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The Zinc Players, page-43

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Forged

13,168 Posts.

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26/12/14

20:04

Post #: 14509741
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Originally posted by Forged ↑

The metal with the best outlook
BY STEPHAN BOGNER
December 9, 2014 • Reprints

Today, mining analyst Stephan Bogner published a new research report on the precarious distortions in the zinc market and the outlook for Pasinex Resources Ltd. becoming a zinc producer.

The 10 page report explains why the zinc price has been outshining other commodities in the recent past and is trading in an upward trend, which is poised to continue for years to come and may escalate any time. Analysts agree on a global scale that zinc will be among the commodities with the most extreme supply/demand deficit and that its price can more than double until 2016.

Since years, the average mining grades are decreasing worldwide and today are less than 5% zinc. Additionally, several large zinc producing mines are about to close and as such supply is shrinking drastically.

On the other side, demand looks increasingly robust, because while the engine of the world economy is gaining traction action, zinc is more demand accordingly. In particular, zinc is needed for the manufacturing of batteries and as a steel and iron alloy to protect against corrosion. The galloping automotive demand in developing countries – hand in hand with the strengthening car sales in West Europe and North America – give an impression of how strong the demand for zinc can grow from here. Additionally, China alone claims around half of global zinc supply for their own and China’s zinc demand grew by a remarkable 8% last year (USA: 3.4%; Japan: 4%).

The result will be a widening market deficit for zinc which is likely to have started in 2014 (in which case in early 2015 – after the official announcement of a 2014 deficit – an initial price escalation is expected).
The "problem" of the zinc market is that only very few zinc deposits exist globally, which have chances of success (i.e. development to a mine), as the upfront capital expenditures (CAPEX) are typically in the area of several hundred million dollars and investors are backing away from such large financings while precious metal prices are collapsing. Hence it should not surprise that large and capital intensive projects are not profiting from a rising zinc price but are even dropping like a junior gold stock; e.g. -50% with Canada Zinc Metals Corp., whose Akie Deposit is mineralized with 8% zinc (thus above average) yet asking for enormous CAPEX to be developed into a mine.

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"The 10 page report explains why the zinc price has been outshining other commodities in the recent past and is trading in an upward trend, which is poised to continue for years to come and may escalate any time. Analysts agree on a global scale that zinc will be among the commodities with the most extreme supply/demand deficit and that its price can more than double until 2016",

Based on this, the current zinc price of $0.98 will become $1.96 by 2016 !!!! if the chart pattern similarity between IBG & Zinc price continue, by 2016 IBG will worth $1.

But I'm sure, just to be on the fair side, other Zinc ASX listed will also appreciate in value, as long as there are no F up (such as ownership issue, court case, run out of cash, failed CR...........)
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