Hi JPWWHITE1,Supply is increasing however it is not enough to...

Hi JPWWHITE1,

Supply is increasing however it is not enough to match the current depletion of stock levels and demand. Supply may increase at around 7% demand up by 5% = rough increase of 2% which is not enough to meet the current short fall. I have not seen any data which indicates that supply is going to increase enough to reduce the current zinc price. Zinc mine reserves are being depleted faster than new production is coming on line, there is a lack of new discovery and late stage projects. Timelines for developing mines are often underestimated and I would be surprised to see any major increases in the supply of zinc within the next 3 years. Lead is the same. Demand is strong and supply, as far as I can tell, is not strong enough. If supply increased greater than I expect over the next few years, this is again only a short term increase as their simply is a lack of world class resources being found, the truth of the matter they have probably nearly already been found.

Zinc stock piles have dropped over the past 3-4 years from over 720 thousand tonne to under 80 thousand tonne. Stockpiles have halved in the last twelve months again. Yes stockpiles have increased marginally in the last few months but you would hope they would!

Most mining companies have known about the increased demand and supply deficiets in these metals for years. However they have not been able to increase supply enough to match demand, the continuance of tight supplies indicates to me that they nearly already maxed out, or waiting for extremely high prices to mine previously unviable tenements.

In closing, in my view, we may see a softening at worse for Zinc and Lead prices in the short term. The long term trend is up!

Now trying to predict metal prices is not easy and so called expert opinions vary widely. All I can do is read, research and form a critically reviewed opinion. I really like CBH based on current metal prices and I think profits will vindicate this by the end of the year. DYOR, a good place to start is http://www.ilzsg.org/ (the international lead & zinc study group).