This is why we need to hold the Chairman and Board accountable...

This is why we need to hold the Chairman and Board accountable tomorrow. The merger is killing OXR holders and it might continue:

Analysts project 30% crash in spot zinc prices
by Tom Stundza -- Purchasing, 7/16/2008 11:59:00 AM

Too much zinc: In a nutshell, that explains the nosedive to an average $1.03/lb at midyear from the 2007 average of $1.51 for the alloying, coating and plating metal. Too many zinc mining and smelting operations worldwide ¡°have caused the supply pipeline for zinc to be more than plentiful,¡± says analyst Gayle Berry at Barclays Capital Research in London. The International Lead Zinc Study Group projects a zinc surplus this year of 215,000 metric tons.

With June¡¯s U.S. zinc price at 90�0„4, the analysts see $1.05 as the probable full-year average for 2008. The forecast average for 2009 also is $1.05 because analysts such as Bart Melek at BMO Capital Markets in Toronto sees no chance demand will outpace supply anytime soon. Another Toronto-based mining analyst, Kerry Smith at Haywood Securities, says production is fragmented among a large number of companies, with the biggest, Xstrata at 800,000 metric tons/year, controlling only 7% of supply. Even this year¡¯s merger of Zinifex with Oxiana that created OZ Minerals only gives the Melbourne firm control of 6% of world supply.

In a recent interview with Platts Metals Daily.com, Smith says that ¡°you never see much producer discipline in the zinc market. If prices come down and a mine starts losing money, you don¡¯t often see it shutting down production because nobody else follows suit.¡± What¡¯s more, a company with a profit-draining mine still faces costs associated with a shutdown, such as holding costs, environmental expenses and worker severance pay. ¡°So even if the mine is losing a little money, it¡¯s sometimes better to keep it operating than to shut down due to these costs,¡± Smith adds.

Recently, 29 small to medium-size Chinese firms with total zinc smelting capacity of around 900,000 metric tons/year (accounting for 20% of total Chinese zinc smelting capacity) met in Shanghai to discuss cutting production by 10% due to tight power supply in 2008. However, a Macquarie Research Commodities report says the proposed production cut appears unlikely, since it lacks the support of bigger Chinese producers.