There's an extraordinary metal about to enter a new super-cycle. That's because existing inventories are vanishing at an alarming rate. And it’s giving smart investors a rare opportunity to potentially make a lot of money.
During the last upswing, prices of this natural resource climbed 349 percent. But the biggest money wasn’t made buying the metal. It was made buying the miners.
Korea Zinc Company, Ltd.’s (KSE: 010130) stock price went up over 465 percent. And Canada Zinc Metals’ (TSX:CZX) shares shot up 610 percent. Darnley Bay Resources Ltd. (TSX:DBL) even rose 667 percent.
Today, mining insiders understand that this metal’s bull market has legs. Prices are just beginning a potentially record breaking rise. To take advantage of it, a leading mining industry expert founded Zinc One Resources (TSX-V:Z; OTC:ZZZOF).
This $67 million market cap company is set to become one of the newest zinc-mining players, and it couldn’t come at a better time as a supply gap of epic proportions looms over zinc markets.
#1 The Edge of an Epic Bull Market
Zinc is the 4th most-used metal in the world, yet it still flies under investor radars. It’s used in everything from power-generation and medicine, to military equipment and shipbuilding. Most notably, it is a central part of all infrastructure projects around the world.
China’s very ambitious plans to build one of the biggest megacities the world has ever seen, as well as its mind-boggling “One Belt, One Road” project, are just one reason zinc demand is soaring.
India is adding to the insatiable demand for zinc, with a massive growth in Indian megacities which are reliant on a steady stream of zinc supply.
Trump’s pledge to spend $1 trillion on infrastructure projects over the next 10 years, including the rebuilding and repair of America’s crumbling roads, highways, bridges, airports, tunnels, and railways will also be a massively commodity-intensive project.
On top of this, the strength of the steel product process is now driving increased steel production, which means an increase in zinc demand.
Beyond infrastructure, governments LOVE zinc. Not only is it essential for military equipment, but it’s also a clever way to contribute to ‘green initiatives’ and score political points.
And as this demand soars, supply is fantastically tight and stockpiles are diminishing at a rapid pace.
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Last year alone, two major mines were depleted and closed down, taking 630,000 tons of annual zinc resources offline. Australia’s Century Zinc mine and Ireland’s Lisheen mine were both shuttered. And the top zinc producer, Glencore, shuttered two depleted mines in Canada in 2012, taking one million tons of zinc offline. In 2015, Glencore shut down two mines in Australia and Peru, and in early May it said it had no plans to restart them.
Now that supply has virtually disappeared and new demand is about to hit a long-running fever pitch, Zinc One (TSX-V:Z; OTC:ZZZOF) is positioning itself right in the heart of zinc mining in Peru. We have about 2 million tons left in global inventory, and it will dwindle fast. And this year alone, we are already set for a 500,000-ton gap in supply.
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In 2016, zinc prices gained a whopping 78 percent before dipping a bit in early 2017, but prices are already regaining momentum. Even with this massive last-year gain, analysts pretty much across the board see room for a surge.
#2 One of the Highest-Grade Mines in the World
The Bongara Mine project, with significant exploration potential along some 2 kilometers strike length, will likely be one of the highest grade zinc projects in the world. Quite possibly it will be THE highest-grade zinc project in the world once it’s back in production.
This is one of the most remarkable aspects of this play; especially when you consider that most of the new zinc projects fall far short of high-grade quality compared to the existing mines of the major producers.
So, we have a junior explorer that’s automatically ahead of its peers, and in league with the biggest miners. This is a rare opportunity that isn’t likely to be repeated.
Bongara’s zinc grade is over 20 percent, which puts it—quite literally—off the charts.
And there’s more blue sky potential and management expects an update soon to increase the historic resource estimate. Previous drilling and trenching suggests there is the potential for this mineralization to continue for double the length, which could markedly add to the current size of the project.
This doesn’t even consider the property Zinc One has right next door—the Charlotte Bongará Project. This is the first time these two properties will have the same operator, giving it a much better advantage than it had historically. Here the grades of zinc become even more tantalizing. In 2008, this project had near-surface drill intercepts of zinc oxides that included 29.5 percent Zn across 15.5 meters, 26.1 percent Zn across 12.5 meters, 29.7 percent Zn across 11.5 meters.
#3 Low-Cost, Easy Access—Get Ready for Production
If the high grade wasn’t enough to impress. Consider this: The Bongara Mine and its corresponding Charlotte Bongara mineralization are sitting on surface and are easy to process from a metallurgical perspective.
Previous production in 2008 demonstrated a recovery rate greater than 90 percent, and with the resource on surface it looks like Zinc One isn’t going to need an expensive underground operation. So far, the deposit is easily accessible on the surface. But even so, the high-grade nature of the zinc ore could even be mined by a more expensive underground mining operation.
The objective here is to re-start mining ASAP, and Forrester already laid the ground work. Existing permits are in place and advanced permitting is already in process, and drilling permits are expected by July.
#4 Big-League Management with Access to Capital
Management is everything in the junior mining world, and this is where Zinc One really shines. Without exceptional management, this junior wouldn’t be sitting on what may prove to be the highest-grade zinc mine in the world.
The top management of Zinc One has over 100 years of combined experience in mine design, permitting, construction and operations.
It’s got deep networks to raise capital and negotiate further acquisitions in the space. When it comes to creating shareholder value, this team is all in.
Zinc One’s CEO Jim Walchuck—is convinced that Bongara will be a game-changer, and he knows what he’s talking about. He has over three decades of mining experience. He put the Balyanhulu mine in Tanzania into production for Barrick Gold.
Walchuck is now partnering with Greg Crowe, the CEO of Silver One Resources, and formerly the legendary figure behind Entrée Gold, which he led to major success on the world stage. He’s a dealmaker extraordinaire, and Zinc One could be his next home run.
The business plan for Zinc One (TSX-V:Z; OTC:ZZZOF) is forward-thinking. Walchuck and Crowe plan to achieve near-term cash flow from the Bongara Mine Project and advance the Charlotte Bongara project while acquiring other advanced zinc assets. This is the making of a metals baron.
#5 This is the Critical Time
Right on the edge of a raging bull run for zinc, and a consensus on tight supply and surging demand, Zinc One is ready to put an uber-high-grade zinc mine into production at breakneck speed.
We expect a substantial amount of news flow from this company in the coming days, weeks and months, including announcements on permits, the drilling of up to 400 holes, and potential increases in resource estimates.
With production slated to begin in 36 months—or less—market value could gain a premium.
We love the people behind the company, including management. We like Peru, we like the fact that this is a former mine which will help shorten the time to production, and we like the fact that this group has easy access to money. And we love zinc!
This is the first time we’ve seen something this rare: A junior explorer with an off-the-charts grade of zinc, gunning for almost immediate production, and perfect timing right after zinc bottomed out and the panic began for securing supply of a metal that cuts across countless strategic industries.
Zinc has come of age, and we don’t know of any other zinc story out there with this kind of catalytic news flow in the pipeline.
Honorable Mentions on the zinc playing field:
• Lundin Mining (TSX:LUN): Operating in Chile, Portugal, the U.S. and Sweden, Lundin expects to double its current zinc production at Neves-Corvo in Chile.
• Hudbay Minerals (TSX:HBM; NYSE:HBM): Operating in North America, most notably in Manitoba, a Q1 operational indicated a potential increase in zinc production at its Lalor mine by just under 20,000 tonnes this year.
By James Burgess of Oilprice.com
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