Supply Shortage: Zinc Prices on the Rise – Mining Opportunities Created
– Momentum Public Relations –
The recent events surrounding the Brexit have been challenging for some base metals on the London Metal exchange. The three-month copper contract for example was down 3.2{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}.
On the other hand, all base metals have not been affected the same way. Zinc is proving to be an outlier among other base metals. Since the beginning of the year, the price for this base metal gained more than 30{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}. The metal mainly used for galvanizing steel and iron has steadily increased its value since early this year and its price even reached its highest level since July 15 2015.
Unlike copper and aluminum, zinc doesn’t suffer from an oversupply. According to the International Lead and Zinc Study Group, global demand for zinc was around 14 million tonnes in April, while total world stocks were around 1.5 million tonnes. It is important to note that these prices have been driven by investors buying in lieu of any change in the fundamentals. According to Robin Bhar, Head of Metals Research at Societe Generale,
“We can expect some further gradual gains admittedly some of the gains have come too quickly because of being based on some buying speculative activity jumping on the bandwagon. So we should expect maybe prices to maybe level off. I think in the fourth quarter when we should see physical demand picking up after the slow summer period, we could see some further gains particularly in zinc and nickel because of an ongoing supply constraints. We are seeing some closures of zinc mines and in nickel we have the threat of mine closures in the Philippines to add to the already existing export ban by Indonesia. So, we would expect further modular gain certainly in the last quarter of this year.”
Canada’s zinc output has been on the decline for the last few years. This decline can be explained by the closure of the Brunswick #12 mine in 2013. This mine was the largest deposit in the Bathurst area and was one of the largest underground zinc mines in the world up until its resources were depleted. The success of Brunswick #12 pushed several mining companies to explore the region in order to take advantage of high level of resources available. One extremely interesting company in the region is Puma exploration Inc. (TSX.V). The company is exploring and developing multiple properties (in red) in New Brunswick, only a couple kilometers north of Brunswick #12 Mine. With demand on the rise and Trevali starting commercial production at its Caribou mine, Puma Exploration is a great opportunity for investors who want to take advantage of an improving zinc market.
For more information on Puma Exploration (PUM:tsxv) visit their website at www.explorationpuma.com/
You can also read the following update released by Puma on July 19th, 2016.