|Glencore reaffirms 2017 production guidance; no hint as to when zinc supply will come back.
Glencore reaffirmed its guidance for metal production in 2017 in its annual report on Thursday February 2, with the company failing to signal as to when it would bring back its shuttered zinc capacity.
The company suspended 500,000tpy in 2015 amid weak zinc prices, but the threat of restarts looms over the market. The three-month zinc price on the LME was recently at $2,869 per tonne, down $11. Zinc was the standout performer last year – at one point it attempted to take out the $3,000 per tonne level. While it failed to breach this, a low-high of more than $1,500 per tonne is impressive. Zinc production guidance for 2017 was placed at 1,190,000 tonnes, up around 25,000 tonnes on the previous year. The company hinted.|
|Spot price for Zinc continues to rise standing at $2,847 per ton.|
|The zinc price is on the rise, but which companies are set to benefit the most? - By Alistair Ford:
Zinc is back in fashion and zinc companies are on the march. But which ones are worth a look?
Balkan Zinc looks set to be the first zinc miner to list in London - if not quite in living memory, then at least in a long, long while.
For a long time, zinc was the metal perennially out of favour. Even during the height of the mining boom it lagged, and promoters around town found the zinc slog harder than almost any other.
One major zinc producer, Nyrstar, pretty much left the mining business altogether. And in February 2016 Horsehead Holding Corp (OTCMKTS:ZINCQ), a billion dollar zinc recycling company, filed for Chapter 11 protection in the US.
But things are changing fast.
The imminent listing of Balkan Zinc, which looks set to come to the market in mid-February, is one sign of that. But there are other signs too.
Ferrum Crescent (LON:FCR) has lately got into zinc, Hannan Metals (CVE:HAN) has acquired the Kilbricken project in Ireland, ZincOx (LON:ZOX) is still alive, just, and signing new deals, while Avrupa (CVE:AVU) is actively looking for deals on the Iberian pyrite belt to complement its existing position.
Meanwhile, Turkish conglomerates are nosing about looking for opportunities, and other companies too are looking to take positions in the metal.
Why is this?
Simple - after long years when supply was easily equal to demand, zinc is now slipping into deficit.
Zinc stocks, as measured by LME inventories, fell in early January, and stood at 419,800 tonnes. These are levels not seen since the end of the last mining boom, and the lack of inventory has been accompanied by a corresponding rise in the price which, at the current US$1.23 per pound, is higher than it’s been since 2008.
The first sign of this recovery was an increasing interest in zinc EFTs, for example the ETFS Commodity Securities Limited ETF (LON:ZINC), which is now trading at a five year high, but which first really moved at the end of 2015.
And by that time, many canny companies had already taken significant positions. Thus Hannan and Balkan are already in place with exploration and development projects. The same is true of Zinc of Ireland (ASX:ZMI), which has several projects in Ireland, Rathdowney Resources (CVE:RTH), which has just announced a C$5mln placing, BRM Group(LON:BMR), which has just issued a positive update on its Zambian projects, and Ironbark zinc (ASX:IBG), which is moving forward with its projects in Greenland.
On the North American side, the zinc companies have become increasingly active too. Thus Nevada Zinc (CVE:NZN) is attracting interest in its Lone Mountain project, including from out of Europe, Arizona Mining (TSE:AZ) is moving ahead with the Taylor deposit and Callinex Mines (CVE:CNX) has hit a three year high of C$0.65 on the strength of exploration success at Pine Bay in Manitoba.
This latter project is situated adjacent to the famous Flin Flon project of Hudbay Minerals (TSE:HBM), which is now boosting production to meet the new market strength. Hudbay shares have more than tripled in value over the past year.
At the top end of the zinc market, Glencore (LON:GLEN) continues to be dominant, while First Quantum (TSE:FM) and Boliden (TSE:BLS) also provide major contributions to global supply.
Nevertheless, that supply is diminishing as major Irish and African mines run down, and new mines look to be slow in coming on stream.
To be sure, Vast Resources PLC (LON:VAST) has recently started production at Manaila in Romania, and other of the juniors may also add a small contributions in due course, in particular mom and pop operations out of China.
But the central dynamic remains the same.
And broker RFC Ambrian spells it out succinctly: “The last three years have seen significant production capacity reductions through mine closures, including Vedanta’s Lisheen mine and MMG’s Century mine (which itself accounted for approximately 4% of global production.”
