PALM BEACH, Florida, May 15, 2018 /PRNewswire/ --
Marketnewsupdates.com News Commentary
What do a pack of batteries, a bottle of sunscreen, and a jar of medicine have in common? All of these everyday products contain zinc. These applications barely scratch the surface of the many applications zinc has in people's everyday lives. This rising demand, coupled with slow growth on the supply side, has driven zinc prices to a decade-high, and reignited investor interest in zinc miners like Trevali Mining Corp. (TSX: TV), Teck Resources (NYSE: TECK) (TSX: TECK.A), Glencore PLC (OTC: GLCNF) (LSE: GLEN), Vedanta Resources PLC (OTC: VDNRF), and Callinex Mines Inc. (TSX-V: CNX) (OTC: CLLXF).
Engineers, Doctors, and Investors All Want Zinc
Zinc's demand is being driven by its diverse range of applications. Consumer demand for zinc is consistently growing, particularly as China also embarks on a massive infrastructure plan. This places customers of the diverse metal, like doctors and building engineers, in direct competition with each other. Pretty much everyone seems to want to get their hands on zinc right now.
However, the real factor driving up the price of zinc is the lack of supply. Wood Mackenzie expects there will be a deficit of 350,000 tonnes this year and 150,000 tonnes in 2019. Inventory now sits at 176,275 tonnes, the lowest since 2008. This lack of supply has played a huge factor in the price of zinc, which has risen by 25% year over year, going from $1,500 per tonne to as high as $3,500 this January- a ten-year high.
This supply deficit is being driven by several factors. First, zinc is not the most common mineral in the world. There are only a limited number of zinc sources available. Second, many existing overseas zinc mines were recently shut down. For example, in 2015, mining giant Glencore cut 500,000 tonnes of production. This has left the door wide open for a new generation of North American zinc miners to fill the void.
With this perfect storm of high demand and low supply driving zinc prices to ten-year highs, it is likely that investors will be closely watching this new generation of zinc mines. Callinex Mines Inc. (TSX-V:CNX) (OTCQX:CLLXF) is an example of a zinc mining company that could benefit from an increase in investor interest in zinc. On Monday, May 14th, 2018, the company released the results of a preliminary economic assessment (PEA) on its Nash Creek deposit in New Brunswick, Canada. The PEA results showed that the property offers an annual production potential of 77 million pounds (35,000 tonnes) of zinc per year. This would allow Callinex Mines Inc. to cover around a tenth of the current global deficit, a significant contribution.
In The Mining Game, PEA is Key
The PEA is one of the first signals to the public that a mining project is viable. It gives investors a glimpse into the overall potential of the mine. For example, in November 2017, Trevali Mining Corp.'s PEA showed an net-present value (NPV) of $166 million and internal rate of return (IRR) of 23%. Trevali's stock rose to a five-year high in the weeks after its PEA, a testament to how positively the market can react to a favorable PEA announcement.
Callinex Mines Inc. (TSX-V:CNX) (OTCQX:CLLXF)'s maiden PEA results showed that the Nash Creek property boasts a NPV of $230 million with an IRR of 34%. It's important to note that Callinex Mines Inc. currently sits at a market cap of just $20 million, so compared with the valuation of its Nash Creek property, the company is significantly undervalued. Combined with an annual production potential of 77 million pounds of zinc per year, the Nash Creek property could have a significant impact on the landscape of the zinc industry.
In addition to its Nash Creek property, Callinex Mines Inc. (TSX-V:CNX) (OTCQX:CLLXF) is moving forward with other zinc properties. The company's Superjack property is located just 90 kilometers away from Nash Creek. The Superjack Project is hosted within a similar geological environment as the 'supergiant' Brunswick No. 12 Mine, which was previously the world's largest underground zinc mine, and Trevali's nearby Caribou Mine that is currently in operation.
Shares in Callinex rose 17.4% after announcing the results of the independent study but still traded at a steep discount to the potential value of the project, according to the PEA study.
Other Active Zinc Producers Around The World
Glencore PLC (OTC: GLCNF) (LSE: GLEN.L)
Glencore is considered the biggest zinc producer in the world, with its operations based mainly in Australia. This year, the company intends to restart phased production at its Lady Loretta mine, with 100,000 tonnes of production expected in 2018 and an additional 60,000 tonnes in 2019. By 2020, Glencore expects to be producing 18% more zinc than in 2017, as Lady Loretta runs at full capacity and a new project in Kazakhstan comes on stream.
