Soaring price average has investors keen to get a piece of the zinc action Email Print Normal font Large font Barry FitzGerald June 4, 2007
Page 1 of 2 | Single page Advertisement AdvertisementTNG THE market has a real appetite for zinc exploration results. And why wouldn't it, with the current price of $US1.69 a pound for the galvanising metal more than three times the 10-year average (1991-2000) of US49.5¢ a pound. Zinc is once again worth finding. It looks like it will stay that way for at least a couple of years, with Macquarie forecasting an average of $US1.79 a pound in 2007 and $US1.30 a pound in 2008. JPMorgan is a bit more severe, predicting $US1.39 a pound in 2007 and US93¢ in 2008. Either way, prices look set to hold well above long-run averages for the foreseeable future.
That's why zinc explorers are now as keenly chased as their nickel or uranium cousins, particularly where they offer exposure to potential game-changing exploration programs. Tennant Creek Gold is in that boat, with a name change to just TNG to clear up any confusion part of its game plan.
TNG has just started an $8 million exploration program at its Manbarrum zinc-lead-silver project in the Northern Territory. Two rigs are on site and the market can expect a steady flow of results, both from extension drilling at the Sandy Creek deposit and from the testing of four high-priority exploration targets.
Sandy Creek ranks as a 10.5-million-tonne resource grading 3 per cent zinc, 0.74 per cent lead and 5.5 grams a tonne silver. It's not the highest-grade resource on the block but TNG is betting that it could well be bigger, as well as being the first of multiple deposits that characterise so-called Mississippi Valley-type base metal provinces.
Funding for the big drilling program was secured back in March when $11.5 million (before costs) was pulled in from an underwritten options exercise program and CBH Resources picked up a 4.5 per cent stake (6 million shares) at a cost of 39¢ each.
CBH knows more than most about base metals, thanks to its ownership of the Endeavour mine at Cobar in NSW and its developments at Sulphur Springs in Western Australia and at Broken Hill. It's doing all right on its entry price, with TNG shares since moving to the level seen on Friday of 50.5¢ a share.
CBH also owns the Sorby Hills lead-zinc-silver deposit about 30 kilometres west of Manbarrum in WA. It stands at 10 million tonnes grading 6.4 per cent lead, 0.9 per cent zinc and 66 grams of silver a tonne. Needless to say, CBH reckons a joint development of Sorby Hills/Manbarrum could make sense.
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