perkoa update annmnt, page-27

Thats about right for a normal long term offtake Dcros.But I would think thats simply to secure supply.The actual negotiated price varies from year to year,I believe.

What I am saying is that if there is excess concentrate supply then the smelters will tend to play concentrate suppliers(miners) off against each other(for a better price) rather than commit to longer term agreements which will nearly always come at a price premium as a part of the guarantee for supplying that amount of concentrate.With excess concentrate supply one would get the reverse situation that DK was mentioning with Aim being able to play offtakers off against each other,particularly with a smaller output!

This may be yet another reason Aim has gone for an upping of plant output as it gives them more leverage to supply larger amounts of concentrate thereby giving them more leverage with these larger smelters as they need much larger guaranteed concentrate supply,not just small dribs and drabs from a spot-like market(hence the price premium).

Votorantim have already signed up as they have been undergoing a smelter expansion in Sth America themselves and would no doubt want to lock down concentrate supply for these new/acquired smelters.

The ace in the hole that Aim would hold(not sure just how much leverage it will give them)is that the Chinese are importing a large % of world concentrate to supply their ever increasing smelter capacity.Just how much this is making it difficult(if at all)for other smelters around the world to get concentrate is anyones guess.Only these smelters could tell you this.It is these smelters that Aim are targeting to supply as the logistics aspect is no doubt cheaper being,either across to Sth America,or up,to Europe,rather than onto the Asian continent.

Another thing that these smelters have to account for would be a possible swing back to concentrate supply deficit into 2010 if those(mentioned) mine shut downs come into effect.There are apparently a few larger zinc mining ops that are getting long in the tooth.When this happens generally the mine looses head grade as well as the leverage to continue supplying large offtake contracts.This is yet another offtake contract factor.

But all things being considered the larger the amount of concentrate Aim can produce,the more leverage it will give them with these offtakers.Try and entice them with a larger concentrate supply.

A smart more by BC/VB,we hope!

d.