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What next for zinc after last year's price rally?

Zinc is now around US$2,560 per tonne and was one of the top performing commodities in 2016

Glencore-zinc-lead_opt.jpg
Major zinc miners such as Glencore are expected to proceed cautiously with any attempt to ramp up mine production

It looks like it's going to be another good year for zinc. In recent weeks, the metal has touched an eight year high, trading at over US$2,800 per tonne.

It is now at around US$2,560 and was one of the top performing commodities in 2016 as the markets supply/demand balance has tightened dramatically.

The market was in deficit through the first 10-months of the year, and official data is expected to show the deficit continued through the year.

Refined zinc metal usage increased this year at the same time that supply cutbacks caused a drop in production.

Even with the zinc pricy rally in 2016, major zinc miners such as global titan Glencore plc (LON:GLEN) are expected to proceed cautiously with any attempt to ramp up mine production.

Other major players include New York listed Teck Resources (NYSE:TECK), which is the third-largest producer of mined zinc in the world.

Toronto listed players include Hudbay Minerals Inc (TSE:HBM) and Lundin Mining Inc (TSE:LUN).

While cutbacks in production have lowered the metal’s supply, an increase in demand has also been a contributing factor to the price rise.

In 2016, China’s increased infrastructure spending boosted demand for the metal used in galvanising steel.

Expectations are that China’s infrastructure spending will continue through the first-half of 2017.

Zinc uses

Zinc is currently the fourth most widely consumed metal in the world after iron, aluminum and copper.

It has strong anticorrosive properties and about one-half of the zinc that is produced is used in zinc galvanizing, which is the process of adding thin layers of zinc to iron or steel to prevent rusting.

Galvanised steel is used for car bodies, street lamp posts, safety barriers and suspension bridges.

The next leading use of zinc is as an alloy; the zinc is combined with copper (to form brass) and with other metals to form materials that are used in automobiles, electrical components, and household fixtures.

Canada-listed players

Tinka Resources Ltd (CVE:TK) is a junior explorer developing its 100%-owned Colquipucro and Ayawilca projects.

In November it reported its environmental impact assessment for the Ayawilca project had been approved.

Here at the Zinc Zone the NI 43 -101 inferred resources are estimated to total 18.8 million tonnes grading 8.2% zinc equivalent (ZnEq).

It has passed several milestones this year.  Last month, the firm discovered a new high-grade zinc prospect at Pucarumi located several kilometres northwest of the company's 100%-owned Ayawilca inferred zinc resource.

Rathdowney Resources Ltd (CVE:RTH) is developing the next generation of zinc deposits in the ore fields of Poland and Ireland.

The Olza project is host to lead and silver as well as zinc and the firm is aiming for a conventional underground operation exploiting 2.16mln tonnes per year.

Nevada Zinc Corp (CVE:NZN)  is another player in the sector. It continues to drill on it Lone Mountain Zinc Project in Nevada.

The  most recently completed Phase 4 drill program hit significant intervals of very near surface high grade zinc mineralization, including assays of up to 5.76% zinc over 41.15 metres.

Arizona Mining Inc (CVE:AZ) holds the Taylor Deposit, which is a zinc-lead-silver carbonate replacement deposit, which has a resource of 31.1 million tons in the indicated category, grading 10.9% zinc equivalent.

Callinex Mines Inc (CVE:CNX, OTCQX: CLLXF) says it has a portfolio of zinc-rich assets in Canada and near term exploration upside with ongoing work programs in Manitoba.

The Point Leamington project has 4.1 million tonnes of inferred resources grading 6.2% Zn Eq (zinc equivalent) containing 1.9 billion pounds of Zn Eq. It has two other projects in the zinc portfolio - Nash Creek and Superjack.

Quick facts: Tinka Resources Limited

Price: 0.175 CAD

TSX-V:TK
Market: TSX-V
Market Cap: $59.63 m
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10.4 metres grading 44% zinc 'not a typo' confirms Tinka Resources chief...

Tinka Resources Ltd (CVE:TK) chief executive Dr Graham Carman speaks to Proactive Investors about the latest stellar drilling results to emerge from the company's flagship Ayawilca zinc project in Peru. Out of seven holes just announced, the highlight was 10.4 metres grading 44.0% zinc...

on 06/28/2018

4 min read