook Hunt, so has a strong track record in the sector.
The zinc price has had a tremendous run over the past year and a half which, as Ms Hassall pointed out, was partly through several years of under-investment in the sector when the prices had remained perilously low, and that no-one at that time had predicted the mercurial growth in first the Chinese and then the Indian economies and consequent demand. China had been an exporter of zinc, but rapidly turned around to become a major importer. Effectively these growing economies are projected, according to Hassall, to add 4 million tons a year to zinc demand between 2000 and 2010 - and looking further ahead a further 4.1 million tons between 2010 and 2020.
Although Chinese growth is still running at high levels - 11 percent this year (lower than 2006), overall global demand increase has slowed to around 4-4.5 percent as against 7.4 percent in 2006.
But, although demand growth continues at a reasonable, but lower, level, supplies have also picked up sharply over the past year. Hassall pointed out that as zinc mines tend to be far smaller than, say, copper operations, the capital cost of bringing a new mine on stream, or resurrecting an old one, is comparatively low and the mining sector can react much faster as prices rise. She did point out though that there are few, if any, really major new zinc mines on the horizon, but that the continuing surge of new production from smaller operations is sufficient to put the market into surplus up until around 2010.
There is also a worry about substitution. As prices rise, consumers may look harder at alternative products and this can have a damaging effect on long term prospects for the metal.
So where will the zinc price go? Hassall's research suggested that there may be the occasional upward bumps in price, but that the current downturn being experienced by the sector will continue for the next three years at least, although she feels that some new projects may fall by the wayside if the price does drop, thus easing the downward pressure. The forecast thus is for prices to remain at or around current levels for the remainder of this year, but as much of the new production comes on stream, Hassall expects prices to fall for a number of years thereafter.
As far as existing zinc miners are concerned, though, Hassall feels they are mostly very profitable, and can remain so even with a sharp fall.
Perhaps this was not what potential investors and zinc miners wanted to hear at a zinc meeting, but after the huge price rises, the reminder that, like other base metals, zinc prices tend to be cyclical in nature is perhaps a much needed return to reality.

[Heavy Metal]

Hmm, maybe Zinc will go back to 80 cents a ilb :confused:



This prediction from the same person who was calling Zinc a screaming buy at $2 at the start of this thread.

[tricha]

This prediction from the same person who was calling Zinc a screaming buy at $2 at the start of this thread.

Actually I predicted $2.50 ilb

Whats really going on, LME zinc stocks plumment and the price of Zinc does as well :confused:

Hedge funds, thats my question ??? and a credit crunch, whats yours Heavymetal, or do u just like bagging :confused::confused::confused::confused:

[FarmerGeorge]

No secret that I'm a holder of CBH. I just read their most recent presentation which doesn't have anything much new but reiterates how undervalued they are on current market cap. Worthwhile looking at for a stable undervalued mid tier miner - plenty of production growth to come and a good strong balance sheet.

[countryboy]

yes and like most companies at the moment loaded with cash.which brings one to the question of how much of an effect this Liquidity issue is going to be for a Australian companies. I was tempted buy CBH today as it dipped below 50c but will continue to sit on the sidelines until this market runs its course.

[tricha]

yes and like most companies at the moment loaded with cash.which brings one to the question of how much of an effect this Liquidity issue is going to be for a Australian companies. I was tempted buy CBH today as it dipped below 50c but will continue to sit on the sidelines until this market runs its course.

Wise move Country Boy, Stock Resouce has just issued a sell on them.
And yes I thought they were cheap below 55 cents, but how things can change so quickly in the resource game.
Yep I put my money on Zinc hitting $2.50 on plummenting stocks, but it has turned to custard.

http://www.kitconet.com/charts/metals/base/spot-zinc-1y.gif (http://www.kitcometals.com/charts/zinc_historical_large.html#1year)

[FarmerGeorge]

Tricha - that may well be spanner to my plan! So what was the rationale for the sell? I'm assuming they're predicting lower zinc prices but was there anything else? Cheers

[tricha]

Tricha - that may well be spanner to my plan! So what was the rationale for the sell? I'm assuming they're predicting lower zinc prices but was there anything else? Cheers

They were not that clear on it from memory Farmer George, but low Zinc prices will certainly hurt. But like Shasta said Lead will help comphensate.

[tricha]

BASE METALS


MOVING TO SURPLUS
Short and medium term decline in zinc price projected

A timely reminder that base metal prices can fall as well as rise was the theme of the opening presentation at a London one-day zinc-focused event.
Author: Lawrence Williams
Posted: Wednesday , 05 Sep 2007

LONDON - Speaking at Mining Journal's 20:20 Zinc Day yesterday, zinc market expert Claire Hassall of CHR Metals opened proceedings with a note of gloom for those companies presenting their zinc projects to the assembled audience of mining investors analysts and corporate representatives. CHR Metals is a provider of internet-based analysis of the lead and zinc markets. Prior to setting up the company in 2000, Ms Hassall was Director of Metals Services of specialist metals consultancy Brook Hunt, so has a strong track record in the sector.
The zinc price has had a tremendous run over the past year and a half which, as Ms Hassall pointed out, was partly through several years of under-investment in the sector when the prices had remained perilously low, and that no-one at that time had predicted the mercurial growth in first the Chinese and then the Indian economies and consequent demand. China had been an exporter of zinc, but rapidly turned around to become a major importer. Effectively these growing economies are projected, according to Hassall, to add 4 million tons a year to zinc demand between 2000 and 2010 - and looking further ahead a further 4.1 million tons between 2010 and 2020.
Although Chinese growth is still running at high levels - 11 percent this year (lower than 2006), overall global demand increase has slowed to around 4-4.5 percent as against 7.4 percent in 2006.
But, although demand growth continues at a reasonable, but lower, level, supplies have also picked up sharply over the past year. Hassall pointed out that as zinc mines tend to be far smaller than, say, copper operations, the capital cost of bringing a new mine on stream, or resurrecting an old one, is comparatively low and the mining sector can react much faster as prices rise. She did point out though that there are few, if any, really major new zinc mines on the horizon, but that the continuing surge of new production from smaller operations is sufficient to put the market into surplus up until around 2010.
There is also a worry about substitution. As prices rise, consumers may look harder at alternative products and this can have a damaging effect on long term prospects for the metal.
So where will the zinc price go? Hassall's research suggested that there may be the occasional upward bumps in price, but that the current downturn being experienced by the sector will continue for the next three years at least, although she feels that some new projects may fall by the wayside if the price does drop, thus easing the downward pressure. The forecast thus is for prices to remain at or around current levels for the remainder of this year, but as much of the new production comes on stream, Hassall expects prices to fall for a number of years thereafter.
As far as existing zinc miners are concerned, though, Hassall feels they are mostly very profitable, and can remain so even with a sharp fall.
Perhaps this was not what potential investors and zinc miners wanted to hear at a zinc meeting, but after the huge price rises, the reminder that, like other base metals, zinc prices tend to be cyclical in nature is perhaps a much needed return to reality.

[Huang Chung]

Not too bad a scenario in respect of my one and only zinc play, Prairie Downs Metals (PDZ). They won't be in production until 2009, which, according to the previous article, would be not too far from when zinc prices might start to strengthen again.

In the mean time, they will go about their business of proving up what could well turn out to be a very sizable resource. :)

[Bobbyvee]

Interesting Huang Chung, but I cannot see how those PDZ drill results can compare with Terramin (TZN) huge findings in Tala Hamza (Algeria)

[Huang Chung]

I'll have to look into Terramin Bobbyvee, so can't comment at this stage. All I know is that PDZ is very moderately priced for the resource that have proved up, and the continuing good drill results they keep coming up with.

[whiteheron]

HC

PEM and TZN would be my best choices for zinc and lead

PEM producing , heaps of cash, well managed, pays dividend, good projects etc
Priced very cheap at present imo

TZN huge resource but not yet producing
Some country risk which you will need to weigh up
I recently sold part of my holding to reduce cost on balance to near nil (also needed the cash)

My opinion only
Time will tell

[shasta]

HC

PEM and TZN would be my best choices for zinc and lead

PEM producing , heaps of cash, well managed, pays dividend, good projects etc
Priced very cheap at present imo

TZN huge resource but not yet producing
Some country risk which you will need to weigh up
I recently sold part of my holding to reduce cost on balance to near nil (also needed the cash)

My opinion only
Time will tell

TZN has some tie in with ZFX, & could be a takeover play for ZFX.

