RE:Natural Resource STOCKSBeen thinking about (gulp) backing up the truck and loading up on CZN. At the current price CZN could be a real good value here. Mining stocks are never easy to stomach in a downturn, but isn't the outlook for zinc still bullish? Or does negative sentiment towards CZN management cancel out any bullish sentiment on zinc? (I don't think anyone invested in CZN for anything other than the Prarie Creek mine, yet management goes on these sidetracks, Paragon, Messina, and (OMG) Vatukoula). 70m shares outstanding 10 years ago, now around 220m, some of the dilution understandable some of it not so much....Anyway they had an article in Barrons this week, "Shortages Galvanize Zinc". Here are some of the excerpts.....
The rally in zinc is just getting started. A predicted shortfall in zinc supplies arrived sooner than expected, with aging mines running out of the metal faster than anticipated. The shortage has also been more severe than forecast,.......The first set of mine closures came in April 2013, when Glencore (ticker: GLEN.UK) shut its Brunswick and Perseverance mines in Canada. The two mines together produced 335,000 metric tons of zinc annually, and the shutdown was a factor in global production falling short of demand for the metal by 60,000 tons in 2013.
This year, the International Lead and Zinc Study Group (ILZSG) forecast a 117,000-ton shortfall. As of July, the latest data available, the supply of zinc trailed demand by more than double that, at 248,000 tons.
More large mines are planning to shut down as once-rich ore deposits run out. MMG (1208.Hong Kong), which owns Century, the world’s No. 3 zinc mine, surprised investors in December when it advanced plans to close the Australian mine by a year, to late 2015. Vedanta Resources (VED.UK) plans to close its Lisheen zinc mine in Ireland in the 2015 third quarter.
“While there are mines to replace [those closing], there aren’t that many, and they’re not that big,” says BNP Paribas metals strategist Stephen Briggs.
New zinc mines take years to develop. MMG has delayed the start date for its Dugald River mine in Australia to late 2016 after hitting technical difficulties.....Demand for zinc was 7.6% higher during the first seven months of 2014 than the same period last year, according to ILZSG.
With stars aligned for higher zinc prices, why has the market pulled back? Blame the dollar. The dollar has surged in recent weeks, making zinc and other dollar-priced commodities more expensive to buyers who use other currencies to fund their purchases. A strong dollar remains a risk to zinc. But the retreat is unlikely to last, because low prices discourage the construction of new zinc mines, and that would exacerbate the shortfall. Morgan Stanley analysts predict that zinc production will continue to fall short of global demand through 2018.