NetworkNewsWire Editorial
Coverage: Zinc is used for various
applications in many industries, including construction, oil &
gas, power generation, automotive and shipbuilding. It is also used
to produce zinc oxide, a constituent of many diverse products
including nuclear reactors, solar cells, sunscreen, multivitamins
and fertilizer. Fully 50 percent of the world’s zinc is used in
galvanizing steel to prevent corrosion, which makes it highly
prized by countries engaged in infrastructure development. Amid
heightened demand, Mining.com (http://nnw.fm/9jaWx) reports that zinc prices have
surged by 78 percent since 2016, have increased 286 percent in the
last two years, and currently stand at over $3,200. This remarkable
surge has created a deficit in the zinc market, with producers like
Canadian-based Zinc One Resources, Inc. (OTC: ZZZOF)
(Z.CA) (Zinc One
Profile) poised to capitalize on the increased demand
for the base metal. Other established zinc producers preparing to
take up the slack include Hudbay Minerals, Inc. (NYSE: HBM)
(TSX: HBM), Ivanhoe Mines Ltd. (OTCQX: IVPAF) (TSX: IVN), Lundin
Mining Corp. (OTC: LUNMF) (TSX: LUN) and Trevali
Mining Corp. (OTCQX: TREVF) (TSX: TV).
China is foremost in the drive for improved infrastructure, and
zinc demand is likely to continue in line with the demand for
structural steel for construction projects. Furthermore, the Trump
Administration has announced its intention to spend $1 trillion on
upgrading infrastructure in America. As such, industry projections
are that China and the United States will contribute significantly
to an annual growth in zinc demand of 2.4 percent over the next few
years. This growth will follow a decade-long lag in demand, which
triggered a corresponding drop in the zinc price. As a result, many
companies cut back on production, resulting in the current market
deficit.
Investing News reports a prediction from analysts at Bloomberg
Markets that supply will continue to trail demand over the coming
years (http://nnw.fm/7F1wa), enabling companies like
Vancouver-based Zinc One
Resources (OTC: ZZZOF) (Z.CA) to capture their share
of market opportunity. With a strong focus on the acquisition,
exploration and development of advanced zinc assets, Zinc One’s
primary projects are located in Peru, the country with the
third-highest zinc reserves in the world. Peru has a mature and
stable mining industry that provides half of the country’s GDP.
In June 2017, Zinc One acquired Forrester Metals, Inc., and
through this the Bongara Mine zinc-oxide project and
Charlotte-Bongara Projects. On par with broader industry trends,
the Bongara Mine was in full production from 2007 through 2008, but
was shut down when the zinc price collapsed in the wake of the
global financial crisis. Historical resource data shows a measured
indicated and inferred resource of over 1.2 million tons of high
grade (20%+), near-surface zinc. With a history of mining on the
concessions, Zinc One enjoys positive and productive community
relations in the area, which is of significant value for any mining
company.
The Bongara Mine’s high-grade zinc mineralization is a rare
find, and Zinc One intends to leverage the zinc-rich soil to bring
Bongara back into production.
Zinc One in August received approval from Peru’s Ministry of
Energy and Mines to suspend the mine closure at the Bongara Mine
location, which allows the company to utilize the current
Environmental Impact Assessment attached to the project for current
and future permitting (http://nnw.fm/mZa3r). This approval allows the company
to take another vital step toward its plans to reopen production at
the Bongara Mine. Notably, at Bongara, open pit mining can be used
to extract the zinc, which can reduce the costs associated with
underground mining.
On November 1 the company announced another advancement,
publishing positive results from an ongoing surface-sampling
program at the Bongarita and Mina Chica areas. The company reported
highest grades that include a surface channel sample (#38) with
47.73% zinc over 8.1 meters from a dolomite, a surface channel
sample (#72) that yielded 25.65% zinc over 19.7 meters from a
dolomite breccia, and 32.50% zinc over a 3.8-metre depth from a
dolomite breccia in an exploration pit (#425).