I'm still happy holding PEM as my preferred Zinc/Lead producer.

[Huang Chung]

Bobbyvee

After a very quick look, TZN does indeed look impressive.

Their Algerian play is large, albeit at modest grades that are not dissimilar to PDZ's. 65% equity stake needs to be factored in though. And as Whiteheron said, soverign risk is a factor that needs to be considered as well. I haven't come across any info at this stage on the metalurgical properties of the deposit...hopefully, they won't have to grind the ore too finely to liberate the zinc and lead.

Their fully owned Angus project is, size wise, in the same ballpark as the Prairie Downs Project. Interestingly, they have a life of mine take-off agreement with Sempra Metals, which just happens to be one of Praire Downs major shareholders. Main mineralised zone is at a depth of around 500m, which is substantially deeper than Prairie Downs, so, all things being equal, will cost more to access.

PDZ is a one trick pony, with just their 100% owned namesake project worth mentioning. No soverign risk issues to speak of, as its an Australian operation. What they've uncovered that this stage is a very shallow resouce, which should be cheap to extract. Exploration continues to give positive results.

Now the clinchers for me....PDZ has a fully dilluted market cap of around $65m, whereas Terramin's is around $220m. Also, PDZ have stated that there is someone running the ruler over them, so there is a real possibility of some corporate action.

We've backed different horses Bobbyvee, but both look to be potential winners.

[Bobbyvee]

Interesting times for these zinc players. TZN have been very good to me as I commenced buying around 30 cents a couple of years ago. I am expecting some good news from the Menninnie joint venture with Zinifex in the near future.
Hopefully we will all be winners with our various plays! I guess what I like about TZN is that they are involved with 3 mines, 2 of which are in Aus

[Huang Chung]

Diversification ain't a bad thing.

Yep, interesting times ahead. All the best with TZN BobbyVee.

Cheers H.C.

[Huang Chung]

Zinc closing in on US $1.40 a lb again, after slipping to the low one twenties during the recent credit crunch sell off.

[tricha]

Zinc closing in on US $1.40 a lb again, after slipping to the low one twenties during the recent credit crunch sell off.

Imm, the Zinc price getting back to the comfort margin for Zinc stocks, it's hard to phantom, near a low in LME stocks and u would expect $2.00 a lb.


http://www.kitconet.com/charts/metals/base/lme-warehouse-zinc-1y-Large.gif

[sparrow]

Don't normally like companies with huge number of shares on issue, with more to come when $200 million worth of notes are converted.

Nevertheless, took an intended long term position in CBH yesterday. . Will be keeping a close eye on CU, PB and ZN prices, (and Aussie dollar) but even at 50-70% of current price levels, even CBH should be able to make money.

[k1w1]

Sparrow, why CBH rather than KZL for cu, zn and pb ?

[sparrow]

QUOTE: Sparrow, why CBH rather than KZL for cu, zn and pb ?

Hi K1W1,

To be honest I did not do any research on other Zn or Pb miners. I just feel that there is some room for appreciation in the CBH share price over the next couple of years, providing the base metal prices hold up, and Aussie dollar retreats a little.

Endeavour mine seems to be back on track.

Looks like thay will have three mines going by 2009, plus they have a few tenements under exploration.

Posters on other forums not too compimentary of the management, we shall see.

[Bobbyvee]

Terramin's Algeria mine output by 2011
Friday Oct 12 07:47 AEST
Australian mining company Terramin could start producing zinc and lead concentrates from its Algerian Tala Hamza mine by 2011, a senior company executive said.
"There's an 80 per cent chance that the mine will bring 3.5 millions of zinc ore, producing in excess of 250,000 tonnes zinc in concentrate," Michael Kennedy, board member of Terramin said in an interview.
"In addition to that, there will be lesser quantities of lead. So if you have around 250,000 tonnes of zinc, you'll have 70,000-80,000 tonnes of lead concentrate per year," he said.
Kennedy said a "scope study", which would show the possible production figures, would be finalised by the end of this year. In May, the company announced it had 55 million tonnes of lead-zinc deposits in its Oued Amizour project, where the Tala Hamza mine is located.
"This project will take Terramin into the top 10 zinc producers, probably to number seven or eight," Kennedy said.
"It is the project that will make Terramin," he said.
Terramin controls the project through its 65 per cent share in an Algerian holding company. The other shares are owned by the Algerian government.
The Tala Hamza deposit is only 10 km away from a deep water port on the Mediterranean coast of Algeria, and strategically located to supply European smelters.

[sparrow]

THIS GUY IS AN INDEPENDENT ANALYST, SO HE SEEMS TO MAKE A BIT OF SENSE

Cheers,

Sparrow (sorry I couldn't add the graphs he showed, but if you want a gander, the link is:)

http://www.kitco.com/ind/Willie/oct112007.html

Commodity Bull Revived

By Jim Willie CB

Oct 11 2007 9:56AM

Numerous favorable signals point to a resumption of the commodity bull. It had been stalled for almost a year. The US Federal Reserve interest rate cut on September 18 clearly marked a turning point, a watershed event, a sea change. The USEconomy is the weakest on the planet, not surprising since it grew on the back of a housing bubble, which has since entered a slow motion crater. The US financial sector, the engine behind the so-called FIRE economy, has sputtered from bubbles mixed with kooky engineering mixed with leverage steroids laced with mispricing misrating fraud. So the next phase will be powered by the USFed doing regular and frequent back-peddling on monetary ease, which is a euphemism for making money cheaper as officials flood the system so as to avert a breakdown, and secretly bail out the big bankers that wish not to hide losses or have them subsidized by public money. Included this week is a potpourri of charts and summaries. Many more details appear in the October issue of the Hat Trick Letter, due out in mid-month.

THE PURE COMMODITY INDEX

Let’s use the index without the rigged nonsense ordered by Goldman Sachs, used to paint a false picture of moderating commodity costs. These guys ply their craft well, the quintessential rig being their cut of the gasoline weight in their GSCI index in August 2006, which engineered a significant drop from $2.30 to $1.45 in just a couple months time. Congressional elections were their motive last time. Hiding the cost explosion is their motive this time on the CRB index. So turn to the Continuous Commodity Index instead. Reminds me of Classic Coke and their ploy to replace Coke. The CCI index has revived strongly, a clear direct response to the expectation of a new monetary easing cycle. If not an entire cycle to kick in quickly, probably a new cycle which will come with the USFed kicking and screaming as their incorrect forecasts, false perceptions, and inept policies must be constantly and predictably reworked.



THE AUSSIE DOLLAR AS RESOURCE CURRENCY

A telling chart ratio is seen with the Aussie Dollar as a ratio of the Continuous Commodity Index. Its message is loud, that the commodity trade is back, and certain currencies like the Aussie$ and Canadian Dollar are leaders. The loonie ratio chart is similar, but with a little more slump upon an early 2007 exchange rate correction. Reversal upward is next, with some amplified but favorable volatility. First the flow of funds goes into the proper currencies, then into the individual investments like corporations and stocks.



MINING STOCKS OVER GOLD METAL

Since the USFed rate cut, a sure turning point, the precious metal mining stocks have responded with more vibrancy than the gold metal price. This is urgently needed by investors in stocks leveraged to the price of metal in the ground. The ratio of HUI to gold actually began to rise before the Sept 18 rate cut. It has continued upward. Note how the current week is displaying a BULL HAMMER pattern. The open and current prices are at highs, while intra-week prices have fluctuated lower. This is a bullish signal, indicating higher ratios ahead.