Some of this production fall has been a tactical or strategic response to weaker pricing. But by no means all. RFC Ambrian also cites “the natural end of older mines” as a significant cause.
And the really big companies are not at the moment interested in redressing the looming deficit. “Zinc is not a strategic focus for the major mining companies, suggesting that the availability of capital for large-scale new projects will be limited,” says Ambrian.
Which brings us back to the smaller players.
As investors search around for ideas on how to play zinc, and as the mining sector as a whole comes back into favour on the back of the Trump stimulus, the zinc juniors are likely to be in increasing demand.
Old projects will start to appear on the radar again.
One such might be the Black Angel zinc mine in Greenland, now owned by private company ARC Exploration. Once-upon-a-time this was held by Angus & Ross, Aim’s proxy zinc play. But the project ran into difficulties and was taken into private hands.
Work has not stopped though. Eight weeks of field activities in the summer of 2016 involved ground geophysics and induced polarisation work conducted by the well-known boutique Irish consultancy Aurum Exploration Services. Then, in late June, 11 new holes were drilled, a number of which intersected mineralisation.
Meanwhile, Anglesey Mining (LON:AYM) still has its large Parys polymetallic project in Wales, and this may get reactivated in the face of further zinc price strength.
Across the water in Ireland, Connemara Mining (LON:CON) is still slip-streaming in the exploration wake of its major partner Teck (NYSE:TECK), while Lundin (TSE:LUN) has now departed and left the field open for Hannan.
Other juniors that are worth a look are: Inca Minerals (ASX:ICG), which has the Riqueza and Cerro Rayas zinc-silver-lead projects in Peru, Zincore Metals Inc (TSE:ZNC), which also has projects in Peru, Trevali Mining, which (TSE:TV) has operations in New Brunswick and a mine in Peru, and ScoZinc Mining Ltd (CVE:SZM) which owns zinc exploration in Nova Scotia.
Also on the radar: Red Crescent Resources (TSE:RCB), which has projects in Turkey, InZinc (CVE:IZN), which has the Indy zinc project in British Columbia and the West Desert project in Utah, Energia Minerals Limited (ASX:EMX), which has the Gorno underground zinc project in the north of Italy, and Consolidated Zinc (ASX:CZL), with its assets in Mexico.|
|The book value was US$5.8mln, so Zincox will take a US$2mln profit on the sale.
picture of recycling plant Zinc prices have soared in recent months
ZincOx Resources plc (LON:ZOX) drawn a line under its Korean zinc operation with the sale of its remaining stake.
Korea Zinc Corporation (KZC), its former partner at the plant, is buying Zincox’s stake for US$7.95mln.
The book value was US$5.8mln, so Zincox will take a US$2mln profit on the sale.
KZC has agreed to pay a total of $7.95m in two tranches for the remaining interest in ZOC, of which $7m is to be paid within three weeks and the balance once KZC has completed various procedural requirements in Korea.
Cash received will also clear US$5mln of its outstanding debts and leave some money to fund new zinc recycling projects it is working on.
Zincox is still working with KZC and in November the pair unveiled plans for a new zinc recycling plant in Vietnam that will use the Rotary Hearth Furnace (RHF) technology they developed in Korea.
Andrew Woollett, ZincOx's chief executive, said: "The sale will enable the Company to pay off all its debt and provide sufficient funds for us to work on new and exciting major projects around which the Company can be rebuilt"
Broker share price Angel added: “The Korean Recycling Plant is now ancient history but with zinc prices so very much higher and management more expert than before, the next incarnation should see a better outcome.”|
|in due course by the looks of it.|
|Todays RNS : Sale of Remaining Interest in KRP
Is this a phoenix event?|
|Spot price for Zinc now holding well above $2,700 as high at $2,753 per ton will hopefully mean that ZOX will not be required to sell down any more of their small percentage holding in the Korean Zinc Recycling plant.|
|ZincOx (LON:ZOX) Suspended – MOU signed with Korea Zinc on joint design and development of new recycling plant in Vietnam
ZincOx is looking to remerge from the ‘ashes’ or should we say the ‘Electric Arc Furnace Dust’ to develop a new recycling plant in Vietnam.
The press release is short on technical details on the project but does tell us that it’s a 51:49 joint venture in favour of Korea Zinc and that the ‘Definitive Development Study’ is expected to cost about $2.5m. If this cost rises to >$3m then ZincOx’s interest will be diluted proportionately though ZincOx will be able to buy back its interest to 49% in the following six months.
