# Zinc – A Potential Play for the Future?



## GREENS (17 July 2008)

Is zinc a potential play for the future? Many analysts tend to agree that zinc inventories should start to get tight again towards the end of 2009 through to 2011 and potential beyond.

Due to the current low spot price for zinc and the bleak outlook over the next 12 months a lot of zinc miners are running in to difficulty as they are finding it extremely difficult  to cover their costs of production. High costs miners such as Perilya and CBH are just a brief example of companies struggling at present. 

This thread is aimed to discuss the future of zinc and zinc miners (does not have to be a pure zinc play). Some areas for discussion may include future demand and supply of the metal. In particular I’m curious to get a discussion going on current or future projects that people consider may have to be put on care or maintenance or delayed due to the low POZ  &/or because of financing difficulties due to poor equity and debt markets. Also state the amount of lost zinc metal from the market that would or may potentially arise. Below are two major projects that fit such criteria and have been in the press in recent days: 

Lennard Shelf Zinc Mine – Operated Xstrata and Tech Cominco have announced the closure of their JV Lennard Shelf Pilbara mine in Western Australia because it has become uneconomic to operate. Operations are expected to cease in August 2008. The mine produced around *42,000t p.a. Zn & 12,500t p.a. Ld*. 

Peroka Zinc Mine – Operated by AIM resources. Today announced that due to current zinc prices and difficulties in raising finance the company has had no choice but to suspend the development of the mine and place it on care and maintenance until conditions improve. The project was originally anticipated for first production in late 2008/early 2009 at a rate of approximately *70,000t p.a. Zn*. 

Could low cost miners such OZ Minerals, Kagara and Jabiru Metals which will easily be able to maintain mine profitability in a low zinc price environment potentially be able to take advantage of other company’s downfalls and in turn be well positioned for any favourable turn in the future price of zinc?


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## GREENS (23 July 2008)

Another item on zinc in an article about OZ Minerals in today’s Fin Review. More good news for those low cost producers...with what seems to be potentially even more major project delays and high cost producers being strangled. 

“Oz Minerals plans to develop new zinc mines despite the dire state of the zinc market, rising costs and capital cost blowouts across the resource industry.

*The slumping zinc price has pushed 15% of global producers into a loss*. 

OZ Minerals chief executive Andrew Michelmore predicts the price will rebound, making new projects viable such as the $500m Dugland River zinc mine in QLD

However not everyone is convinced...Deutsche Bank analyst Paul Young said: I think the company will still push ahead with the project studies. But Dugland River is a stretch now due to escalating capital costs and I wouldn’t be surprised if the development decision is pushed well into 2009 and first *production pushed back to 2012 or 2013. Any delay to Dugland River bodes ill for the more ambitious Izoc Lake zinc project in Canada, which will require other miners in the region to contribute to costly infrastructure*.”


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## GREENS (29 July 2008)

Another good article on the supply/demand situation of base metals by investment house Fitch. Here is the bit on zinc, but the ill attach the rest of the article as the analysis of other metals is also quite an interesting yet brief overview. 

ZINC

"*Currently, the market looks to be in surplus, but may become more balanced with reduced production or delays in development*," according to Fitch. For example, AIM Resources suspended development of the Perkoa Zinc project in Burkina Faso until zinc prices and financing improve.
"With the price declines over the past year and expectations of a surplus, some high-cost operations are expected to be shuttered," the analysts advised, who also correctly predicted the decision to close the Lennard Shelf Pilbara zinc mine in Western Australia. Meanwhile, mines comprising an eventual total capacity of 235,000 mt are scheduled for completion this year.
The analysts noted that zinc consumption through the month of May this year has increased 1% over the same period of 2007 despite weakness in North America and an 8% decline in Europe.

http://www.mineweb.com/mineweb/view/mineweb/en/page36?oid=57944&sn=Detail

I also have a feeling Perilya may run into some troubles if the zinc price remains low over the next 6-18 months. PEM's cost of production per lb is already well above the current metal price being received by the company. They either need to take the lead of CBH and cut costs/attempt to increase throughput to bring down operating costs or face having to close down there broken hill operations. Still CBH will probably be in a similar position at the moment, probably running at a slight loss.  So any further sustained weakening will likely see considerable disruption to supply. This could results in >120,000t p.a. Zn being taken from the market, which would be a considerable hit to the supply side of things. On the other hand if they can reduce their cash costs per lb, then both companies may just hang in there. Will have to wait and see in the quarterly reports to be released soon.