ENERGY STOCKS OVER OIL PRICE

Pressure on the energy stocks has come from two opposite forces. The prospect of slowdown in the USEconomy points to reduced energy demand. The weaker USDollar pushes higher the crude oil price. Add to the mix the lack of damaging hurricanes, warmer winters, and more volatility is seen in this ratio than in the metal ratio above. The strong main current is growth in the developing nations, led by China. The message here is that a reversal off a double bottom is rather clear. The stochastix cyclical is flashing positive. Keep an eye on the moving average crossover. We need to see the faster 20-wk MA cross back above the slower 50-wk MA. My guess is it will very soon. Hey, Chevron is buying back $15 billion of its own stock, a signal that energy stocks are under-valued.


MINING STOCKS POISED IN BREAKOUT

The major precious metal stock indexes are all showing the same positive picture. The HUI, XAU, GDX are showing breakout and current consolidation. Notice how the HUI refuses to stay down on an intra-week basis. Attempts at selloff failed in the last two weeks. The old technical adage applies here. The longer a price remains in a bound range, the bigger and more powerful is the breakout when the resistance is overwhelmed. Very positive technical indicators are the rising cyclical powered by the rising moving averages. Notice how both the uptrend channel has been overwhelmed, AND the current consolidation is occurring above the old 730 high mark from April-May 2006. Targets are outlined in the September and October Hat Trick Letter reports.


DANGEROUS DEPENDENCE FOR US$

Emerging markets are the driving force for global FOREX reserve growth. Clearly, the trend is led by China, but other nations such as South Korea, Russia, and Brazil are accumulating money quickly. The growth is powered by emerging economies. In the past four quarters, emerging economies have financed almost the entire US Current Account deficit. These are not all friendly nations to the increasingly pushy hostile feisty desperate Untied States. See the trade protection legislation directed against China. Its duplicity screams loud, since trade partner Japan is a chronic violator of currency manipulation, an order of magnitude worse than China for at least two decades. The difference is that Japanese bankers are US lackeys, fully subservient. The other difference is that the US has heavy influence on Bank of Japan so as to ensure the financing of the Yen Carry Trade. The US financial syndicate wants to control China. Aint gonna happen. The ugly response to any trade sanctions against China could reliably be a shun or boycott of USTreasury Bond purchases from trade surplus recycle. China is going to take its place as the primary major global banker in the next couple years. With that change comes a tectonic shift to global power, and a certain topsy turvy to the global monetary order. They might choose to stand by and watch the colossal waste of money on US military pursuits. The must see the futility of US Military emphasis. The real game is industry and accumulation of wealth.

TAKE YOUR BEST SHOT AT GOLD & OIL & EURO

We all know the powers that be, closely aligned to governments and their central banks, will take a shot at the gold price and crude oil price, as they try to push back down the euro currency exchange rate. Well, they have not succeeded in doing much. They whacked gold almost $20 on a single day last week, yet the gold futures price remains near 745. Artificial sell pressure from paper futures is enormous, all uneconomically inspired, yet permitted by lapdog regulators. They tried to take down the crude oil price, a couple days knocking it down by almost $2 on single days, yet it remains above the 80 level. The rigged goofy September Jobs Report, a jobbed tally, triggered a profit taking session for the euro. It fell from 142.7 to about 140.5, but has regained its balance in the mid-141 range, well above the breakout at the 138.5 level. The USDollar, gold, and crude oil make for a key currency triangle, all inter-connected. If this is the best the corrupted desperate megalomaniac power centers can muster, we are going to have a powerful follow through when the USEconomy shows its next bout of weakness.

NEXT USFED RATE CUT

The great unwind of the nightmarish bond bubble will continue to put downward pressure on not only the housing market but the USEconomy generally. We are in a very early phase of the great unwind where structured finance has proved to be of substandard construction, certainly not to meet the building code. The USFed will be cornered repeatedly. The USDollar is secondary as a priority to the USEconomy. Foreigners have noticed! The retired serial bubble engineer Sir Alan Greenspan has spoken on the housing decline certainty, on the economic recession likelihood, and more. The most recent important forecast call comes from Standard & Poor economist David Wyss. “The panic has subsided but the housing market has not hit bottom yet. It will not hit bottom until winter. Housing prices will not hit bottom until next summer and the losses will not peak for another two years, until 2009. We are not halfway through this crisis yet.” Since the rate reset procedure in adjustable rate mortgages (ARM) continues into the first quarter of 2008, we should regard the Wyss assessment as very optimistic. Officially, the S&P sees the USFed cutting interest rates another 50 basis points before year end. The Fed Funds futures contract has lost some of its enthusiasm. The prospect of a second big rate cut has faded somewhat. They must be paying too much attention to the nonsensical Jobs Report. Perhaps the decisions by the Euro Central Bank and the Bank of England not to hike rates influenced them. These converted monetary doves have taken pressure off the USFed, so they think. In reality, easier US$ money offered means more funds, investment, and emphasis will be directed toward Europe, making their need to hike rates even more motivated.

USECONOMY WEAKENING SLOWLY BUT SURELY

The USEconomy is destined to suffer a recession. How can one be avoided when housing is in decline? If the USEconomy rode the back of the housing bubble boom on the way up, it will ride it on the way down also, since the manufacturing sector is still absent, missing in action, or better described as dismissed and abandoned. There are limits to US exports, with aircraft, military hardware, and telecom computer networking equipment as the three-horse team pulling that load. The home equity raid trend is long gone. What was once $700 billion per year in power assist to spending by households, has been reduced to $140 billion per year nowadays. That amount is less than the $180 billion spent on alcohol annually, to put it into perspective.


Job losses from large companies dominate the scene. Small businesses are struggling to remain alive with rising costs across the spectrum. Try to tell that to clueless corrupted conmen at the Bureau of Labor Statistics, who issue the Jobs Report. Their Birth-Death Model showed +120 thousand job additions in August, even construction job adds, indefensible to be sure. The Challenger Gray & Christmas tally of job cuts at large financial firms has jumped markedly. The finance sector is shedding jobs, and every such job lost probably results in two lost jobs downstream in the tangible economy.



The ADP Jobs Report is far more accurate, but less optimistic typically. So it is not placed in prominence by the press & media. It has been proved as far more accurate over time, but is not under the control of the USGovt agencies, who prefer to doctor and distort all statistics, thus painting a rosy bright picture. The ADP non-farm payroll statistics are in steep downtrend. Perhaps, the BLS jobs data reported last week is correct and the USA economy truly grew by 110 thousand jobs. Put big doubt on that number! It is not rational to expect positive job growth in the midst of a credit crisis where both liquidity and insolvency problems threaten the system. Banks distrust the borrowers even less than other banks.



CONCLUSION

Many more rate cuts are to come by the US Federal Reserve. They will be caught flat footed consistently. They have never gotten it right, not once. Greenspan has tried to explain that the USFed shoots in the dark, employs faulty models, fails to understand the link between economy and credit extension, and probably cannot avert a recession led by a certain housing bear market. Horrendous home inventories and accelerating foreclosures guarantee much lower home prices ahead. More rate cuts are to come. Imports to the US are in decline, year over year, with evidence being reduced Los Angeles port traffic. Not a single economic myth mantra has been correct so far. Their claim of avoided spillover into the tangible economy is just an admission that it has yet to occur. The latest myths promoted are that the USDollar decline is orderly, and the price inflation is contained. Neither is true. The Euro Central Bank probably has another one or two rate hikes ahead. Europe is powered by exports, has a trade surplus, and can point to a viable broad industrial core, unlike the Untied States. European corporations also benefit from ongoing expansion in Eastern Europe, although some relaxation in their frenetic growth is to be expected soon, if not already.

The gold price from here onward will react to global monetary inflation, led by the US, Europe, and Japan, MORE SO than to USDollar weakness. The gold price will rise from an under-current of global banking distress. Capital inflows into the United States are inadequate to meet current account deficit needs. The gold price will rise from monetary inflation in unison, almost coordinated, as global central banks have been converted to monetary doves at the point of a gun. Soon the English housing bubble will unravel, leading to a benefit to the USDollar bilaterally. By this time next year, the EuroZone economy might flatten on growth. It is only a matter of time before the higher euro currency exchange rate slows down their economy naturally, from higher export prices. However, Europeans receive a discount on oil costs, material costs, and possibly food costs from the higher euro, which is the opposite effect on Americans. So the EuroZone should hum along longer than some expect.

