aim: the cream of australian zinc
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The cream of Australian zinc
Michael Quinn
Thursday, September 01, 2005 FANCY some exposure to the zinc price? MiningNews.net Premium presents a snapshot of what's on offer from Australian-listed companies that either have advanced projects or are already significant producers of the currently fashionable metal.
AIM RESOURCES
An advanced exploration company that's currently completing a bankable feasibility study (through consultants Snowden) at its Perkoa zinc project (ex-BHP) in the West African country of Burkina Faso ?with the study to be finished this month.
Perkoa contains an inferred 7.06 million tonnes grading 17.7% zinc, with exploitation via decline and underground mining methods. Production is put at around 75,000 tonnes per annum of zinc (in concentrate) from early 2008. Capital costs are understood to be in the order of $US55 million, with a further $US10 likely in working capital.
Share price: 5.9c Capitalisation: $30 million Year high/low: 7.4c (March) ?4c (September 2004)
CBH RESOURCES
Currently produces around 70,000 tonnes per annum of zinc (in concentrate) from its Endeavour mine near Cobar in New South Wales ?and is targeting output of 80,000tpa ?with planning and feasibility work underway at two other potential developments (containing zinc), namely Broken Hill and Panorama (WA).
Share price: 28.5c Capitalisation: $144 million Year high/low: 35c (March) ?17c (September 2004)
HERALD RESOURCES
Is at the financing stage for a high-grade project (7.7 million tonnes at 21.6% zinc equivalent) in Indonesia called Dairi that will cost around $US118 million to bring into production by late next year. The operation is targeting output of around 220,000t of zinc concentrate and 100,000t of lead concentrate annually (grading 55% and 65% respectively) over a mine life of seven years. Cash costs for the 120,000t of contained zinc produced are put at around US31c/lb.
Share price: 69c Capitalisation: $45.7 million Year high/low: 99c (January) ?53c (April)
INTEC
Aiming to process tailings at Hellyer in Tasmania totalling 10.9 million tonnes grading 2.6gpt gold, 2.8% zinc, 3% lead plus silver and copper. Pilot plant campaigns using the "Intec Polymetallic Process" have reportedly recovered more than 90% of the contained base metals.
Development options include a 1 million tonne per annum processing plant, or an "enhanced case" treatment route of 500,000tpa of tailings and 100,000tpa of zinc residues ?the latter produced steel mills in the steel making process. Capital costs have previously been put at $153 million and $136 million respectively. A bankable feasibility study is underway and expected to be completed early in the first quarter of 2006.
Share price: 7.4c Capitalisation: $31.4 million Year high/low: 10c (September 2004) ?4.2c (May)
JABIRU METALS
Developing the Jaguar base metals project near Leonora in Western Australia, with first production due late next year. Will initially yield around 36,000 tonnes per annum of contained zinc in concentrate (as well as significant copper).
Share price: 19c Capitalisation: $33 million Year high/low: 23c (June) ?15c (September 2004)
KAGARA ZINC
Made a $14.4 million profit last year (from EBITDA of $28.8 million), producing around 53,000 tonnes of zinc in concentrate from its Mt Garnet operations in North Queensland. Cash costs (net of credits) came in at US25c/lb, with the company receiving a zinc price of US50c/lb.
Zinc production in fiscal 2006 is understood to be slightly less than that achieved in 2005, with copper output rising. However Kagara is aiming to be at least double current zinc output levels with the development of its Chillagoe/Mungana deposit(s) ? possibly from as soon as late calendar 2006.
Share price: $1.27 Capitalisation: $238 million Year high/low: $1.47 (March) ?80c (October 2004)
OXIANA
Primarily a copper and gold producer, Oxiana recently bought the Golden Grove base metal operation in Western Australia. Estimated zinc production is 50-60,000t of zinc in concentrate this year, and more than double that in 2006.
This Broken Hill miner produced 132,000t of zinc in 2004/05 at cash costs, after by-product credits, of US41c/lb. Production details going forward were difficult to ascertain as new management implemented various initiatives. However the company recently said it was planning a "solid production" in the year currently in play following mining output shortfalls last year.
Share price: 77c Capitalisation: $144 million Year high/low: $1.20 (March) ?65c (June)
TERRAMIN
Has attracted the likes of Macquarie and zinc-heavyweight Zinifex. A pre-feasibility at its Angas project (in South Australia) earlier this year considered an operation annually yielding around 65,000 tonnes of zinc concentrate (grading 53% zinc) ?ie. around 35,000t of zinc metal.
Cost to get into production is put in the order of $30-35 million, with break even cash costs (net of lead and silver credits) estimated to be around US15c/lb. Initial mine life based on current reserves totals 6-7 years.
Share price: 31.5c Capitalisation: $20.11 million Year high/low: 44c (June)/11.5c (September 2004)
ZINIFEX
Australia's number one zinc miner and producer, with annual output of around 630,000 tonne per annum of zinc. It announced last week a profit of $A235 million, someway north of the $A63 million forecast in its prospectus of just under 18 months ago.
Zinifex has no commodity or currency hedging, and at a recent briefing the company said that every US1c movement in the exchange rate affected EBITDA by $A15 million. A similar result was achieved by a $A25/t change in the Australian dollar zinc price, while a $US25/t change in the zinc price moved earnings by $A20 million. Share price: $3.92 Capitalisation: $1.93 billion Year high/low: $3.97 (August) - $1.76 (September 2004)
Disclosure: The reporter holds shares in Oxiana
AIM Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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