"As expected, the high-grade zinc grades from this current
sampling program are very encouraging and augments our opinion that
the Bongarita and Mina Chica areas hold significant potential. In
particular, these areas have not been drilled and that the base
(footwall), outlining the depth extent of mineralization, is not
well defined. The upcoming drill program should help to better
define the footwall of mineralization as well as better determine
the magnitude of mineralization left behind by past mining in the
Mina Grande area. Overall, we anticipate that the drill program
will better delineate and expand the known mineralization at the
Bongara Zinc Mine Project,” Zinc One president and CEO Jim Walchuck
stated in the press release announcing the results (http://nnw.fm/lY23V).
Zinc One’s neighboring Charlotte-Bongara Zinc-Oxide Project also
shows potential, with multiple at-surface, high-grade drill
intercepts providing numerous drill targets.
The Bongara Mine Project mineralization lies on surface with
simple metallurgy and greater than 90 percent recovery, as
demonstrated in past production. The Charlotte-Bongara Project will
require exploration to determine the extent of the mineralization;
near-surface drill intercepts conducted over a stretch of 8
kilometers (4.9 miles) at this location by Rio Cristal Zinc in 2008
showed extremely high-grades of 29.5 percent zinc at 15.5 meters,
26.1 percent at 12.5 meters, and 29.7 percent zinc at 11.5
meters.
As it stands, Zinc One is one of the few new zinc focused
companies with near-term production potential, allowing the company
to occupy a position alongside its large-cap, older peers like
Hudbay Minerals (NYSE: HBM) (TSX: HBM). With
interests principally in mining operations and exploration, Hudbay
focuses on reserves of base and precious metals including copper,
zinc, gold and silver. The company operates three mines in the Flin
Flon Greenstone Belt in Manitoba, another in southern Peru and is
busy with a development project in Arizona. The company has just
released its third quarter results for 2017, which show operating
cash flow of USD$154 million, an increase of 24 percent over the
previous quarter. Copper production for the quarter was over 40,000
tons, with zinc production of almost 37,000 tons.
Ivanhoe Mines (OTCQX: IVPAF) (TSX: IVN) is a
mining company that has been operating in sub-Saharan Africa for
more than 24 years. Its Kipushi mine, located in the Democratic
Republic of Congo (DRC), produces silver, germanium, copper and
zinc. The company also has the Kamoa-Kakula copper mine located in
Congo’s copper belt. A new exploration project in Kakula West
returned Ivanhoe operates the Platreef mine in South Africa that
produces both base and precious metals, including copper, nickel,
gold and platinum group metals.
Another larger and older peer, Trevali Mining (OTCQX:
TREVF) (TSX: TV) has mining interests in the Americas and
Africa. Its presence in New Brunswick, Canada extends to the 100
percent owned Caribou Mine in the north of the province, while it
also owns the Halfmile and Stratmat concessions of base metal
deposits that are under review for potential development. The
company also has controlling interests in three other mines; the
wholly-owned Santander mine in Peru, a 90 percent share in the
Perkoa mine in Burkina Faso and 80 percent ownership of the Rosh
Pinah mine in Namibia.
Also enjoying uptrends in zinc is Lundin Mining (OTC:
LUNMF) (TSX: LUN), a diversified Canadian-based metals
mining company with operations in the United States, Chile,
Portugal and Sweden. In addition to its production of zinc, copper
and nickel, the company has a 24 percent stake in a cobalt
refinery, Freeport Cobalt Coy, located in Kokkola, Finland. For
2019, Lundin provides outlook for zinc production between
152,000-162,000, its same forecast for 2017 (http://nnw.fm/ioaR1).
Zinc is an invaluable base metal and a strategic priority for
many industries, and all indications are that the price of zinc
will continue to increase over the next few years while producers
scale-up their operations in an effort to meet market demands. The
sudden surge in the demand for zinc has caught some producers
unprepared, but with three c-level managers totaling 100 years of
combined mining experience putting projects into production, Zinc
One has the resources and expertise to meet demand.
For more information on Zinc One Resources,
visit Zinc One
Resources (OTC: ZZZOF) (Z.CA)
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