Zinc the metal for 2006

[rederob]

Pro Fink
Putting the above into perspective:
Nickel rose by $750 overnight.
As zinc is presently trading at $3300/tonne, nickels' dollar price rise was equivalent to adding 22% to zinc overnight.
Let me put it in a longer term perspective: In the last month nickel prices have risen by over $4450/tonne.
In other words the total price of zinc would need to rise over $1000 just to match the price rise of nickel in the last month alone.
Now I am in love with zinc this year, but the markets require perspective.

 

[professor_frink]

Pro Fink
Putting the above into perspective:
Nickel rose by $750 overnight.
As zinc is presently trading at $3300/tonne, nickels' dollar price rise was equivalent to adding 22% to zinc overnight.
Let me put it in a longer term perspective: In the last month nickel prices have risen by over $4450/tonne.
In other words the total price of zinc would need to rise over $1000 just to match the price rise of nickel in the last month alone.
Now I am in love with zinc this year, but the markets require perspective.

interesting point you make there. I actually think nickel can be used as an example to how the rest of the base metals could move down the track, this just theory based on looking at charts, but if you look at nickel, it started it's run before most of the other metals did. After nickel had it's big parabolic move, it stayed in a trading range until it's recent breakout- didn't completely collapse, just paused, until now. If all of the other base metals perform in a similar way over the next few years, this commodities bull will be going on for a long time yet!
Am I saying we are in a supercycle? not necessarily, but it makes me more confident that we aren't even close to the top yet.
At the moment I'm in love with zinc, not because of any personal preference for the metal, it's just that out of all the stocks that have options on them, zfx is by far the easiest to trade, and is moving the quickest!!


p.s yogi, thanks for the reply, i completely missed your post this morning, i was very hungover

 

[rederob]

If all of the other base metals perform in a similar way over the next few years, this commodities bull will be going on for a long time yet!

qed

 

[nizar]

rederob

the pie chart u attached of your current holdings, is that by: $ invested or current market value ?

 

[RichKid]

FYI: There was an interview today with the Zinifex boss by Alan Kohler on InsideBusiness on TV, discussed the Zinc price.

 

[rederob]

rederob

the pie chart u attached of your current holdings, is that by: $ invested or current market value ?

nizar
It's my Comsec CHESS holdings by present value - taken direct from the Position Summary" in Comsec's website.
I still hold some HIN statements on TLS, BSL SUN and AMP from investments made in late 90s.

 

[nizar]

FYI: There was an interview today with the Zinifex boss by Alan Kohler on InsideBusiness on TV, discussed the Zinc price.

What did he say?

Let me guess, the price will go up more? LOL

 

[Halba]

it'll be interesting to see ZFX quarterly report this week..hopefully no big dramas...they really need to expand their production if they can

 

[michael_selway]

Zinifex rides wave of commodities boom
Date : 23/04/2006
Reporter: Alan Kohler

ALAN KOHLER: When the zinc miner, Zinifex was floated out of the wreckage of Pasminco two years ago it had few friends and dubious prospects. Memories were still fresh about how panicking banks scuttled the one-time great mining house which was then wallowing under $3 billion of debt, a disastrous hedge-play and an abundant supply of a rather unfashionable metal. Well, as you can see from this graph, Zinifex is the champion surfer of the commodities wave, easily outpacing even the extraordinary performances of its peers, like BHP Billiton thanks to its relatively pure zinc play. I spoke to Zinifex boss Greg Gailey who's been at the helm through the highs and the lows.

Greig Gailey, Zinifex floated from the ashes of Pasminco a couple of years ago for less than $2, it's now more than $11, capitalised at $5.5 billion. I guess its ironic, isn't it, that Pasminco went broke betting that the zinc price would do exactly what it's done, it was just too early.

GREIG GAILEY, CEO, ZINIFEX: Pasminco's problems were complex and it failed for a number of reasons. However, Zinifex has had a spectacular performance since it listed in April of 2004.

