I’ve been on the road for six weeks now without the opportunity to write up the several wonderful projects I have been visiting so look forward to a number of pieces coming out shortly.
It should be no surprise to anyone reading the web; China is slowing down after 15 years of record growth. It would not be foolish to believe copper and the base metals should have a pullback based on a reduction in future demand. For one base metal, any demand reduction will be more than met by a more massive supply reduction. That commodity is zinc.
Zinc is the fourth most commonly used metal in the world after iron, aluminum and copper. Two major mines are starting to shut down in 2013 including Xstrata’s Brunswick zinc mine in Canada and Minmetals’ Century zinc mine scheduled for shut down in Australia. Between those two mines, there will be a 765,000 metric ton loss of zinc production in the next three years.
One of our new advertisers has a mine with great potential in British Colombia, Canada Zinc. (CZX-V)
In a piece in the Financial Times on February 15, 2012, Macuarie’s commodity research team picked zinc as the top base metal pick with estimates of price increases up 50% from current levels. Regardless of demand changes.
Canada Zinc is perfectly positioned to respond. Their 100% owned Akie project north of Prince George had a 43-101 resource released in 2008 showing 23.6 million tonnes in the inferred category at a cutoff grade of 5% zinc. I have shown a picture of what the rock in the ground is worth in theory below.
At $197 rock, the deposit has almost $4.64 billion dollars worth of rock. Interestingly, the deposit is very sensitive to grade. If you lower the cutoff grade to 2% zinc, the theoretical rock value drops to $137 per tonne but the tonnage more than doubles. In theory, the metal in the ground would be worth just short of $7 billion.
There has been a lot of drilling done by the company since the resource came out in 2008. In 2011 they drilled an additional 5,667 meters with results of up to 14.54% combined lead/zinc over 8.5 meters.
The company will be at PDAC and that would be a good time to talk to them and now would be a great time to invest. They expect to release a new 43-101 resource the week of March 12.
Canada Zinc is a new advertiser and we are biased. As always, you are solely responsible for your own investment decisions. We share neither in your profits nor your losses.
Canada Zinc Metals Corp