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## GREENS (30 July 2008)

GREENS said:


> Still CBH will probably be in a similar position at the moment, probably running at a slight loss.




CBH stated that the Endeavour mine pre tax loss for the year will likely be around $12m compared to a positive value from the previous year due to a combination of lower metal prices and throughput. However they are attempting to increase both throughput and grades to push down operating costs and have cut around 200 workers, so will be interesting to see if things improve financially in the coming quarters.


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## michael_selway (30 July 2008)

GREENS said:


> CBH stated that the Endeavour mine pre tax loss for the year will likely be around $12m compared to a positive value from the previous year due to a combination of lower metal prices and throughput. However they are attempting to increase both throughput and grades to push down operating costs and have cut around 200 workers, so will be interesting to see if things improve financially in the coming quarters.





hm seems you are bullish on zinc, so what Zinc stocks on ASX shoudl we keep an eye on?

thx

MS


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## GREENS (31 July 2008)

michael_selway said:


> hm seems you are bullish on zinc, so what Zinc stocks on ASX shoudl we keep an eye on?
> 
> thx
> 
> MS




MS I wouldn’t say I am completely bullish on the metal just yet. But with the price hovering where it is, and if it continues to decline or stay at these lower levels than I can see a fair bit of supply destruction occurring. What has made this situation even worse is that some projects that would be feasible in normal market conditions are struggling to get finance due to depressed debt and equity markets. 

For starters some large zinc mines have already been shutdown or put on care and maintenance, and even if the zinc price did shoot up all of a sudden, it would still take considerable lead time for them to reopen. Many other higher cost zinc miners are struggling to turn a buck also in the present environment and I suppose will be trying to hang in there as long as possible in hope they can cut costs or the zinc price will rise. But the longer that these prices stay around for and if they fall even lower then I would only assume that more miners will close down there operations. 

In some ways I’d be very happy to see the zinc price fall further or stay at or around its current price for an extended period of time say 12 to 18 months or even slightly longer to force some of these high cost producers to close their operations and to deter new mine development coming into production. Why? Because this could potentially create a chance for a strong upwards movement in the zinc price which in turn would benefit existing low cost producers that can weather the storm.  If this then did occur there would still be a lengthy period of time before supply caught back up to demand once again. So I see this doom and gloom scenario in zinc at the moment as potentially a good opportunity going forward. 

In terms of potential zinc plays, Id still try and stay with companies that are low cost producers of the metal and can maintain good margins and profitability regardless of whether zinc prices fall another 15-20%, of course not saying they will but better to be safe than sorry. Also may be a bit better to stay with companies that have some additional exposure to copper, gold &/or nickel but still have good leverage to zinc. I like Oz minerals & Kagara probably look the best, but JML and TZN are also expected to be low cost producers of zinc as respective production reaches full capacity. Companies with considerable by products such as copper and/or gold are also going to fair much better.  All the companies mentioned above fit this category, but is always good to keep in mind if you come across other zinc producers that you fancy. 

But I don’t think there is too much rush to jump in just yet, considering this market (ASX and zinc) probably has further to fall and this is a more long term trend I’m focussing on. But as with any long term prediction, it is still extremely difficult to predict with great accuracy. I am just trying to supply the facts and hope people will join in an attempt to put together a better fundamental picture of the metal going forward. If I continue to see mine closures and project delays occurring this will re-affirm my initial position of strong outlook for the metal going into 2010.  But then again there is also a risk that the demand side of things won’t hold up either. So it depends also what your views are on demand for resources long term.


