although the general markets have been very tough the past week, the zinc market itself is holding up extremely well. very bullish comments and projections continue. That bodes very well for co's like CZX. Very good buy at current levels pushed down to the past few days...
Canada Zinc Metals Corp. (TSX.V : CZX) -- TD Securities - Zinc Market Moving from Tight to Tighter
Please find below, for your information, excerpts from the “Industry Note – Equity Research - Metals & Minerals” report issued by TD Securities on February 6, 2018
Regards,
Canada Zinc Metals Corp.
TSX.V: CZX; Frankfurt: A0RAQJ
Zinc Market Moving from Tight to Tighter
Zinc price deck increased
Zinc price deck increased — We have increased our zinc price deck for the next several years. Although zinc mine supply is expected to improve in 2018, it will be mostly H2/18 weighted and unlikely to affect refined metal supply until H1/19. We expect that total zinc stocks will remain very low at ~32-33 days of consumption through 2020 (lowest since 1985), lending support to prices. Low stocks and limited mine supply in 2018 could result in a sharp upward spike in prices. We have increased our 2018 zinc price forecast to US$1.76/lb (from US$1.65/lb); our 2019 and 2020 price forecasts increase to US$1.75/lb and US$1.50/lb, respectively (from US$1.45/lb and US$1.30/lb).
Zinc inventories low and getting lower — Zinc fundamentals remain supportive, with global exchange stocks at 10-year lows (equivalent to just six days of consumption) and the forward price curve now in backwardation through mid-2019, suggesting that the market expects supply to remain tight. We also note that LME zinc cancelled warrants now total ~42% of all zinc in LME warehouses, indicating that the draw-down of zinc inventory should continue.
Treatment charges near record-lows — Spot Chinese zinc concentrate treatment charges for January have been quoted at US$22.50/t, up from US$15.00/t in December, but very low by historical standards (in 2015, the average spot treatment charge was US$201/t). The 2017 benchmark TC was US$172/t (with zero price participation); negotiations on 2018 TCs are just starting, with the miners expecting to retain zero price participation and a lower TC, possibly in the US$150-US$160/t range (-10% year-over-year).
Chinese mine supply weak; refined imports at record levels — Wood Mackenzie forecasts that Chinese zinc mine supply rose 3.6% in 2017; during previous periods of elevated zinc prices (2010/2011, 2006/2007, 1996/1997), Chinese zinc mine production has climbed upwards of 12-15% on a year-over-year basis. Lower availability of both domestic and imported concentrate is constricting Chinese refined zinc production; 2017 refined zinc production was down 0.7% year-over-year, despite a sharp spike in production in Q4/17. Weaker domestic zinc production is leading to higher imports of refined zinc which totalled 676,000t in 2017 (+59% year-overyear), a record-high (previous high: 670,000t in 2009).
About Canada Zinc Metals Corp. (TSX.V : CZX ; Frankfurt: A0RAQJ )
Canada Zinc Metals is a mineral exploration company focused on unlocking the potential of a future long life mining district in British Columbia, Canada. The Company is the dominant land holder in the Kechika Trough, a world class mineral belt, which hosts in excess of 80 million tonnes of base metal resources.
Canada Zinc Metals owns a total of 79,780 hectares in 230 mineral claims which extend northwestward from the Akie property for a distance of 140 km.
The Company has outlined a NI 43-101 compliant mineral resource at its flagship Akie property, including an indicated resource of 22.7 million tonnes grading 8.3% zinc, 1.6% lead and 14.1 g/t silver (at a 5% zinc cut-off grade) and an inferred resource of 7.5 million tonnes grading 7.0% zinc, 1.2% lead and 12.0 g/t silver (at a 5% zinc cut-off grade). Using this estimate, the deposit contains 4.2 billion pounds of zinc, 804 million pounds of lead and 10.3 million ounces of silver in the indicated category, and 1.2 billion pounds of zinc, 205 million pounds of lead and 2.9 million ounces of silver in the inferred category (at 5% zinc cut-off). The deposit remains open along strike and at depth.
| 5% zinc cut-off grade | Contained metal: |
| Category | Tonnes
(million) | Zn (%) | Pb (%) | Ag (g/t) | Zn (B lbs) | Pb (B lbs) | Ag (M oz) |
| Indicated | 22.7 | 8.32 | 1.61 | 14.1 | 4.162 | 0.804 | 10.3 |
| Inferred | 7.5 | 7.04 | 1.24 | 12.0 | 1.169 | 0.205 | 2.9 |
Tongling Nonferrous Metals Group, Jintuo (Canada) Investment Co. Ltd, Teck Resources and Korea Zinc are significant shareholders of the Company.
Teck Resources and Korea Zinc have also entered into an option agreement with Canada Zinc Metals in relation to 3 of the Company's Kechika Regional Properties.