"Zinc prices are going to explode", page-8

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    There has been some allowance made for this output 5hareholder, see article below, and seem to recall Jonathan mentioning in his IBG presentation on the homepage http://ironbark.gl. Some of the mine closures have already occurred and others are planned to close 2014 to 2016. It doesn't seem there will be enough supply from resumptions and new projects to meet demand until later in the decade.

    LME inventory is probably the best guide to the deficit and is likely to fall below the critical 600,000 tonnes level in the next few months. You will see last time this happened the zinc price motored above $US1.20 and kept going to $US2 per pound.


    The multiplier impact on a company focused on zinc - most of those on the Fibonarchery list posted above are smaller, often mixed resource explorers - with the largest zinc resource of any junior will be impressive, especially as they've used $US0.85 in the $5.65 billion feasibility study to derive IRR of 32%. The study itself is fascinating http://ironbark.gl/wp-content/uploads/2013/11/Citronen-Feasibility-Study.pdf and they are expecting the life of the mine to be double if not triple the 14 years in the study. If the price heads north of the current $1.20 and with their major partnerships in place, this could be an exciting place to be. You can see the previous impact of the zinc price above $1.20 on the IBG, in the area where share price was around 40c. The share price has risen from 5c to 7.5c in the past few weeks.


    There seems to be a lot of attention on graphite, vanadium, nickel and of course gold as usual but not too many people are looking at boring zinc. I suspect there could be quite a bit more interest later in the year.

    Be interested if anyone knows of a bigger project underway than IBG Citronen in Greenland and the audio presentation on the homepage is well worth the 20 mins.

    Zinc producers eye resuming operations By Xan Rice
    Strong demand for zinc coupled with the imminent closure of several large mines is tipping the market towards deficit and enticing producers to restart mothballed operations. Teck Resources, the Canadian company, said this week it would resume operations at its shelved Pend Oreille underground mine in the US, which has been idle since 2009. Although the zinc price has been flat this year, trading at $2,070 a tonne on Thursday, Teck is banking on a rally in the coming years.
    The company said that zinc, which is used as a protective coating for steel in construction, cars and home appliances, has the best outlook of all the base metals because of looming supply cuts. Several large mines, including Century in Australia and Lisheen in Ireland are expected to shut in 2015. “Over a three-year period commencing last year, approximately 1.5m tonnes of current zinc production will be closed due to mine depletion. This is a significant figure in a 13m tonne market,” said chief executive Don Lindsay on a call with analysts. Teck’s announcement follows that of Trevali, another Canadian miner, which is preparing to reopen its Caribou mine, which was closed five years ago due to weak prices. While neither mine is large by industry standards – Pend Oreille will produce 44,000 tonnes of zinc a year – analysts say the decision to restart operations is sending a positive message to the industry.
    “It signals to the market that they are bullish on the outlook for zinc,” said Graham Deller, a research manager for zinc at CRU, the commodity consultants. “It will get people thinking more seriously about investing to bring new projects online.” The zinc price peaked at $4,515 a tonne in November 2006, before plunging as low as $1,065 a tonne in 2008, at the start of the financial crisis. As demand slowed, large surpluses accrued from 2009 to 2012, keeping a lid on prices.
    Last year, the market tipped into a small deficit, according to International Lead and Zinc Study Group, which forecast a deficit of 117,000 tonnes in 2014. Mr Deller of CRU is more circumspect – Chinese consumption is difficult to accurately measure – and thinks the deficit will only arrive in 2015. But he is bullish in the medium to long term, pointing out that even with additional zinc production in China, which is responsible for about a third of global output, demand will exceed supply by a growing margin in the second half of the decade.
    As above ground zinc stocks – estimated at up to 2m tonnes, or two months’ usage – are drawn down, the price should increase. However, Leon Westgate, a commodities strategist at Standard Bank, cautions that if too many miners expand production too fast, as happened in 2005 and 2006, it will postpone the price recovery. “You could see the mine reopenings as positive for sentiment,” Mr Westgate said. “But you could also ask if this is the start of mine supply rushing back too quickly.” from http://www.ft.com/intl/cms/s/0/0fb04d92-cbcd-11e3-a934-00144feabdc0.html#axzz37aNpz0jS
 
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