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## GREENS (31 July 2008)

PEM quarterly out this morning. Like CBH it seems like the low zinc and lead price are taking its toll on this high cost producers Broken Hill asset. 

March Q 08 – Net Cash Costs per lb of zinc where $1.20, with a negative operating margin of ($0.12). The company faired slightly better this quarter with higher throughput, June Q 08 – Net Cash Costs per lb of zinc where $1.01, with a slightly positive operating margin of $0.03. The company is only just keeping its head above the water as a result of hedging, but I just can’t see how with such high operating costs this mine will be able to continue if zinc prices remain low for a sustained period of time and especially once hedging contracts expire. Only a small proportion of zinc is hedged going forward now, so as with CBH will be interesting to see how things turn out in future quarters. I still can’t believe the CBH and PEM merger did not go through, seemed to be the most logical decision to bring down operating costs and make both companies more competitive going forward. 

Full year production of zinc for PEM was >90,000t. So if this was to be taken off the market, would be a fairly big hit to zinc supply. The company will have a lot of work if it is to reduce its high operating costs.


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## Spaghetti (14 August 2008)

Greens

Thinking along similiar lines as you and zinc does seem an obvious choice at some stage down the line.
OZ minerals would be Zinifex deposit, or did Oxiana have zinc deposits? I did hold Zinifex and the issue then was that their zinc supplies would only last 10 years and that was maybe 1 year ago. Mind you my research on zinc is as old so they may have proved up more since.

I agree though best to have the information at hand at before a boom in a metal starts rather than later as I normally do . I realised that by jumping on during hype times do can miss the huge potential gains and take away only some so best to be prepared.

Maybe a while though, unless market gets hungry for next big thing. 

May start a search when I have found the iron ore stock I want. Hard when the few good ones already seem to be valued accordingly so yes next project, the next big thing.


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## Spaghetti (14 August 2008)

Greens, you had answered my question re OZ minerals, I should read everything.

Little bit of reading, same conclusions, expected production pipelines may need to be reviewed as finance ,either bank or equity, may not be available to finance planned production.

The expected closure of Century mine (2015) will be a loss of major supply. Will see some of the smaller struggling miners being bought out by larger zinc miners that have lower costs enabling them to purchase current uneconomic ground for rock bottom prices.


The question remains when I guess.


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## Spaghetti (14 August 2008)

Have not done a real lot of research on zinc yet but TZN has me a little interested even though not done enough work to be at convinced stage yet. Undiluted m/c circa 200m.

Has just begun shipping from angus in SA. Looks lower grade than the others I have looked at today but has gold and copper credits plus had forward sales contracts in place so has positive hedgebook. Funds from angus operations will go toward development of Algerian operations of which TZN have 65% stake. Also 25% jv with OZ minerals menninine project. Terramin has an offtake agreement in place with Sampra metals for life of mine at Angus. They also provide financing etc etc.

Press release state they hope to have 100,000mt per annum from algeria though I cannot find any jorc that supports ..though they are at pre-feasibility stage so scratch my head over that one..or missing something on my searches.

Fosters had a price target of $10/share before all this market turmoil..whether time will realise this potential or not during choppy times is yet to be seen but considering they have done this well so far during poor zinc time may well be a good sign they will flourish in better times.
http://www.theaustralian.news.com.au/story/0,25197,22779681-5005200,00.html

Note sure of Alegeria risk profile but overall looks like a company worth at least researching.


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## GREENS (15 August 2008)

Well looks like CBH is having to take some pretty drastic measure to stay viable in a low zinc environment and looks like Perilya is in a pretty dire situation, yet to take any action. 

“ATTEMPTING to survive floundering zinc prices, CBH Resources has now cut its workforce by two-thirds in the past two months and will restrict mining at its Endeavour operation by 28 per cent so it can break even.

