Leveraging value form a rising zinc price

Maybe you can buy zinc like any other commodity in the hope that someone will buy it off you for a higher price in the future.  But for the ordinary investor there is really no option for physical zinc exposure but exchange traded funds or ETFs such as ZINC:LN that are backed by zinc.  More sophisticated investors do have the option of looking at futures contracts of the metal which can be bought on the London Metal Exchange.

In terms of equity exposure to zinc miners there are very few almost pure plays on zinc for many reasons both commercial and also to do with geology.  Higher zinc prices could see a boost in companies such a Nyrstar and Boliden and smaller producers such as Trevali and Griffin Mining. Nevsun is interesting in the medium term as it will be mining the zinc-rich part of its Bisha (Volcanic Massive Sulphide (VMS) deposit in Eritrea by 2016.  But these and other major or big companies such as Teck, Lundin and HudBay are well certainly severed by the mining analysts with extensive research coverage.  I am interested in the smaller explorers and developers which are more leveraged to a rise in zinc price but where the intrepid investor needs to thread nimbly in not only considering the economic potential of an ore deposit and the competency and track record of management but also a raft of mitigating factors such as Sovereign risk, metallurgy and most critically community support or suspicion.  Because we are essentially dealing with a bulk commodity there are the challenges of a remote location for some of these zinc projects and the associated cost of providing necessary infrastructure.  With some deposits shipping concentrate may not be possible for a greater part of the year.  There is only a very small amount of Zinc Juniors in the space which makes the job a lot easier, a fraction indeed compared to copper and gold, and so over the coming weeks I plan to sift and delve and comment as I go and see what I think is worth a closer look.  So why zinc?  It is something of which I have some knowledge and like to write about.  The challenges in zinc exploration and discovery and project development are broadly similar to all mining in general and what we do not grow from the ground for our sustenance we have to dig out of the ground.

Clearly I cannot make any recommendations on the Zinc Juniors which I write about and in any event this would be an insult to your intelligence and independence of thought.  My notes will just contain my personal view based on experience spanning some 25 years, initially as a young exploration geologist exploring around the fringe of one of the world’s great zinc-lead deposits near Navan in Ireland to more recently as CEO of a Canadian-listed zinc Junior operating in Poland.

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