A declining USDollar currency is a curse, despite the propaganda doled out by Wall Street spinmeisters. If in doubt, they are lying to you. It is that simple. Lastly, the trade war heating up with China points to less imports, less USTreasury Bond subsidies, and the potential for severe capital flow disruption. That translates to higher US domestic prices for finished product, higher borrowing costs, and shock waves to financial markets. Not much positive there, unless you are a precious metal or energy investor. The US is no longer the sole global engine of growth. China, Russia, India, and Brazil will continue to exhibit strong growth. In order to keep the USEconomy and US banking system and US financial markets from faltering, constant measures will be ordered, all good for gold and energy, whether or not the USDollar declines another 10%. When the dust clears in a few years, the total bailout ordered by the USFed and various other USGovt agencies will reach $2 trillion. It is still early.

[tricha]

http://www.resourceinvestor.com/pebble.asp?relid=36618

[countryboy]

september report:
A record after tax profit for the financial year ended 30 June 2007 of $38.7 million was announced.

This represents a 356% increase in net profit after tax compared to the previous financial year.

Profit before tax for the same period was $56.2 million on operating revenues of $269.5 million. No tax was provided for although a tax expense of $17.6 million was recorded. At 30 September 2007 cash and short term deposits totalled $219.4 million (30 June 2007 $238 million).
Capital investment during the quarter totalled $33.1 million with accelerated mine development and paste fill at Endeavor, development at Panorama and Rasp Mine projects accelerating and evaluation of new projects at Hera, Mineral Hill and Sorby Hills.

50c miner which can finance its own exploration and for the most part development. It may happen tomorrow or next year but it will push way past what its current SP is

TRY getting that return at a bank :D

[countryboy]

derrr maybe i should have said CBH somewhere in that post !:rolleyes:

[tricha]

derrr maybe i should have said CBH somewhere in that post !:rolleyes:

Hmm, I do not want to burst your bubble, but

* Go count the shares on issue:confused:

* Find out where the 200 million dollar loan takes them.:confused:

* Go over their grades.:confused:

* Calculate the risk in getting their new Panorama mine up north in WA - on time, on budget and producing the goods:confused:

* Check out their Chairman Mr Wall and find out his relationship with BMA Gold , hopefully he may have learned something.:rolleyes:

[tricha]

Hmm, their quarterly certainly shows great improvement Countryboy, so yes great buying today at 51 cents, might go another 10% higher in the short term.

[Bobbyvee]

I think Terramin are heating up again. Worth watching over next few weeks. There have been some large share transactions recently associated with firming SP.

[Bobbyvee]

A very positive 6.5% rise in Terramin SP today

[countryboy]

were reminising about the time PEM took over the shell of pasminco- the price of Zinc was around $600 a tonne. People are getting all nervy about PEM as the zinc price floats around. It could halve and i wont loose my job!Truckloads coming up at the moment- good quarter coming up :rolleyes:

[crisstoff]

One of the reasons for the rise in Terramins SP may be this recent report from there website by Pattersons

http://www.terramin.com.au/reports/7feb56712a65c99fd3a5eaaab1509e4a/Patersons%20Securities%20Report.pdf

Also there is more drill results due from Tala Hama in Algeria.

As well as an Intial JORC Resource announcement due from Ziniflex on the Menninnie Dam Project in South Australia this quarter.

Could be an interesting few months ahead.

[sparrow]

If the RBA of Australia says so, I'll go along with it.

IMO even if base metals retreat another 25% to 35% from current levels, many well run miners with good ore grades will be star performers on the ASX for years to come.

Cheers Sparrow

Hold AZC, BRW, CBH, CFE, GDM, LRL, PTS, URA VREO

-----------------------------------------------------------------------------------

China development to fuel demand

David Uren, Economics correspondent | November 13, 2007


THE China boom will keep powering the Australian economy in the years ahead, despite the financial storm still gathering in the US.

The Reserve Bank says China's growth will be shaved marginally by 0.5 per cent to 10 per cent next year because of the effect of financial turmoil on credit markets worldwide.

However, it says China's development, which has brought investment growth rates of 19 per cent over the past five years, still has a long way to run.

"This investment has been both a consequence of, and a reason for the rapid increase in urbanisation in China."

It says China's urban population has risen from 30 per cent to 44 per cent over the past decade.

"Given ongoing large population movements, infrastructure needs seem likely to remain strong in the period ahead."

The RBA says China now accounts for 40 per cent of world iron ore imports, between 10 and 20 per cent of copper and nickel imports and 4 per cent of coal imports.

India is also growing rapidly, with industrial production rising 11 per cent in the year to August, while growth elsewhere in Asia reached 5.7 per cent in the year to June.

The RBA expects softer economic growth in the US, but is far from pessimistic about its outlook.

"Moderate growth is continuing, notwithstanding the downturn in housing construction.

"The fundamentals continue to suggest a favourable outlook: capacity utilisation remains high, corporate balance sheets are healthy and profits are high."

The bank says sentiment in financial markets has improved although it remains fragile, with concerns re-emerging at various times about the extent of exposure of large financial institutions to the sub-prime mortgage risk.

"Notwithstanding the recent credit market strains, strong global demand has continued to support high commodity prices," the RBA says.

The bank's commodity price index has risen by 6 per cent in the year to October, with rural prices rising 15 per cent, base metals falling 4 per cent and coal, iron ore and gold having risen by an average of 3 per cent.

The RBA expects iron ore prices to rise 30 per cent from April next year, while it also believes there will be a substantial increase in the coal price.

[qinshu]

The Zinifex announcement is having the strange but i suppose natural effect of killing the price of Perilya this morning too as well as its owns. Does not seem fair when Perilya is on target for its expected profits, has hedged against the dollar and for lead prices falling, and is moving into mining in Indonesia. However I guess being at the bottom of its Williams Perilya will be starting back up soon. LOL Actually my partner jsut told me up 10 cents since I started writing this.

[fihr]

Does anyone have any idea what might be causing today's surge in ZFX's sp? It's been in the doldrums for a while, but is recovering quite sharply in the last couple of days, yet no news is out. Zinc has done nothing noteworthy.

[fihr]

Perilya isn't doing as badly, either.

[whiteheron]

fihr

In regards to PEM I feel that investors are just beginning to cotton on to what a good company that it is and how unloved it has been by the market

In my view it has now turned the corner and is in the early stages of a significant recovery

I will not go into the reasons why I consider PEM to be such a good company, reference to PEMs 2007 announcements will provide all information for anyone interested

Worth some research I think --- good luck

[fihr]

Now that I have read a bit more news I realise that ZFX price move is based on rumours of a takeover bid emerging from Xstrata at $20 per share. It would be great if this was true. However, I am used to seeing rumours like this go on for months and months. OXR's sp last year was one good example.

[countryboy]

CBH - from Shaws Brokers report:(available on web site)

We currently value CBH at $1.02 a share and have a target price of
$1.00ps which is approximately a 78% premium to current share
price levels.
Until recently CBH has traded in line with zinc and lead price
movements, however we anticipate a share price re-rating as the
development of the Rasp and Panorama projects advance and
become more appreciated by the broader market.
There is scope for CBH’s Newcastle port facility to be used for coal
loading in the future given that it is currently only 10% utilised.

CBH have Pem working on the east and west sides of its lease.

[FarmerGeorge]

I've held CBH for a while and have always maintained they were undervalued as they continued to produce significant amounts of cash, with a good exploration pipeline and some major new mines coming online over the next couple of years. Recent result is highly disappointing. Time to reassess this holding perhaps, any other holders out there with an opinion on the recent announcements?

[Huang Chung]

Zinc up 7.87% overnight to around USD 1.20 a pound. Probably partly due to the falling USD, but a substantial move all the same.

Lead has also recovered quite nicely.

[whiteheron]

Huang Chung

Yes, it is all good and looking to have strength medium to long term too
Should give zinc/lead producers a bit of a lift
Especially satisfying to see zinc have such a good lift

I remain confident on base and precious metals prices --- supply disruptions and strong demand will keep prices elevated

[Huang Chung]

Zinc now closing in on USD 1.25 lb, and lead USD 1.55 lb.