The move could foreshadow moves by others and illustrates the pressure Australian zinc miners are under as prices slide and costs of fuel, labour and equipment soar. 

CBH managing director Stephen Dennis said falling zinc prices had led CBH to stop chasing profits at the NSW mine in the near term and just put it where it can weather the poor market conditions. 

"What we've tried to do is stem the bleeding and put ourselves in a position where we can break even," Mr Dennis told the Australian. "Our strategy is to try to keep the mine viable and open while prices are depressed." 

"At some point we will see a lot of further announcements like today's, where people have to take action in response to these prices," he said, adding the reduction in output should at some stage start to support prices. 

Under CBH's new mine plan for Endeavour, which is the town of Cobar, staff will be cut by 151 people to 233. 

The move comes after a June decision to reduce numbers from 600 people to try to cope with lower zinc prices. 

As well as staff cuts, CBH will reduce planned ore output to 940,000 tonnes, down from a target of 1.3 million that was restated a month ago, as it restricts mining to higher grade areas. 

After that, production will continue at 800,000 tonnes a year for up to a decade, but prices can be ramped up fairly quickly if prices improve. 

Combined zinc and lead grades will increase to 11.5 per cent this financial year, from around 9.4 per cent now and then on to 12.4 per cent next year. 

That represents annual metal production of 108,100 tonnes this year and 99,200 tonnes in the future. 

Endeavour plans to produce 111,400 tonnes of lead concentrate and 57,500 tonnes of zinc concentrate this year. 

Andrew Muir, a mining analyst at brokerage Hartleys in Perth, said most zinc miners were struggling at the moment and more cuts from other miners could follow. "CBH are saying they'll tread water for the time being, with the view to zinc prices kicking up again in the medium term but it is going to be hard work for them," Mr Muir said. 

One miner that would probably be facing a similar dilemma is Perilya, which walked away from a merger with CBH last month. 

The Broken Hill miner logged cash costs of more than $US1 a pound for the third straight quarter in its last report, well above current zinc prices of about 75 cents, though it is buffered by its hedge book. 

Perilya executive chairman Patrick O'Connor could not be contacted yesterday. 

Mr Muir said Hartleys was forecasting zinc prices to remain around 85c a pound for at least the next year and a half. 

Zinc prices for the metal have slid by more than 50 per cent in the last year to a nearly four-year low, and are down from a peak of near $US2 a pound at the end of 2006. CBH's share price, which fell 1c, or 8 per cent, to 11.5c yesterday, has followed the metal price, sliding from a peak of 75c at the end of 2006.” 

http://www.theaustralian.news.com.au/story/0,25197,24164937-5005200,00.html

Spaghetti here is some more info on Terramin, when I get a chance ill put up some similar info on Oz Minerals, Kagara and Jabiru. 

*Terramin: *

Has only around 100m shares on issue (undiluted) which means there is little dilution in any upside exploration, development &/or production success and they hold around $40m in cash. I had invested in this company a long time ago and made a very healthy return, but have not followed the company or management for a year or so now, so whether they can  keep to their forecasts and targets particularly in the cost department is yet to be seen. 

*Angas Zinc mine *- Latest reserve/resource announcement reduced the grade and amount of contained metal in the deposit. The reserve still stands at a handy 2.41Mt @ 7% Zn, 2.72% Ld, 0.24% Cu, 31g/t Ag, 0.48g/t Au. The only downfall to the reduction in grade is that cash costs will likely rise from initial forecasts of around $0.30/lb of Zn after by product credits.  At full production of 400,000t of ore throughput p.a. it is likely to produce around 25,000 - 30,000t zinc and 10,000t lead as well as smaller quantities of copper silver and gold concentrate. The only downfall is at a rate of 400,000t p.a. it has a very short mine life of around 7 years. 