ALAN KOHLER: I guess you're pretty happy you decided to stick around? You were appointed about a month before the company collapsed, I think?

GREIG GAILEY, CEO, ZINIFEX: That's correct.

ALAN KOHLER: It must have been tempting when the collapse occurred to bail out.

GREIG GAILEY, CEO, ZINIFEX: It was. However the three years, Alan, in all honesty, was the most fantastic career experience one could ever have. I mean to take a public company through administration which not many CEO's quite frankly would like to do, and I don't blame them for that, but that was an enormous learning experience to restructure it in the way that I was able to do and to bring it back to market as Zinifex and then see the spectacular success is just an amazing experience and it's a true tribute to all of the people in the company that worked so hard to create what Zinifex is today.

ALAN KOHLER: Now obviously as you say, no-one predicted what would happen to the zinc price, but do you think what's happening to the zinc price now is rational?

GREIG GAILEY, CEO, ZINIFEX: Absolutely in the sense that, really the seeds of where we are today were sown in the early 2000's. It was pretty miserable time in zinc. Nobody made any money, companies like Pasminco failed, and as a result of that, nobody did any exploration, nobody was interested in developing zinc mines and what we're seeing today is the fruits of that, i.e. there's an acute shortage of raw material.

ALAN KOHLER: So do you believe that this current price can now be sustained?

GREIG GAILEY, CEO, ZINIFEX: Well if you look at the cure, which is more raw material coming to market, it takes today somewhere in the order of three to five years to develop a new zinc mine. We have a very large deposit in Queensland called Dugald River, which is about 50 million tonnes, so it's half the size of Century, could be a very substantial mine. We're currently in the phase of doing a pre-feasibility study but even if we fast track that project through, i.e. we said feasibility then immediately into development, it would not be in the market before 2010 or 2011.

ALAN KOHLER: I've been reading some analyst reports which say that zinc, unlike other minerals, tend to be small mines, small deposits, more easily developed than others, and that there are - this was Merrill Lynch - has identified 234 potential zinc mines in the world. I mean it is likely isn't it that there will be much more of a response to the price in terms of supply, than you can come up with?

GREIG GAILEY, CEO, ZINIFEX: Well there certainly will be a response to price but we believe it will be somewhat slow in coming and even though there are a lot of zinc mines, many of them are very small, and not only that - the other issue that plays in here - because there was no exploration carried out during this period, many of the deposits that are being looked at today for development like Dugald River, have actually been around a long time and the reason they haven't been developed before today is that either they have technical challenges or they have high costs, and that has issues I think for what the long-term sustainable price is going forward.

ALAN KOHLER: And what about the demand outlook? Is there any push back from customers about the trebling of the cost of, for example, of galvanising iron?

GREIG GAILEY, CEO, ZINIFEX: Well, in the issue...zinc's primary use is galvanising, rust protection, and in the terms of a sheet of galvanised steel it's a very minor cost component. So in terms of what drives the demand for galvanised steel it's really the price of iron ore not the price of zinc. I mean your options in galvanising is you move to something like aluminium which is not cheap either. You paint it, which has high costs in terms of maintenance or you simply let it rust. And in many cases - are you going to buy a car that's not galvanised?

ALAN KOHLER: It's a relatively simple business in some ways I guess, I mean, you dig the stuff out, you sell it and it's driven by the price, so what sort of price do you think is implied - zinc price is implied by the current Zinifex share price and is it, is that kind of sustainable?

GREIG GAILEY, CEO, ZINIFEX: Well, I think the issue you're asking is hard to answer because what price is required to justify the current share price depends on not one year but going out a whole series of years. It's what is the price in the next three years but also what is the long-term price. And I can't answer that question in terms of detail because it would require all sorts of different assumptions. But clearly the market determines what our stock price is and if you look at our other criteria like PE multiples, we actually trade at a PE multiple well below most of our peers.