It's good to see that the metal prices are keeping pace with the rising $A....at least we're maintaining the status quo, and not going backwards.

Manufacturing exporters most be doing it tough right now......

[tricha]

Zinc now closing in on USD 1.25 lb, and lead USD 1.55 lb.

It's good to see that the metal prices are keeping pace with the rising $A....at least we're maintaining the status quo, and not going backwards.

Manufacturing exporters most be doing it tough right now......

China's Zinc Market Pressured by Weak Consumption and Increased Supplies
By Ida Chen and Li Chunlan
10 Apr 2008 at 10:05 AM GMT-04:00

SHANGHAI (Interfax-China) -- China's zinc market will become increasingly bearish in the coming months on the back of declining consumption and capacity expansions in the country, analysts told Interfax today.
"The U.S. subprime crisis is playing a leading role in slowing the country's economic development, and this is damaging zinc consumption. At the same time, the Chinese government's tight currency policy has also weakened zinc consumption, and this will drag this year's average zinc price under last year's average," Joint Futures analyst, Ren Jianfeng, said.

Domestic zinc smelters are also gearing up to unveil a number of major capacity expansion projects, with several scheduled to kick off operations in the second half of this year.
"These capacity expansion projects are likely to increase China's refined zinc output by around 300,000 tonnes to 4.05 million tonnes this year," Zhu Yiman, an analyst from Shanghai-based Metalease, said.
A number of major zinc projects will also become operational in the third quarter of this year, including Shaanxi Dongling Group's 80,000-tonne zinc smelting project, Yuguang Lead and Gold Group's 100,000-tonne zinc smelting project and Zhuzhou Smelter Group's 100,000-tonne zinc smelting project.
China's investment in the lead and zinc smelting sector surged by a remarkable 126.43% year-on-year to RMB 285.22 million ($40.80 million) in the first two months of this year, while investment in the lead and zinc mining sector fell 12.26% over the same period to RMB 93.8 million ($13.42 million), according to statistics released by the China Nonferrous Metals Industry Association.
"Zinc prices on the Shanghai Futures Exchange (SHFE) will stay at historical low levels for the moment, but will further drop off if copper prices fall from current levels. This is because the zinc market is very weak and prices are mainly being supported by high copper prices," Ren said.
However, although Chinese zinc smelters are carrying out capacity expansion projects, which will lead to increased zinc concentrate imports this year, global zinc mines are up to the task of keeping up with this year's demand, a Zhuzhou Smelter international trade department official, surnamed Wang, said when reached by Interfax today.
Spot treatment charges (TCs) for imported zinc concentrate will generally stay above $300 per tonne this year, on the back of a global zinc concentrate surplus. The current low spot TC for Chinese smelters of between $280 per tonne and $290 per tonne, compared to last year's high of between $360 per tonne and $380 per tonne, will only be short term, Wang said.
TCs are fees paid by miners to smelters to cover the costs of processing concentrate into metal.
Wang said that some domestic smelters recently accepted a TC of $325 per tonne for 2008 long-term contracts, with a basis price of $2,500 per tonne on the London Metal Exchange (LME) involving an escalator of 11% and a de-escalator of 7%. Escalators are an important part of long-term contracts, and take into account changes in underlying zinc prices.
Zhu from Metalease agreed with Wang's forecast for spot TCs this year, but expressed concern that the domestic zinc market will be further pressured as a weakening U.S. dollar and Renminbi appreciation will lead to increased imports in the coming months.
China shifted from a net exporter to net a importer of zinc in February this year. The country imported 8,984 tonnes of refined zinc over the month, compared to exports of 6,679 tonnes.
Zinc contracts for June 2008 delivery, the most active zinc contracts on the SHFE, finished 0.16% higher at RMB 19,275 ($2,757.51) per tonne on Wednesday. However, prices have tumbled by 17.56% from RMB 23,380 ($3,344.78) per tonne since March 4, the highest point of the year thus far.
The three-month zinc price on the LME slid by 2.69% to close at $2,350 per tonne overnight on Tuesday.
© Interfax-China 2008. For more intelligence on Chinese metals and mining, contact David Harman in Hong Kong at david.harman@interfax-news.com.

[Huang Chung]

Zinc doing it tough righ now, and maybe for some time to come.

You've got to remember that once you start going below $1.00 a lb, high cost production will start to dry up.

Happy to keep holding PDZ though, as they look like being a low cost producer....very shallow resource with a nice high grade core. Lots of exploration upside to. They won't be in production until late 2009, by which time the zinc price should be ticking up again.

1 Billion plus dollar resource defined, and the market is currently valuing the company at about 10 Ferrari's. :eek:

Sorry if I've digressed a bit T. ;)

[Huang Chung]

Extracted from Bobbyvee's latest post on the Terramin thread. Comments from Kevin Moriarty, Terramin's Chairman.....

I think it appropriate to comment on zinc pricing and the future for lead and zinc. Currently analysts are somewhat bearish about zinc prices, although it should be noted that their idea of a low price is still several times higher than some years ago. Supposedly, in
2008 there is predicted to be an oversupply of concentrates that would flow into lower zinc prices. So far zinc stockpiles amount to only few days supply, and zinc prices have not fallen markedly. Our commercial team have not been able to verify oversupply predictions, and argue that any lower prices would simply curtail new projects and some higher cost production. They also contend that it is quite unrealistic to suppose that Chinese mine production can maintain the high growth rates of the past three years. The recent rate is a function of a low starting base, and it is unlikely that mines can be found and developed to sustain growth. Whatever occurs, it is worth pointing out that our Angas mine has a very low cost for its zinc production, after credits for precious metals and lead. Furthermore, the results from the scoping study on our Tala Hamza project place it in the lowest cost quartile of zinc producers.

In the medium term, zinc looks to be an even better investment, since there are no large low-cost projects in the pipeline and many existing mines will start declining from 2010. Another factor that appears to be missing from the zinc price scenarios is that capital and
operating costs have been escalating, even doubling, with the boom conditions. Some projects, in areas requiring large infrastructure expenditures, have been shelved. Terramin makes it a requirement for its investments that its projects are well located with respect to infrastructure. This not only substantially reduces risks of over-runs, but means that costs for both development and operating will be low to start with. Tala Hamza and Angas both show these characteristics.

[countryboy]

Haung
pleasing day for you with PDZ up at one stage 42%. I struggle to see why PEM didnt gobble PDZ up when they were looking for aquisitions. The fact that CBH approached PEM suggest to me that PEM management behaved like rabbits in headlights..frozen and unsure which direction to head. Zinc is an interesting metal to follow with supply demand issues dealing many companies massive blows.

Well done with PDZ (maybe some people should look at how long it has taken to get this resource close to mining 06 start...and we still have not mined yet...building a mine takes years not months!);)

[Huang Chung]

Cheers Countryboy.

Very excited, but early days for C7. Lets see what happens when they drill it. Very confident, but no guarantees. If they keep producing the goods, it will likely be only a matter of time before someone tries to take them out.

[tricha]

Zinc Prices to Continue Downward Trend in 2008
By Ida Chen
24 Apr 2008 at 10:19 AM GMT-04:00

SHANGHAI (Interfax-China) -- Zinc prices on the Chinese and international markets are set to continue last year's downward trend throughout 2008, with China's zinc production capacity expected to increase by between 300,000 tonnes and 400,000 tonnes over the year despite oversupply issues, an industry official told Interfax in Beijing on Tuesday.
"In 2008, China's zinc production capacity still set to increase by between 300,000 and 400,000 tonnes, despite some Chinese smelters delaying various new zinc smelting projects due to unfavorable market conditions this year," Zhao Cuiqing, deputy director of the China Nonferrous Metals Industry Association's (CNMIA) zinc and lead department, said at the 2008 China Lead and Zinc Industry Chain Forum.