*Tala Hamza Deposit *– Looks like a massive Zn-Ld-Ag deposit with an inferred resource of 55Mt @ 5% Zn and 1.2% Ld using a cut off grade of 2.5% Zn. An upgraded resource is due in the current quarter. The company has stated that major infrastructure is already in place and within close proximity to the mine.  They also state that from third party modelling that the deposit could sustain an initial production rate of 2Mt p.a. for around 100,000t Zn and 20,000t Ld at a cash cost of approximately $0.43/lb of zinc after by product credits. The upside is the Oued Amizour looks like a very prospective area. Still the downside is that the ground is in Algeria which is still a considerable high sovereign risk area. In addition a fairly long mine life.


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## GREENS (21 August 2008)

More good news for zinc as a long term play, with more major cut backs in production and delays to development. 

Perilya announced today that it will significantly reduce zinc production at its broken hill operations in an attempt to ride out the low zinc price. The company stated that contained zinc production will fall from around 91,000t p.a. to approximately 55,000t p.a., a reduction of around 40%. This is a major blow to supply considering Perilya’s Broken Hill operations are globally significant (i.e. top 20 zinc producing mine). There is still a strong possibility that the mine may have to be put on care and maintenance if low zinc prices &/or high cash costs persist. “The revised production plan has demonstrated that the Broken Hill Operation can continue to operate in this mode for around 2 to 3 years at *current prices*”. While the company stated it has a wad of cash on hand, it will likely be spent in trying to keep its broken hill operations up and running. 

In addition to this news Perilya also stated that its Broken Hill development activities at the North and Potosi deposits will be put on care and maintenance. You would think that any decision to bring these mines back on line would still take considerable lead time if zinc prices were to recover.   

Along with Perilya, its neighbour CBH has also stated in a recent announcement that its development project in Broken Hill (CML-7), which was expected to produce around 30,000t of zinc p.a., will also be put on hold. The CEO of CBH has also stated his desire to try and avoid putting mines and in particular Endeavour on care and maintenance because “reopening any operation that has been placed on care and maintenance is quite difficult in the current environment for resources”. 

*In stark contrast * OZL & KZL still looking quite profitable at current prices due to their lower cost operations. Yet both still going with the downwards momentum, fundamentals dont seem to matter in this environment.


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## GREENS (22 August 2008)

Plenty of good news flowing in, as more and more zinc mines close or reduce production by the day. By the way a massive 7% rise for zinc last night, will probably give others a hope that zinc prices may recover in the short term and convince them to stick it out for as long as possible. Should be a very good day for the miners!

*HudBay Announces Closure of Balmat Zinc Mine*

TORONTO, ONTARIO and BALMAT, NEW YORK, Aug 21, 2008 (Marketwire via COMTEX News Network) -- HudBay Minerals Inc. (TSX:HBM) (HudBay) today announced *it plans to close its Balmat, New York zinc mine and concentrator*. As a result of lower prices for zinc metal, continued high operating costs associated with the geology of the Balmat mine and general inflationary pressures, HudBay has determined that its *Balmat operation is not economically viable given current market conditions*. The Balmat mine was reopened in 2005 based on a feasibility plan that assumed lower costs and higher levels of production than were achieved to date. 

The announcement will affect approximately 200 workers employed at the Balmat mine and concentrator. Operations are expected to cease on August 22, 2008. A small group of employees will be retained to keep the facility on care and maintenance. HudBay will continue to test geophysical anomalies within its exploration territories in the region as part of its overall 2008 exploration program announced earlier in the year. HudBay indicated that affected employees will receive transition support and the Company will work with employees closely during this difficult time. 

The Company does not expect to incur significant costs associated with closure. *HudBay's total zinc production for 2008, including Balmat's contribution through the first eight months of the year, is now expected to be at the lower end of the Company's previously disclosed production guidance range of 120,000 to 150,000 tonnes of zinc(1). *

(1) Zinc production includes Balmat payable metal in concentrate shipped. 

http://www.hudbayminerals.com/


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## GREENS (25 November 2008)

GREENS said:


> But I don’t think there is too much rush to jump in just yet, considering this market (ASX and zinc) probably has further to fall and this is a more long term trend I’m focussing on. But as with any long term prediction, it is still extremely difficult to predict with great accuracy. I am just trying to supply the facts and hope people will join in an attempt to put together a better fundamental picture of the metal going forward. If I continue to see mine closures and project delays occurring this will re-affirm my initial position of strong outlook for the metal going into 2010.  But then again there is also a risk that the demand side of things won’t hold up either. So it depends also what your views are on demand for resources long term.