ALAN KOHLER: That's right, which is remarkable in a sense. Given the rise in Zinifex share price over the past couple of years which has been far greater than BHP Billiton's and Rio Tinto's yet your PE is much below their's, isn't it?

GREIG GAILEY, CEO, ZINIFEX: I think you have to look at where we came from. There's no question that when Zinifex was created and put into the market, the ghost of Pasminco hung over the company, and certainly at the time of the float, it was the lack of support by Australian institutional investors which really led the offer to go into the market at such a low price and I believe we had a period to prove that we could run this company successfully, and I believe we've done that, and I think that's a component also in the uplift in the share price.

ALAN KOHLER: Now Zinifex, I think, is virtually debt free, if not entirely.

GREIG GAILEY, CEO, ZINIFEX: We are more than debt free, we have cash in the bank.

ALAN KOHLER: Right, and what's your free cash flow generation at the moment?

GREIG GAILEY, CEO, ZINIFEX: We don't put actual numbers in the market but our free cash flow at the moment is very healthy. We're generating a lot of cash.

ALAN KOHLER: So what are you going to do with it all?

GREIG GAILEY, CEO, ZINIFEX: Well, we've got a pretty clearly stated policy and that is if we can invest it to grow the business for the shareholders and to their benefit then we will do that. If we're unable to do that because we can't find the right opportunities we will simply give the money back to shareholders.

ALAN KOHLER: At what point will you make that decision, that you need to give it back?

GREIG GAILEY, CEO, ZINIFEX: That decision's made every half. We declared a dividend at the last half and I'm sure when the accounts close for the June period, the board will come to a view as to what the cash surplus position is, whether it has opportunities to use that cash and if it doesn't it will do as it has stated, it will return that cash to shareholders.

ALAN KOHLER: Are there sufficient opportunities, do you think, in zinc?

GREIG GAILEY, CEO, ZINIFEX: There are clearly opportunities to explore and we're busily doing that, we're investing $75 million over 5 years to explore in and around the properties we have and in joint ventures with others. But when it comes to acquisitions there's no doubt that the market for resource companies today is pretty well priced.

ALAN KOHLER: $75 million's probably a few hours cash flow.

GREIG GAILEY, CEO, ZINIFEX: Possibly, but $75 million is still a significant investment in exploration and exploration itself is an interative process in the sense that you spend some money, you learn a bit more and you spend a bit more, and there are clearly limits on how much one wants to spend very quickly.

ALAN KOHLER: I suppose the question is whether you're considering diversifying outside of zinc?

GREIG GAILEY, CEO, ZINIFEX: Again the strategy is clearly stated. We like the metals we're in. We also like other base metals which are related to our business. As well as zinc we produce lead, copper, silver, gold and in any of those materials we would feel very comfortable.

ALAN KOHLER: Right. So each of those materials, because you're known, obviously, as a zinc company primarily, and the other metals you mentioned are minor. So can you see a time in the future when one or more of those metals equal zinc in terms of Zinifex's portfolio?

GREIG GAILEY, CEO, ZINIFEX: I wouldn't like to look forward in that sense because I think what the future holds is not necessarily certain, but it's also worth mentioning that we are the world's third-largest silver refiner, so we're a big producer of final silver as well - doesn't contribute a huge amount to our profit, because we pay for what we bring in to Port Pirie, but we are a major player in the silver market.

 

[michael_selway]

ALAN KOHLER: Can you see possible takeovers as well as developing mines?

GREIG GAILEY, CEO, ZINIFEX: Acquisitions are something that are clearly of interest to us, there's no doubt about that. If we could find an acquisition at the right price which added value we'd be very happy to do that. And I have no doubt that just as many merchant banks pass through my office proffering companies to me, they pass through other people's offices proffering my company to them.

ALAN KOHLER: Do you think we're in sort of a boom mentality at the moment? Do you think that there is sort of a euphoria spreading across the mining industry which is affecting everybody, the way they think about it?