On the basis of these delays, the CNMIA has revised its forecast for China's new zinc capacity expansions for this year from its previous figure of 680,000 tonnes, despite more than 12.5 million tonnes of zinc smelting capacity undergoing construction nationwide, Zhao said.
However, industry insiders are still concerned that even with this revised forecast, rapid capacity expansion programs will bring further downward pressure to bear on the market this year, as China's consumption is also predicted be less than previously thought.
"Zinc stockpiles in both the Shanghai and London markets are at historically high levels, indicating sluggish consumption. Moreover, Chinese smelters are reluctant to sell zinc ingot to the market under current low prices in order to avoid losing money, which has further boosted domestic zinc stockpiles," Yang Yinghui, a senior analyst with COFCO Futures, told Interfax.
"We predict that Shanghai zinc futures will generally fluctuate between RMB 17,000 ($2,435.53) and RMB 25,000 ($3,581.66) per tonne throughout this year. However, China's zinc production is likely to stage a remarkable increase in the third quarter, and this may pull zinc prices on the Shanghai Futures Exchange below RMB 17,000 ($2,435.53) per tonne in that quarter," Yang said.
She also predicted that the three month zinc price on the London Metal Exchange will remain between $1,750 per tonne and $3,000 per tonne this year, after hitting an all-time-high of $4,530 per tonne in November 2006.
Zhongjin Lingnan's Shaoguan Smelting Plant in Guangdong Province completed a technological upgrade project at the end of last year, which will boost the company's total zinc production capacity to 300,000 tonnes per annum this year from a previous 225,000 tonnes, a senior Shaoguan Smelting Plant official, who wished to remain anonymous, told Interfax.
The entire company plans to produce 350,000 tonnes lead and zinc metals this year, up from the approximately 270,000 tonnes it produced last year, the official said.
The company's other zinc facility, the Danxia Smelting Plant in Renhua county in Guangdong Province's Shaoguan City, is scheduled to kick off operations on a 100,000-tonne zinc production line in early 2009. The facility is designed to attain a total annual production capacity of 500,000 tonnes by 2012.
Baiyin Nonferrous Metals Co. Ltd., a leading state-owned lead and zinc smelter based in northwestern China's Gansu Province, plans to start construction on a 100,000-tonne zinc smelting project this June. The project is scheduled to start operation in 2010, a Baiyin Nonferrous official, who wished to remain anonymous, told Interfax at the forum.
"Major zinc smelters are expanding their capacities in order to grab a larger market share at a time when many small-scale smelters are quitting the market due to losses. Besides, as a state-owned enterprise, profitability does not always take first place, as we also have social responsibilities to live up to, such as stabilizing employment rates and increasing the government's fiscal income," she added.
Baiyin Nonferrous' 70,000-tonne zinc smelting facility started operation in April this year, increasing company's total refined zinc capacity to 200,000 tonnes per annum, up from the 134,000 tonnes it produced last year.
China's zinc capacity expansions are also being supported by a high level of zinc concentrate imports, which have been encouraged by rapid Renminbi appreciation and high zinc concentrate treatment charges (TCs). In the first three months of 2008, China imported 595,782 tonnes zinc concentrate, up 63.5% from the same period last year.
In order to ease oversupply in the domestic market, CNMIA is lobbying the government to maintain its current 5% value-added tax rebate on 0# refined zinc exports. However, the government is still expected to cancel the VAT rebate this year in order to curb the country's huge trade surplus, CNMIA's Zhao said.
China shifted from a net exporter to net importer of refined zinc in February this year. The country exported 4,841 tonnes of refined zinc and imported 9,363 tonnes of refined zinc in March, representing a net import of 4,522 tonnes, while for the first quarter, the nation's net exports of refined zinc only hit 337 tonnes, according to the General Administration of Customs.
COFCO's Yang predicts that China will remain a net exporter of refined zinc this year, as the country is facing a severe supply surplus, while the volume of China's zinc exports will play a leading role in determining the global zinc market.
"At the moment, Chinese zinc smelters can only maintain profitability through producing sulfuric acid and obtaining high treatment charges from miners," she added.
China produced 3.71 million tonnes of refined zinc in 2007, up 17.8% from the previous year. The country produced 882,000 tonnes of refined zinc in the first quarter this year, up 3.7% from the same period last year.
The three-month zinc contract on the LME closed at $2,239 per tonne Wednesday, down 2.01% from the previous trading day, while the most traded zinc futures contract on the Shanghai Futures Exchange closed at RMB 18,235 ($2,609.1) per tonne Wednesday, up 0.27% from Tuesday.
Zinc prices in China's spot market stood at between RMB 18,200 ($2,606.07) per tonne and RMB 18,400 ($2,634.71) per tonne Wednesday.
© Interfax-China 2008. For further information regarding Interfax China Commodities Daily Reports, contact David Harman at david.harman@interfax-news.com. Interfax also publishes a comprehensive China Grains & Soft Special Report in March 2008, contact David Harman for details.

[Huang Chung]

..and probably for a couple of years after 2008 as well T. Expecting upturn between 2010 and 2012, depending on who you listen to.

Wouldn't be much fun holding current producers, especially high cost ones.

[SEC]

Wouldn't be much fun holding current producers, especially high cost ones.

Says who?

ZFX held since late 2004, total return approx 550% or 71%pa compound.
KZL held since mid 2006, total return approx 70% or 32%pa compound.

The impending surplus of Chinese zinc smelting capacity is a red herring and old news. The main issue is the global production of zinc concentrates. China can have all the smelting capacity they like but it won't matter diddly squat if/when the supply of concentrates falls short of demand.

SEC (KZL ZFX)

[countryboy]

production out of broken Hill increased by 22% for lead 22,000 tonnes and six percent Zinc :13200 tonnes in the last quarter.Target for full year is 90,000 tonnes of zinc and 55,000 tones of lead

decreasing zinc price (and it has not tanked !) is offset by inceased lead price

[Huang Chung]

Zinc price down, $A up.....not the sort of environment I'd be wanting to chew up my finite zinc resource in (unless you were well hedged, of course).

Impressive numbers for KZL and ZFX SEC, but somehow I don't think you get the same return over the next couple of years.

[tricha]

Zinc price down, $A up.....not the sort of environment I'd be wanting to chew up my finite zinc resource in (unless you were well hedged, of course).

Impressive numbers for KZL and ZFX SEC, but somehow I don't think you get the same return over the next couple of years.

The big picture is China has huge zinc growth potential in their own country. :(
I'm sticking to oil and yes, a re-rating coming in a few days for a lot of mid tier oil companies Huang, the oil price will see to that.

[SEC]

Zinc price down, $A up.....not the sort of environment I'd be wanting to chew up my finite zinc resource in (unless you were well hedged, of course).

Impressive numbers for KZL and ZFX SEC, but somehow I don't think you get the same return over the next couple of years.

Disagree - I think 32+% pa will be easily achievable for KZL and ZFX over the next two years. Don't forget that neither co's are/will be pure zinc/lead plays. KZL will soon be deriving most of its income from copper, is developing significant nickel assets, and is trading at a discount to other diversified miners. ZFX also has nickel and will soon be folded into OXR with gold and copper. The merged entity also trades at a discount to other diversified miners.

SEC

[Huang Chung]

SEC..having copper and lead and gold and silver in a base metal miners product mix will help for sure over the next couple of years. High cost zinc producers could find themselves in a world of hurt if zinc goes much below $1lb. Zinc will have its day in the sun again, but maybe not for a couple of years.

T....The disconnect between the POO and many mid-cap oilers share price performance has been remarkable...It will be interesting to see if your profacy of a re-rating in the next few days comes true.

All the best to the both of you. :cool:

[Huang Chung]

Yep, the low zinc price is starting to bite. Teck Cominco Ltd and Xstrata Zinc have announced the closure of their joint venture Lennard Shelf Pillara mine in Western Australia because it has become uneconomic to operate.

http://news.theage.com.au/business/lennard-shelf-pillara-mine-to-close-20080715-3fbx.html

Production only commenced in early 2007....talk about bad timing. :eek:

[tricha]

Yep, the low zinc price is starting to bite. Teck Cominco Ltd and Xstrata Zinc have announced the closure of their joint venture Lennard Shelf Pillara mine in Western Australia because it has become uneconomic to operate.

http://news.theage.com.au/business/lennard-shelf-pillara-mine-to-close-20080715-3fbx.html

Production only commenced in early 2007....talk about bad timing. :eek:

You must have nerves of steel Huang, hanging in there with PDZ.
My biggest mistake of recent times, ZINC. :(

The big problem is China, used to be a net exporter, probably close to it again, I read a few bits of info where they have found mountains of Zinc.