The new Vietnam recycling plant will be based on ZincOx’s developed Rotary Hearth Furnace technology and with capacity to treat 100,000tpa of EAFD. We guess this could result in 30,000t of high quality zinc oxide (80% zn) production worth around twice as much as zinc concentrate plus some by-product iron.
This should lead to a significant increase in sales for a relatively modest increase in overall operating cost leading to a substantial uplift in margin, value and profit compared with the last plant built. We believe the ZincOx plant built in Korea is now working well and enjoying the benefits of the significant uplift in zinc prices since Korea Zinc took control of 91.3% of the plant as part of a financial restructuring during the prolonged commissioning process.
ZincOx shares were suspended on 28th October and must requote within six months to avert delisting.
Debt: ZincOx is carrying £3.78m of corporate loan notes with interest accruing at 10%pa from 1st August 2016 and are due for repayment in January 2018.
Assets: ZincOx retains an 8.7% interest in the Korea Recycling Plant which it designed and built. Very sadly extended plant commissioning combined with prevailing low zinc prices allowed Korea Zinc to take control and majority ownership of the plant just ahead of a recent and sustained rise in Zinc prices.
The value of Zincox’s stake in Korean Zinc Recycling Plant should now be substantially more than the last implied value of $6.3m.
ZincOx also owns what is described as a valuable plot of industrial land in Turkey.
Conclusion: It’s good to see ZincOx re-emerge from losing control of its Korea Zinc Plant. It is interesting to note that Korea Zinc are still working as cooperating partners with the ZincOx team. Korea Zinc must respect the skill and knowhow of the ZincOx team and must also need to utilise these skills to advance with their next EAFD project.|
|Spot price for Zinc now nearly $2,700 per ton. What could of been when it comes to ZOX, too small and under funded to with stand a short term drop in the Zinc price to $1,450 per ton.
Dominic Frisby - Today we turn our attention to a metal which often passes without notice.
It isn’t glamorous like gold or silver, nor is it rare like platinum or rhodium.
It isn’t controversial like uranium, strategic like tungsten or cobalt, nor even widely talked about like iron or copper.
But it has, quietly, had a stellar 2016. It’s currently up almost 60%.
Today we’re talking zinc…
Zinc is in short supply:
Having started 2016 at just over 70c per pound, the zinc price currently stands at $1.17 a pound.
All of the usual factors have been driving the price. Firstly, there’s a lack of supply. China is the world’s top producer, contributing some 37% of global supply last year. However, last year it shut down some 26 lead and zinc mines for environmental reasons.
In addition, Australia’s Century mine and Ireland’s Lisheen mine, which between them produced about 5% of the global supply of zinc, have shut down due to depletion. Meanwhile, Glencore Xstrata’s Perseverance and Brunswick mines also recently closed.
As the zinc supply has dwindled, so the price has risen – and there’s nothing like a rising price to bring in more buyers.
After iron, aluminium and copper, zinc is the fourth most used metal in the world. (Although be aware that in some years this title falls to titanium). Annual zinc demand stands at 13.4 million tonnes.
Per year, it is a $34bn market. To put that number in some kind of perspective, silver is about an $18bn market and platinum just $8bn. Copper meanwhile, is closer to $150bn.
What is zinc used for?
The main uses for zinc are as follows.
Galvanising: this is the most important use for zinc, accounting for about 50% of annual demand. Iron and steel are coated in zinc to prevent rust. Galvanised steel is one of the strongest construction materials there is. It’s used to make the frames of large buildings, bridges, beams, piping, roofs, staircases – you name it.
Batteries: the world’s first battery – invented by Alessandro Volta in 1799 – used zinc as an anode. Zinc is still used in all kinds of batteries, from cheap to expensive: zinc-air (such as in hearing aids); silver-zinc (used in the aerospace industry); zinc-bromine (for energy storage); and plain old alkaline batteries – such as the AAs I have in my computer’s mouse.
Solder: zinc, lead and tin alloy is used to join electrical components and pipes.
Nickel-silver: this is actually zinc, copper and nickel, and is used in keys, zips, silverware and musical instruments (brass requires zinc).
Almost half of annual zinc demand comes from China, which is still building buildings and bridges, despite its economic slowdown. And if Donald Trump’s proposed infrastructure splurge comes to fruition, you can expect US zinc demand to grow considerably in the coming years. Zinc is a beneficiary of government infrastructure spending.