GREIG GAILEY, CEO, ZINIFEX: I think we're in a rather remarkable period. If you look at the history of the resource business, the last period that resembled this was the economic miracle that occurred after the war with Japan and there's no doubt in my mind that China is undergoing a massive economic change which is sort of a decade-long phenomenon. Now the Chinese may fall in potholes along the 10 years, but there is no doubt that they are on a trajectory for a long period of economic growth.

ALAN KOHLER: And obviously that post-war miracle and period you spoke about led to the nickel boom of the late 60's and the 1970 crash. What sort of danger do you think there is of that happening again?

GREIG GAILEY, CEO, ZINIFEX: I think the cycle here's longer. I think one of the more interesting things is what it means in terms of the long-term commodity prices. The industry is experiencing cost increases, which is the black side of the current resources boom, and the industry is looking, generally speaking, at developing more difficult deposits in less hospitable places, and I think all of that has ramifications for long-term sustainable prices.

ALAN KOHLER: We'll have to leave it there but thanks very much, Greig Gailey.

GREIG GAILEY, CEO, ZINIFEX: Alan, pleasure.

http://www.abc.net.au/insidebusiness/content/2006/s1621836.htm
http://www.abc.net.au/reslib/200604/r82495_239914.asx

 

[Smurf1976]

it'll be interesting to see ZFX quarterly report this week..hopefully no big dramas...they really need to expand their production if they can

Zinifex Hobart Smelter appears (looking from the outside) to be roasting concentrates falt out again after having the larger of the two roasters shut for upgrading. The crane is still up though but it appears that the roasters are running. They've relined one of the roasters and also the associated waste heat boiler. This enables the roaster to run a bit faster. Since roasting was the bottleneck in the plant, this will increase overall production by a modest amount for zinc and by-products.

With the move to use 70% Century concentrates in the Hobart Smelter, there will be increased sulphur content (so in theory at least more sulphuric acid produced and also more heat, hence the roaster reline) and a lower production of paragoethite (the primary waste product which is shipped to Port Pirie). The reduction in paragoethite production will mean they are able to reprocess more than is produced thus gradually clearing the stockpiles (at Port Pirie) of unprocessed material.

Just for general info on what the company is doing.

 

[professor_frink]

qed

sorry mate you've lost me with that comment????????

 

[rederob]

sorry mate you've lost me with that comment????????

qed

Latin abbreviation:
quod erat demonstrandum (which was to be demonstrated)

... usually after we have proved that the case exists....

 

[professor_frink]

qed

Latin abbreviation:
quod erat demonstrandum (which was to be demonstrated)

... usually after we have proved that the case exists....

gotcha.
Making fun of me and I didn't even know it!

 

[YOUNG_TRADER]

Starting a new thread on a metal that is way overdue for coverage on this forum, Zinc!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


Here's my prefered stock exposure

TZN Terramin
I have done a valution for it as I can't find one from any of the brokers, if someone can tell me how to I will try and upload it, its in an Excel file

To give you an idea I think the stock will be worth $1.40 + once the Angas feasibility study comes out

Started this thread on the 22nd March, TZN was 70c then, today only 1 month later it nearly tested $2,


Take a look at CBH Zinc Bulls! $1+ stock

 

[nizar]

Take a look at CBH Zinc Bulls! $1+ stock

Agree, this stock very undervalued
Market sentiment is still negative, but BFS for Sulfur Springs due soon and for sure this will boost the sp

 

[YOUNG_TRADER]

Re CBH see the thread,

Be nice to get some feedback,





Zinc trades at all-time high on London Metal Exchange
E-mail | Print | | Disable live quotes Last Update: 7:03 AM ET Apr 26, 2006