[corporateraider]

Tricha,
do you have any thoughts on the future price of lead/zinc. I see that last week lead had the biggest one day price rise ever and the price seems to be holding around the higher level. And zinc too has moved up considerably recently.
Where to from here?

[Huang Chung]

You must have nerves of steel Huang, hanging in there with PDZ.
My biggest mistake of recent times, ZINC. :(

The big problem is China, used to be a net exporter, probably close to it again, I read a few bits of info where they have found mountains of Zinc.

Bought another 40,000 PDZ last week T. Probably the work of a crazy man. :eek:

Actually, the share price at around 80c has held quite well. Many a blue chip stock has fared worse. Market seems to be riding on the prospect of a substantial copper find.

PS I would go within a million miles of PEM or CBH at the moment.

[steve fleming]

Yep, the low zinc price is starting to bite. Teck Cominco Ltd and Xstrata Zinc have announced the closure of their joint venture Lennard Shelf Pillara mine in Western Australia because it has become uneconomic to operate.

http://news.theage.com.au/business/lennard-shelf-pillara-mine-to-close-20080715-3fbx.html

Production only commenced in early 2007....talk about bad timing. :eek:

Macquarie Zn outlook:

We continue to believe that the zinc market is bottoming out, with prices in recent weeks trading at levels that leave high-cost
producers in the red. We expect prices to trade sideways over the next year (with occasional short-lived rallies when production cuts are announced). The zinc market still looks set to be in a modest surplus in 2008 and 2009 before a slowdown in mine-supply growth over the 2010–12 period sees the market tighten up again.

[Huang Chung]

Macquarie Zn outlook:

We continue to believe that the zinc market is bottoming out, with prices in recent weeks trading at levels that leave high-cost
producers in the red. We expect prices to trade sideways over the next year (with occasional short-lived rallies when production cuts are announced). The zinc market still looks set to be in a modest surplus in 2008 and 2009 before a slowdown in mine-supply growth over the 2010–12 period sees the market tighten up again.

Very much in line with the commentary coming from Terramin and Prairie Downs Steve.

At the quality end, Oxiana and Kagara looks to be great bets if you take a time horizon of 3-5 years.

I'm sure they'll outperform your bunch of oilers over that time frame Tricha. :cool:

[countryboy]

pem will bite the bullet and off load quite a few people. time and number is of speculation but figures whispered are around 200 and within a a couple of weeks. CBH at 15/16c has me interested.

[tricha]

pem will bite the bullet and off load quite a few people. time and number is of speculation but figures whispered are around 200 and within a a couple of weeks. CBH at 15/16c has me interested.



Oh yeah and this is the problem, this picture tells a few words and fuel doubling in a year magnifies the problem and then u have the $, OUCH.

http://www.kitconet.com/charts/metals/base/spot-zinc-5y.gif (http://www.kitcometals.com/charts/zinc_historical_large.html#5years)

[Huang Chung]

pem will bite the bullet and off load quite a few people. time and number is of speculation but figures whispered are around 200 and within a a couple of weeks. CBH at 15/16c has me interested.

Hope it works out for you Countryboy.

Signs are there that the high cost production is begining to taper off, which should help stablise the zinc price.

What is your thinking around CBH CB?

[SEC]

Very much in line with the commentary coming from Terramin and Prairie Downs Steve.

At the quality end, Oxiana and Kagara looks to be great bets if you take a time horizon of 3-5 years.

I'm sure they'll outperform your bunch of oilers over that time frame Tricha. :cool:

Agree HC and will add that both Oxiana and Kagara hold nickel which is at the bottom of the price cycle - at $9/lb the nickel pig iron industry which was the major contributur to the nickel surplus is history - millions of tonnes or worthless rubble building up at Chinese ports as we speak...

At 80c/lb the high cost zinc producers are unfortunately squealing, reducing production and closing down mines. Those MacEquities comments re zinc (thanks SF) say it all - zinc is also at the bottom of the cycle.

SEC (OXR KZL)

[SEC]

pem will bite the bullet and off load quite a few people. time and number is of speculation but figures whispered are around 200 and within a a couple of weeks. CBH at 15/16c has me interested.

Nothing like a good bit of insider info eh - looks like that info leaked out elsewhere today, PEM down 13% today...

SEC

[Huang Chung]

AIM Resources have decided to suspend development activities at their Perkora project in Burkina faso, due to the low zinc price and funding problems.

http://www.stocknessmonster.com/news-item?S=AIM&E=ASX&N=414098

Seems pretty clear that Prairie Downs will put all development plans on hold and just focus on their exploration program along strike of their zinc/lead find for a while until the dust settles.

[SEC]

Those MacEquities comments re zinc (thanks SF) say it all - zinc is also at the bottom of the cycle.

I might also add that Macquarie Equities have been better than most in their predictions re commodity prices. They called the latest commodities bull cycle before the other brokers did and some of the correction predictions.

SEC

[steve fleming]

lead broke through the USD1 / lb last nite.

Up about 25% in a couple of weeks:

latest lead news:

"Henan Yuguang Gold and Lead has cut its lead production by about a third in
order to carry out repair work. The 310,000tpa capacity plant will cut production
by 300t per day until mid-August, potentially causing a loss of up to 9,000t of
lead. The company has chosen this time to carry out the repairs due to reduced
power supplies in Henan, a company manager told Reuters. In addition, a
representative of the Shadian Refinery in Gejiu, Yunnan province, said that
about a quarter of the 500,000tpa lead smelting capacity in the area may have
been stopped due to a shortage of concentrate supplies after authorities closed
a number of small mines for safety reasons in the run up to the Olympics."

[Huang Chung]

I've been watching the lead price tick up Steve. Unfortunately, it would appear the reasons are temporary in nature, and that lead production might be back to normal by around October, assuming its OK for Chinese miners to get killed AFTER the Olympics.

[steve fleming]

I've been watching the lead price tick up Steve. Unfortunately, it would appear the reasons are temporary in nature, and that lead production might be back to normal by around October, assuming its OK for Chinese miners to get killed AFTER the Olympics.

Yes, true HC.

Do you have any thoughts on Bauxite?

[Huang Chung]

Do you have any thoughts on Bauxite?

Not one I really focus on Steve. Most bauxite seems to be controlled by the big aluminium players who own the alumina refineries. Seems to be some positive outlooks for the aluminium price, but, geez there does seem to be an awful lot of new refining/smelting capacity being built around the world at the moment......

Do you have anything specific in mind?

[steve fleming]

Not one I really focus on Steve. Most bauxite seems to be controlled by the big aluminium players who own the alumina refineries. Seems to be some positive outlooks for the aluminium price, but, geez there does seem to be an awful lot of new refining/smelting capacity being built around the world at the moment......

Do you have anything specific in mind?

I was just having a read of the BAU presentation

http://stocknessmonster.com/news-item?S=BAU&E=ASX&N=413130

EV of approx $10m - it might be a cheap exposure to a bouyant aluminium price?

[Huang Chung]

I was just having a read of the BAU presentation

http://stocknessmonster.com/news-item?S=BAU&E=ASX&N=413130

EV of approx $10m - it might be a cheap exposure to a bouyant aluminium price?

Steve, it does make good reading, especially as the target of 2MTPA doesn't seem overly ambitious for a small company.

Naturally, the devil will be in the detail....simple scoop and scoot or is there substantial overburden to be removed, for example. I think the railways in the south of WA are all ARG, so you wouldn't think rail access would be an issue.

Certainly seems worth a bit of homework.

[steve fleming]

lead broke through the USD1 / lb last nite.