How to buy zinc:
The simplest way to invest in zinc is to buy one of the zinc exchange-traded funds (ETF Securities offers a London-listed one under the convenient ticker ZINC) or to buy it via a spread bet. All the usual risk warnings apply (particularly to the spread betting).
Alternatively, you can go down the individual company route. BHP Billiton (LSE: BLT) is the world’s largest producer – although, of course, it produces many other commodities as well, so it is not a pure zinc play. I like BHP and, like zinc, it is in a strong uptrend. At 1,326p it has more than doubled from its lows of below 600p at the start of the year.
A purer play might be Griffin Mining (LSE: GFM), which owns just under 90% of an operating zinc-gold mine about 300 miles north-west of Beijing. However, while I’m mentioning the company, that does not constitute a recommendation – if you’re keen on the theme, then it’s one to do your own further research on. Otherwise I’d stick with one of the bigger players.|
|Today's RNS gives hope. May ZOX fly again like Phoenix!|
|Thanks etarip for the explanation.
So I guess there is hope however slight if the Vietnamese project can get the go ahead.|
|AIM Rule 15:
Rule 15 (fundamental changes of business) has been amended in relation to an AIM company which becomes a cash shell following a fundamental disposal. The previous Rule 15 provided that an AIM company which became a cash shell following a fundamental disposal was deemed to be an investing company. This meant that the AIM company had to obtain shareholder approval for the disposal and its proposed investing policy, following which it would then have 12 months to either implement the investing policy or make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14. If the AIM company did neither within the prescribed period, trading in its shares were suspended.
According to the Exchange, the purpose of this rule is to enable AIM companies, where appropriate, to continue to access the benefits of the market following a fundamental disposal. However, the previous Rule 15 resulted in some companies remaining on the market with limited cash balances which were insufficient to enable meaningful investments or facilitate the functioning of a fair and orderly market in that company’s securities.
Rule 15 has therefore been amended to provide that an AIM company that becomes a cash shell following a fundamental disposal will no longer automatically be treated as an investing company but will instead be regarded as an AIM Rule 15 cash shell. Within six months of becoming an AIM Rule 15 cash shell, the AIM company must make an acquisition or acquisitions which constitute a reverse takeover under Rule 14. For the purposes of this rule only, becoming an investing company pursuant to Rule 8 (including the associated raising of funds as specified in Rule 8) will be treated as a reverse takeover and the provisions of Rule 14 will apply, including the requirement to publish an admission document. If an AIM Rule 15 cash shell does not complete a reverse takeover within six months as required, the Exchange will suspend trading in that company’s securities.
Where an AIM Rule 15 cash shell does not intend or wish to undertake a reverse takeover in accordance with Rule 15, the Exchange expects it to obtain shareholder approval to cancel its admission to AIM in accordance with Rule 41 and to consider how best to return any remaining funds to shareholders.
A new definition of “AIM Rule 15 cash shell” has been added to the Glossary terms accordingly.
Changes to the AIM Note for Investing Companies
As a result of the above changes to the AIM Rules, consequential changes have been made to paragraph 5.2 of the AIM Note for Investing Companies, including adding a confirmation that cash funds resulting from a fundamental disposal under Rule 15 will usually be considered independent for the purposes of satisfying the equity fundraising requirements under Rule 8.
This means six months to go to find a deal otherwise they get struck off permanently.|
|Zox is getting cuddled|
|Very small gamble on this some before tick up, some after.|
|Yesterday the zinc price touched $2,300, for what it is worth when it comes to ZOX.|
|It seems to me after these two big Buy´s all the other trades for the rest of the day were also Buy´s so if nothing else has brought a little confidence back into ZOX.|
|Looking better was several pence no too long ago let's hope the bod pull that rabbit out|
|mally - I think approximately 3.4% of shares in issue.
Current major share holders in ZOX
SR Global Fund LP: .........17.53%
Harold N McCawley:...........8.67%
Charles Stanley Group Plc:...7.29%
|sinificant amount still for a 1mill mcap this could really fly on good news|
|It seems to me they were two trades at slightly different prices and they both seem as Buy´s to me.
Saying that the total value for the 7M shares is less than £40,000.|
|are you talking about the 3.5M roll over?
no stake for sure
almost - same amount, same time, same price|
|Well someone's bought 2 lots of 3.5mill|