Things are taking shape. 

Not only are these zinc mine closures good for zinc, but considering lead is a significant by product of many zinc mines it will surely be starting to cut pretty deep into an already short supply of lead. Normally after considerable mine closures in an economic cycle this can often suggest we are working towards a bottom in the market. However if zinc prices remain this low for a little longer it will be much better for the lower cost producers in the long run given >50% of global zinc production is operating at a loss at present. Nickel also looks to be in a similar position with news of mine closures starting to become a more regular occurrence. 

Bits and pieces of this list have been taken from Reuters, but unfortunately I know longer know which parts as this has been constructed over time.   

*Nov 25 – OZ Minerals (OZL)* announced it will cut zinc production at its Century mine by 20,000t p.a. from a forecast of 515,000t in 2008 to 495,000t in 2009. It stated that development of its Dugald River zinc mine in North Queensland would not commence in 2009 and be deferred until the external environment became more favourable. The company also said the current resources at its Izok Lake and High Lake deposits in Northern Canada were not substantial enough to justify the capital expenditure necessary to build a producing mine. 

*Nov 20 – Teck Cominco* has decided to cut production at its Trail zinc operation in Canada by 4,000 - 5,000t of contained zinc per month (approx 50,000-60,000t p.a.) or around 20% of 2007 production (290,000t Zn). The duration of this curtailment depends on market conditions, but will likely continue for at least six months. Lead production at Trail’s smelter will not be affected.

*Nov 7 – CBH Resources (CBH)* advised the market that it will further cut production at its Endeavor mine in Broken Hill in an attempt to push cash costs down to around $0.55-$0.60/lb. Production in 2008/09 is anticipated to fall to approximately 40,000t of contained zinc and 20,000t of contained lead. Production in 2009/10 has also been earmarked for production cuts with production anticipated to fall again too approximately 25-30,000t of contained zinc and 12-15,000t of contained lead. Managing Director Stephen Dennis also said at the companies AGM on the 11th of November that if prices continued to stay low or decline further the company could not guarantee the future viability of the Endeavor mine. 

*Oct 30 – Kagara Ltd (KZL)* stated that although it was still in a positive operating cash flow position, zinc production would be around 15 -20% lower than the previous year (41,000t contained zinc). But the real impact of lower zinc production from Kagara would be as a result the result of the deferral of current construction at the Mungana treatment plant which was anticipated to produce approximately 50,000t of contained zinc annually with significant by-product credits  at a cash cost of <$US0.30/lb from mid 2009 onwards. 

*Oct 21 – OZ Minerals Ltd (OZL)* CEO & Managing Director Andrew Michelmore said that partial curtailment at the world’s second largest zinc mine, Century was being weighed up, given that the mine was operating at a loss at current zinc prices. "Zinc in the ground is worth a lot more in the future than it is now," Michelmore said. "So we need to ask ourselves, what's our cost of leaving it there." There was no timetable set out for taking a decision on Century's future, "though there is no way we would want to keep producing if we are making cash losses there," Michelmore said. In addition the company stated that the timing of the Dugald River zinc development in QLD will likely be delayed until conditions improved. Dugald River was initially expected to produce 200,000t of zinc p.a. from around 2011.

*Oct 17 – Blue Note Mining Inc* announced that it will be initiating a temporary care and maintenance program at its Caribou and Restigouche zinc and lead mines. Despite excellent operating performance, current zinc and lead prices make the mine unprofitable. The processing plant and mine infrastructure are being prepared for the orderly suspension of all activities. Blue Note commenced mining in July 2007 and achieved commercial production as of January 1st, 2008 producing approximately 36,000t of zinc and 19,000t of lead to date in 2008. 