Vedanta Resources PLC (OTC: VDNRF)
Vedanta subsidiary Hindustan Zinc is the world's second-largest zinc producer. Currently, Hindustan operates the world's largest zinc mine, Rampura Agucha, located in Rajasthan, India. Earlier this year, it commissioned two additional mills in Rajasthan to match the growing zinc demand in India.
Trevali Mining Corp. (TSX: TV)
Trevali is a zinc-focused base metals company operating four mines: the Santander mine in Peru, the Caribou mine in New Brunswick, the Rosh Pinah mine in Namibia, and the Perkoa mine in Burkina Faso. As part of its acquisition of the Namibia and Burkina Faso mines from Glencore, Glencore now holds a 25.6% stake in the company.
Teck Resources (NYSE: TECK) (TSX: TECK-A)
Teck is a diversified resources company focused on copper, metallurgical coal, zinc, and energy. The company's zinc operations are mainly based in Alaska at the Red Dog mine. Last year, Teck produced 659,000 tonnes of zinc in concentrate, which was more than its 2017 production guidance.
Why Zinc, Why Now?
Zinc now plays a critical role in human society, and as such, will likely be in demand for the foreseeable future. Unlike other metals that rely on a single industry, zinc has a diverse range of applications including sunscreens, food additives, medicine, rubber, batteries, and many more. This diverse range of applications protects both the demand for and the price of zinc from shifts occurring within any one industry that consumes the metal.
On top of this, zinc faces a serious supply shortage due to the recent closures of a number of zinc mines. This has led zinc prices to a decade high and created a favorable climate for zinc miners like Callinex Mines Inc. (TSX-V: CNX) (OTCQX: CLLXF).
The company is part of a new generation of zinc miners who are moving their projects to completion to help the world satisfy its insatiable demand for zinc. With zinc prices at a decade-high and demand not slowing down, the emergence of a potential world-class mine at Nash Creek may benefit from this perfect storm of soaring demand and dwindling supply.
For more information on Callinex Mines Inc. (TSX-V: CNX) (OTCQX: CLLXF), please visit Microsmallcap.com for a free research report.
DISCLAIMER: Microsmallcap.com (MSC) is the source of the Article and content set forth above. References to any issuer other than the profiled issuer are intended solely to identify industry participants and do not constitute an endorsement of any issuer and do not constitute a comparison to the profiled issuer. FN Media Group (FNM) is a third-party publisher and news dissemination service provider, which disseminates electronic information through multiple online media channels. FNM is NOT affiliated with MSC or any company mentioned herein. The commentary, views and opinions expressed in this release by MSC are solely those of MSC and are not shared by and do not reflect in any manner the views or opinions of FNM. Readers of this Article and content agree that they cannot and will not seek to hold liable MSC and FNM for any investment decisions by their readers or subscribers. MSC and FNM and their respective affiliated companies are a news dissemination and financial marketing solutions provider and are NOT registered broker-dealers/analysts/investment advisers, hold no investment licenses and may NOT sell, offer to sell or offer to buy any security.
The Article and content related to the profiled company represent the personal and subjective views of the Author (MSC), and are subject to change at any time without notice. The information provided in the Article and the content has been obtained from sources which the Author believes to be reliable. However, the Author (MSC) has not independently verified or otherwise investigated all such information. None of the Author, MSC, FNM, or any of their respective affiliates, guarantee the accuracy or completeness of any such information. This Article and content are not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action; readers are strongly urged to speak with their own investment advisor and review all of the profiled issuer's filings made with the Securities and Exchange Commission before making any investment decisions and should understand the risks associated with an investment in the profiled issuer's securities, including, but not limited to, the complete loss of your investment. FNM was not compensated by any public company mentioned herein to disseminate this press release but was compensated forty four hundred dollars by MSC, a non-affiliated third party to distribute this release on behalf of Callinex Mines Inc.
FNM HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may", "future", "plan" or "planned", "will" or "should", "expected," "anticipates", "draft", "eventually" or "projected". You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a company's annual report on Form 10-K or 10-KSB and other filings made by such company with the Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements. The forward-looking statements in this release are made as of the date hereof and MSC and FNM undertake no obligation to update such statements.
FN Media Group, LLC