Up about 25% in a couple of weeks:

latest lead news:

"Henan Yuguang Gold and Lead has cut its lead production by about a third in
order to carry out repair work. The 310,000tpa capacity plant will cut production
by 300t per day until mid-August, potentially causing a loss of up to 9,000t of
lead. The company has chosen this time to carry out the repairs due to reduced
power supplies in Henan, a company manager told Reuters. In addition, a
representative of the Shadian Refinery in Gejiu, Yunnan province, said that
about a quarter of the 500,000tpa lead smelting capacity in the area may have
been stopped due to a shortage of concentrate supplies after authorities closed
a number of small mines for safety reasons in the run up to the Olympics."

Lead couldn't hold $1, as it got punished with the rest of the BM last nite.

Some interesting thoughts from Macquarie on Pb:

China has become an increasingly bullish factor in the
lead market in recent months. Refined production has
been disappointing in 2008, domestic demand has
remained robust and the weak performance of lead on
the LME has discouraged Chinese producers from
exporting lead to the international market.
Chinese refined lead net exports reach minimal
levels
-80
-60
-40
-20
0
20
40
60
80
2000
2001
2002
2003
2004
2005
2006
2007
2008
tonnes
Metal Net Exports
Concentrate Net Exports
Metals Net Exports (3MMA)
Concentrate Net Exports (3MMA)
Source: Customs Statistics, CNI-A, Macquarie Research, July 2008
􀂃 Data released by the CNI-A this week showed that
Chinese refined lead exports hit new lows of just 1,182t
in June. China had been a major supplier of lead to the
global market in recent years, but that trend has really
not continued in 2008. Over the first half of the year,
China exported a mere 31,456t of refined lead, down by
80.0% (99,114t) from the first half of 2007.
􀂃 The dwindling supply of lead metal out of China has
been a reflection of the underperformance of lead on the
LME relative to the domestic Chinese market, because
domestic lead demand has remained strong in 2008.
During the first six months, apparent lead demand in
China was up by 18.1% YoY to 1.43mt. The relative
weakness in western world demand and the lack of
major supply disruptions so far this year pushed LME
lead prices well-below domestic Chinese prices (after
factoring in export taxes), reducing the incentives for
Chinese lead smelters to produce for the export markets.

􀂃 It was this differential in prices that triggered the 25%
rally in LME lead prices in the course of a few days
earlier this month, as a large increase in LME-cancelled
warrants in Singapore was reportedly due to market
participants looking to move metal from the LME to
China, selling the material for a profit in the domestic
market.
􀂃 There are question marks about whether China can
actually switch to being a net importer of refined lead in
the long run. The rally in lead on the LME has closed the
gap somewhat on Chinese domestic prices and showed
that prices can move very quickly in response to the
possibility of arbitraging between the international and
domestic markets.

[Huang Chung]

A good basic education piece.....

http://www.kitco.com/ind/Wright/aug012008.html

[Huang Chung]

Extract from a Terramin release today.....


A recent media report suggested that 15% of all zinc miners are operating
at a loss at current metal prices. This does not include Terramin. We remain
well-positioned to ride out this part of the cycle and expect lead and zinc
prices to regain long-term levels in the coming months. In the medium-term
the curtailing of new projects makes it inevitable that prices will go much
higher to meet demand, which is still growing strongly. Some analysts
suggest this critical point will occur in 2010; however others have pointed
out that any sustained period of lower prices will bring this point forward.

[steve fleming]

lead broke through the USD1 / lb last nite.

Up about 25% in a couple of weeks:

latest lead news:

"Henan Yuguang Gold and Lead has cut its lead production by about a third in
order to carry out repair work. The 310,000tpa capacity plant will cut production
by 300t per day until mid-August, potentially causing a loss of up to 9,000t of
lead. The company has chosen this time to carry out the repairs due to reduced
power supplies in Henan, a company manager told Reuters. In addition, a
representative of the Shadian Refinery in Gejiu, Yunnan province, said that
about a quarter of the 500,000tpa lead smelting capacity in the area may have
been stopped due to a shortage of concentrate supplies after authorities closed
a number of small mines for safety reasons in the run up to the Olympics."

And now down 25% just as quickly - the volatility is amazing.

Still trading higher than Zn though.

[Huang Chung]

Perilya on a trading halt pending an announcement regarding its hedge book and Broken Hill operations.

Is a bit more high cost zinc about to be taken out of the market??

[Huang Chung]

Zinc, lead and nickel blasting out of the box tonight, all up around 5%-6%.

Oil up as well.

No complaints here.

[SEC]

On the positive side the decision to wind back Broken Hill takes out another 30000 tonnes per annum of zinc production. The forecast zinc surplus for the next couple of years is fast reducing.

SEC

Hudbay's closure of the Balmat mine takes out yet another 30000 tpa of zinc.

The Balmat mine as one of several high cost zinc mines in USA/Canada mothballed in the late 1990s/early 2000s that were reopened in the past couple of years on expectations that the zinc price would stay buoyant and productions costs could be kept to pre-closure levels. Neither happened - expect more closures and windbacks.

SEC

[shasta]

Hudbay's closure of the Balmat mine takes out yet another 30000 tpa of zinc.

The Balmat mine as one of several high cost zinc mines in USA/Canada mothballed in the late 1990s/early 2000s that were reopened in the past couple of years on expectations that the zinc price would stay buoyant and productions costs could be kept to pre-closure levels. Neither happened - expect more closures and windbacks.

SEC

Great results from KZL @ Lounge Lizard...

For all you Zinc nutters (not looking at anyone in particular HC :rolleyes:)

http://www.stocknessmonster.com/news-item?S=KZL&E=ASX&N=419945

[SEC]

Hudbay's closure of the Balmat mine takes out yet another 30000 tpa of zinc.

The Balmat mine as one of several high cost zinc mines in USA/Canada mothballed in the late 1990s/early 2000s that were reopened in the past couple of years on expectations that the zinc price would stay buoyant and productions costs could be kept to pre-closure levels. Neither happened - expect more closures and windbacks.

SEC

Yet another ~27000 tpa zinc taken out with the announcement of Intec's Hellyer Mine closure today. Hellyer was yet another high cost mine closed down in the early 2000s that should never have reopened.

Take a look at the INL announcement - they could not have better (mis)timed the reopening of the Hellyer mine. Also note the real Zn price in AUD is at historic lows, and IMHO as bad as it will get.

http://stocknessmonster.com/news-item?S=INL&E=ASX&N=519810

SEC

[shasta]

Yet another ~27000 tpa zinc taken out with the announcement of Intec's Hellyer Mine closure today. Hellyer was yet another high cost mine closed down in the early 2000s that should never have reopened.

Take a look at the INL announcement - they could not have better (mis)timed the reopening of the Hellyer mine. Also note the real Zn price in AUD is at historic lows, and IMHO as bad as it will get.

http://stocknessmonster.com/news-item?S=INL&E=ASX&N=519810

SEC

SEC

You looking at Zinc again?

OZL or KZL (both have copper & zinc)

[Huang Chung]

Yet another ~27000 tpa zinc taken out with the announcement of Intec's Hellyer Mine closure today. Hellyer was yet another high cost mine closed down in the early 2000s that should never have reopened.

Take a look at the INL announcement - they could not have better (mis)timed the reopening of the Hellyer mine. Also note the real Zn price in AUD is at historic lows, and IMHO as bad as it will get.

http://stocknessmonster.com/news-item?S=INL&E=ASX&N=519810

SEC

My best mate was involved in commissioning the Hellyer plant back in the 80's. It was a great resource in it's day, but, like a lot of mines, should have been put to rest for good when they finally closed the mine down.

Most sad stories in the mining game seem to occur when someone tries to give an old mine a second lease at life.

I hope you're right SEC in regards to zinc....shutting down zinc production must surely be a sign that we are at, or near, the bottom.

[shasta]

My best mate was involved in commissioning the Hellyer plant back in the 80's. It was a great resource in it's day, but, like a lot of mines, should have been put to rest for good when they finally closed the mine down.

Most sad stories in the mining game seem to occur when someone tries to give an old mine a second lease at life.

I hope you're right SEC in regards to zinc....shutting down zinc production must surely be a sign that we are at, or near, the bottom.

TZN ann re first sales

http://www.stocknessmonster.com/news-item?S=TZN&E=ASX&N=168162