I expect that zinc prices will moderate into Q4 and possibly into 2020 to around $2500/t however what insulates RVR from this potential price drop are 2 things: 1) They have commodity diversification - they produce copper, gold and silver which have a significant contribution to revenue. All these commodities are at a pretty low base and should be well supported over the next few years - even if zinc goes down they will likely go up. 2) Lower realization costs - as more zinc smelters come back on line they will be producing more zinc metal and need more zinc concentrates and that will reduce treatment costs that zinc miners like RVR pay.
What nobody can properly predict is demand growth (think current Chinese stimulus starting to work through to more infrastructure investment and potential future stimulus) and potential for further disruptions both on zinc mining and smelting side (think cyclones, logistics disruptions, environmental checks for smelters etc) - both can result in price spikes.
RVR is very much able to survive and thrive in most price environments - lack of debt is a massive plus as well. Debt is what can kill companies (just look at the previous owners of Thalanga). In the meantime when prices are high they are able to generate large amounts of cash relative to its market cap.
RVR Price at posting:
19.0¢ Sentiment: Buy Disclosure: Held