*Oct 9 - Strategic Resources Acquisition (SRA)* said it would be initiating a temporary care and maintenance programme at its wholly-owned Mid-Tennessee zinc mining complex (MTZ). The company said that since production began at the Gordonsville mine in April 2008, cash costs per pound of payable zinc had been well above prevailing commodity prices.

*Sept 26 Lundin Mining* The Galmoy zinc-lead mine in Ireland will begin a three-year phased shutdown in December, a union spokesman said. The mine produces about 70,000 tonnes of contained zinc and 19,000 tonnes of contained lead a year.  The mine will shut down completely in 2011 when the mine reaches the end of its natural lifespan.

*Sept 23 - OZ Minerals Ltd (OZL)* said it plans to cut zinc production in 2009 at its Golden Grove mine in Australia by 35-40% of planned 2008 production (130,000-135,000t contained zinc), in response to weak prices. 

*Sept 8 - Intec Ltd* said it had suspended operations with immediate effect at its Hellyer Zinc Concentrate Project (32,000t contained Zn), citing several reasons including low zinc prices and rising production costs. 

*Aug 29 - Angus & Ross Plc* said it has delayed further construction at its high grade Black Angel zinc/lead mine in Greenland until next year, due to troubles in securing project financing and falling metal prices. 

*Aug 21 - HudBay Minerals Inc* said it is closing the Balmat, New York zinc mine and concentrator on Aug 22 because of low prices for the metal. The mine, which restarted in January 2007, was earlier expected to produce at around full capacity of 60,000t p.a. of contained zinc in 2008.

*Aug 21 - Perilya Ltd (PEM)* said it will cut its zinc production by almost half in the face of low metals prices and will wait for a rebound in the commodities cycle before resuming full operations. Mining of ore this year from the firm's Broken Hill deposit will almost halve to 950,000 tonnes, a level forecast to yield 55,000 tonnes of contained zinc compared with 91,000 tonnes a year earlier. 

*Aug 20 – CBH Resources (CBH)* said that it has placed its development project in Broken Hill (CML-7), which was expected to produce around 32,000t of contained zinc & 25,000t of contained lead p.a., on hold.

*Aug14 - Strategic Resources Acquisition (SRA)* said in its third quarter results that, as at June 30, 2008, its mining operations were not profitable near term on a sustainable basis. This assessment was based on results of mining operations, including costs of mining and recoveries and prevailing zinc prices. The company said it needed to raise additional financing and/or refinance its short-term debt to enable it to remain in operation beyond October 2008. SRA revised its production forecast for calendar 2008 to about 25 million lbs of payable zinc versus previous estimates of about 100 million lbs, citing delays and lower than expected productivity and mill recovery during production ramp-up.

*Aug 7 - Lundin Mining* announced that it was reviewing its options for its Aljustrel zinc mine in Portugal given it was a high cost producer in a low zinc price environment. Options include a possible early extraction of known copper resources at the site. Aljustrel is in start-up mode and produced 30,000t of contained zinc which was less than the expected 51,000t of contained metal. 

*July 17 - Australia's Aim Resources (AIM)* said it plans to suspend development activities and place the Perkoa zinc mine in Burkina Faso on care and maintenance due to the funding problems as a result of the credit crises and depressed zinc prices. At full capacity the mine was expected to produce around 70,000t p.a. of zinc in concentrate. 

*July 14 - Teck Cominco & Xstrata Ltd* said they would close the Lennard Shelf lead-zinc mine in WA in August. The company said rising costs, lower metal prices and a stronger Australian dollar had made it uneconomical. The mine, which was brought out of care and maintenance in early 2007, produced around 42,000t of zinc and 12,400t of lead in 2007 and had been scheduled to remain in operation until 2011.


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