SINGAPORE (MarketWatch) -- London Metal Exchange three-month zinc hit a record of $3,405 a metric ton in Asia Wednesday, building on overnight gains on the back of several bullish comments by industry participants.
Zinc has risen by 77% since the beginning of the year and is analysts' top base metals pick, due to firm fundamentals.
Zinc continues to be supported by an expected deficit on the back of strong demand growth from China, coupled with a tight concentrate market and falling inventories.
Global miner BHP Billiton (BHP) said Wednesday it will reduce output at its Cannington silver-lead-zinc mine in Australia's Queensland state to shore up ground conditions.
Peru's copper-zinc mine Compania Minera Antamina SA said Tuesday its zinc production will be slightly lower in 2006 than it was in 2005.
First quarter zinc output at Antamina was down 56% on the same period last year due to lower ore grades.
Meanwhile demand for the metal, used in galvanized steel, is expected to be strong, as the demand for steel continues to be robust.
The International Iron and Steel Institute said late Tuesday that it expects total world steel demand to grow 7.3% to 1,087 million metric tons in 2006 and 5.8% to 1,150 million tons in 2007.
"The largest factor in this growth is the influence of China. Even with a slowing of Chinese steel demand, double digit growth in China is still predicted at 13% for 2006 and 12.1% in 2007," the industry group said in a statement.
The institute forecasts steel use in China will grow to 356 million metric tons this year, accounting for 32% of total steel demand in 2006.

 

[noirua]

Re CBH see the thread,

Be nice to get some feedback,





Zinc trades at all-time high on London Metal Exchange
E-mail | Print | | Disable live quotes Last Update: 7:03 AM ET Apr 26, 2006


SINGAPORE (MarketWatch) -- London Metal Exchange three-month zinc hit a record of $3,405 a metric ton in Asia Wednesday, building on overnight gains on the back of several bullish comments by industry participants.
Zinc has risen by 77% since the beginning of the year and is analysts' top base metals pick, due to firm fundamentals.
Zinc continues to be supported by an expected deficit on the back of strong demand growth from China, coupled with a tight concentrate market and falling inventories.
Global miner BHP Billiton (BHP) said Wednesday it will reduce output at its Cannington silver-lead-zinc mine in Australia's Queensland state to shore up ground conditions.
Peru's copper-zinc mine Compania Minera Antamina SA said Tuesday its zinc production will be slightly lower in 2006 than it was in 2005.
First quarter zinc output at Antamina was down 56% on the same period last year due to lower ore grades.
Meanwhile demand for the metal, used in galvanized steel, is expected to be strong, as the demand for steel continues to be robust.
The International Iron and Steel Institute said late Tuesday that it expects total world steel demand to grow 7.3% to 1,087 million metric tons in 2006 and 5.8% to 1,150 million tons in 2007.
"The largest factor in this growth is the influence of China. Even with a slowing of Chinese steel demand, double digit growth in China is still predicted at 13% for 2006 and 12.1% in 2007," the industry group said in a statement.
The institute forecasts steel use in China will grow to 356 million metric tons this year, accounting for 32% of total steel demand in 2006.

I wonder whether this boom in mining stocks and metals is nearing its peak? Maybe not yet, 'though in the end it will surely crash as it always has before, will it not??

 

[nizar]

Historically, All commodity bull runs have lasted btw 15 and 23 years

So yes, as before, it will become crashing down, but not for a long time yet

 

[YOUNG_TRADER]

Resource boom behind zinc mine's reopening

Thursday, 27/04/2006

The booming base metals price has led to the reopening of an old zinc mine in the Kimberley region of Western Australia.

Canadian company Teck Cominco will reopen its underground mine near Fitzroy Crossing because of a recent hike in zinc prices on the London Metal Exchange.

Teck Cominco exploration general manager Wayne Spilsbury says zinc is performing well after a three-year price glut.

"We were watching the stocks of zinc in the LME warehouses and making sure those numbers were coming down before we made a decision to reopen. There is now an under supply, but that has only turned up in the last year or so."

In South Australia, junior zinc explorer Terramin Australia has also benefited.

Terramin's shares have surged more than 44 cents to $1.84 after it discovered rich zinc deposits near Port Augusta.