New York, New York (NetworkNewsWire) – Zinc is beginning to
shine again. The metal has been a top performer on the London Metal
Exchange (LME), breaking through the $3,000 a metric tonne ceiling
for the first time in over a decade. With stocks on the three main
exchanges (Shanghai Metals Market, COMEX and LME) at record lows,
prices are expected to remain elevated, potentially changing the
economics of zinc production for Blue Moon Zinc Corp.
(TSX.V: MOON) (OTC: BMOOF) (MOON
Profile), Hecla Mining Company (NYSE: HL), Teck
Resources Ltd (NYSE: TECK), Glencore plc (OTC: GLNCY), and
Trevali Mining Corp. (TSX: TV).
To everything, there is a season … two years ago, disinvestment
and mine closures bedeviled the industry. In 2015, the
Australian-Chinese concern MMG Limited (HKEX: 1208), announced the
shuttering of its mining operations at Century in Australia. The
Century mine was Australia’s largest zinc mine and the third
largest in the world. In 2014, it produced 465,696 tonnes and
accounted for around 3.5 percent of global zinc output. And in
2015, by the time mining ended in August, it had yielded about
345,000 tonnes of zinc in zinc concentrate after processing.
Vedanta Resources also closed its Irish Lisheen mine in 2015.
Lisheen was Europe’s second-largest zinc mine with a capacity of
around 175,000 tons. Lisheen’s closure reduced global supplies by
another 1.3 percent. And Glencore exacerbated the supply constraint
after it announced it would cut output from mines in Australia,
Peru and Kazakhstan totaling around 500,000 metric tonnes. This
removed another 4 percent from global supply in 2015. Those supply
cuts have been boosting prices ever since.
With the outlook on zinc in favorable territory, both senior and
junior exploration companies are dusting off previously shuttered
projects.
In a recent interview, Blue
Moon Zinc Corp. (TSX.V: MOON) (OTC: BMOOF) CEO Patrick
McGrath retraced the history of the Blue Moon, USA deposit, which
dates back to the Second World War. From 1943-1945, the resource
was mined by Hecla Mining Company, whose efforts produced 55,656
tons of 12.3% zinc. The mine lay dormant until the early 1980s,
when Imperial Metals completed approximately 33,000 feet of diamond
drilling. Thereafter, Westmin Resources, now Boliden, one of
Europe’s largest zinc producers, undertook about 57,000 feet of
diamond drilling, calculated a mineral resource and commenced
engineering, metallurgical, hydrological and environment baseline
studies. In addition, Westmin obtained a permit and approval of a
reclamation plan from Mariposa County for a shaft and certain
underground development. By 1991, the resource was in new hands:
being explored by Barrick (Lac), who completed approximately 20,000
feet of drilling. Consequently, Blue Moon, USA stands on the
shoulders of well-established and well-qualified operators, who
have done a lot of the development work.
Blue Moon emerged from the amalgamation of asset disposals by
two other junior exploration companies, the first deriving from
Yukon Zinc, which had acquired the Blue Moon deposit from Boliden
Limited. The second followed a 2007 spinout by Selwyn Resource of
its zinc assets. The company, previously known as Savant
Explorations Ltd, announced its name change to Blue Moon Zinc Corp
on July 5, 2017 (http://nnw.fm/6DxmD).
The Blue Moon project, located in Mariposa County, California,
is estimated to have close to 375 million pounds of zinc in the
indicated category, and about 400 million pounds on an inferred
basis. A high recovery rate (95%) and its location in an area with
well-developed infrastructure and access to labor and other
resources gives Blue Moon, USA an indisputable commercial advantage
over other junior zinc companies. Moreover, the management and
advisory team includes two executives, Lutz Klingmann and Larry
O’Connor, with extensive experience either building a mine from
scratch or re-starting a mine and dealing with the regulatory
process.
Lutz Klingmann is the former CEO of Golden Queen, who
successfully permitted the open-pit, heap-leach Soledad Mountain
gold mine in California. He brings extensive experience in
permitting and building mines, including building the Minto mine
currently owned by Capstone Mining Corp. (TSX:CS). Lawrence
O’Connor is the former VP Operations at Western Goldfields (now New
Gold) where he restarted the Mesquite Mine in California. He is
also a former general manager of Eldorado Gold Corp’s La Colorada
Mine and during his tenure there completed the feasibility study
and permitting required for expansion. Blue Moon’s current CEO,
Patrick McGrath, is a CPA-CGA (Chartered Professional Accountant),
with 20 years of experience in financing and executive roles in
junior public companies. As VP Finance of Adriana Resources Inc.
(now Sprott Resource Holdings Inc.), he raised $50 million in
equity and debt during his tenure. Together officers and directors
hold close to 22 percent of Blue Moon’s equity.
Blue Moon also holds interests in the Yava Property in the
Mackenzie Mining District, Territory of Nunavut, approximately 450
kilometers northeast of Yellowknife. The Yava Property consists of
one mining lease of 1,304 hectares and 16 unpatented mineral claims
that taken together cover 4,449 hectares.
The silver lining on zinc should galvanize Hecla Mining
Company (HL), which although primarily focused on silver
and gold, unearths substantial quantities of zinc ore in its
exploration activities. The company is a leading, low-cost silver
producer with operating silver mines in Alaska (Greens Creek),
Idaho (Lucky Friday), and Mexico (San Sebastian) and is a gold
producer with an operating mine (Casa Berardi) in Quebec, Canada.
Its Greens Creek and Lucky Friday mines have reported large proven
and probable zinc reserves.
In zinc, as in general, the rich get richer. Top producer
Glencore (GLNCY), with output of around one
million tonnes of zinc concentrate annually, has struck ‘gold’ in
its joint venture with BHP Billiton, Teck Resources and Mitsubishi.
The Antamina copper pit in Peru appears to enclose zinc-heavy ore
that has already produced an extra 60,000 tons of zinc over the
past 12 months.
And Teck Resources (TECK), the world’s No. 3
producer (Hindustan Zinc is at No. 2) continues its run of good
luck. At its Red Dog operation in Alaska, the largest zinc pit in
the world, a vein of hard-to-refine but zinc-rich rock with ore
holding about 24 percent zinc (compared to 14 percent in the pit as
a whole) has been discovered.
Meanwhile, Trevali (TSX: TV)
announced on August 31 it had acquired a portfolio of zinc assets
from Glencore and some of its subsidiaries, which include an 80%
interest in the Rosh Pinah mine in Namibia, a 90% interest in the
Perkoa mine in Burkina Faso, an effective 39% interest in the
Gergarub project in Namibia, and an option to acquire a 100%
interest in the Heath Steele project in Canada.
As the global economy continues its rebound, the demand for zinc
is forecasted to grow. The metal is mainly used to galvanize iron
and steel to prevent rusting, essential in infrastructural
projects. In addition, supply is way behind demand. In a June 2017
report, the International Lead and Zinc Study Group (ILZSG) found
that the ‘worldwide market for refined zinc metal was in deficit
during the first five months of the year while total reported
inventories declined over that same time frame,’ according to Metal
Miner (http://nnw.fm/qCp5K). It looks like zinc is starting
to show its true color.
For more information on Blue Moon Zinc Corp. please visit:
Blue
Moon Zinc Corp. (TSX.V: MOON) (OTC: BMOOF)
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