Caylus, You raise some good points but I would argue that a...

Caylus, You raise some good points but I would argue that a large fund with say $1bn of global resource esposure is not going to be too fussed about say shorting $4m (10% daily turnover OZL) to hedge, It's a rounding error. Its more likely to be hedge funds playing games, The stock is easily borrowed so easily shortable. Did any one see the NYR BB (Nystar) result tonight in Brussels? This is one of the good things ZFX did, IPO'ed and cashed out. See below:

Nyrstar Slumps After Profit Misses Estimates, Zinc Plant Shuts

By John Martens

Aug. 19 (Bloomberg) -- Nyrstar NV, the world's largest zinc producer, fell the most in six weeks in Brussels trading after first-half profit missed analyst estimates and it closed an unprofitable Chinese plant.

Net income was 21 million euros ($30.8 million), the company said today in a statement, less than the 57.9 million- euro median estimate of six analysts in a Bloomberg News survey. Balen, Belgium-based Nyrstar also said it will move production from a smelter in Port Pirie, Australia to Hobart, Tasmania, to cut costs. Nyrstar fell as much as 11 percent.

``We are clearly concerned about profitability at some of our operations,'' Chief Executive Officer Paul Fowler said on a conference call with analysts today. ``Port Pirie, for example, is the most expensive zinc smelter in the world.''

Nyrstar operates seven smelters on four continents, extracting zinc from raw materials shipped from mines and charging fees linked to the metal's price. Zinc, used to, protect steel against corrosion, averaged 36 percent less in the half. Smelting costs have also risen on higher energy prices.

Nyrstar declined 70 cents, or 8.9 percent, to 6.65 euros at 11:59 a.m. local time, heading for its biggest one-day drop since July 8. The stock has declined 66 percent since Nyrstar started trading in Brussels on Oct. 29.

The company earned an average fee of about $281 for each metric ton of zinc it refined in the half, while it agreed to some 2008 fees at $350 a ton. Still, it hasn't finalized 2008 terms with OZ Minerals Ltd., its largest supplier of feedstock, forcing Nyrstar to use ``conservative estimates'' for fees earned in the first half.

Spending Cuts

Nyrstar will reduce planned spending on maintenance, growth and environmental projects by 20 percent to 120 million euros this year, citing falling zinc prices and weaker economic conditions.

Zinc for immediate delivery on the London Metal Exchange averaged $2,281 a ton in the six months through June. It traded at $1,652 as of 11:11 a.m. in London.

Operations at Nyrstar Yunnan Zinc Alloys Co. in Kunming, China, were halted at the end of June because of higher prices for raw materials. Nyrstar said the expansion of the plant to 58,000 tons a year remains on schedule for completion by the end of 2008, ``subject to the resumption of operations.''

First-half profit was also affected by a 17.7 million-euro loss from the sale of a 25 percent stake in Bangkok-based smelter Padaeng Industries Pcl. Nyrstar sold its holding to a group of investors led by Asia Plus Securities Pcl because local rules governing foreign ownership of natural resources barred it from gaining control.

Annual revenue synergies and savings from the combination of the zinc smelting and alloying operations of Umicore SA and Melbourne-based Zinifex Ltd. in August last year will reach 30 million euros in 2009, Nyrstar said.