I don't think there is much of margin on zinc production.
A small change will lead to a massive change in profits.
For conceptual purposes look at it this way...
Revenue $400
Costs $350
Profit $50
Drop in price by 7%
Revenue $373
Costs $350
Profit $23
Over 50% fall in profits
If price and value are in one to one relationship then a 50% fall in profits plus possible cost blowouts down the track may mean a big drop in the share price.
However one must also factor in sentiment and crowd mentality.
This could either hold the share above true value or it may even push it below true value.
Up till now sentiment toward resource stocks is supporting the price above true value, so what you might find is only a small drop in price.
ZFX
zinifex limited
