In the face of commodities’ struggle, zinc is ready to boom

• A near universal, year-on-year-average fall in commodity prices is expected this year as the global economic outlook looks bleak
• The zinc price currently sits at more than US$3,200.00, up from US$3,100.00 last month but down from US$3,500.00 a year ago
• This is a change of 5.75 per cent from last month and -8.43 per cent from last year
• Fireweed Metals Corp. (TSXV:FWZ) opened at US$0.65, Hudbay Minerals Inc. (TSX:HBM) opened at US$5.1, and Hecla Mining Co. (NYSE:HL) opened at US$6.74

A near universal, year-on-year-average fall in commodity prices is expected this year, according to a recent report from CRU insights, as the global economic outlook looks bleak.

The research firm noted that expectations of recession in Europe and the U.S., lingering high inflation, continued disruption in China, and rising demand destruction for fertilisers drove prices down for the latter half of last year and will continue to drag on prices for the rest of this year.

The zinc price currently sits at more than US$3,200.00, up from US$3,100.00 last month but down from US$3,500.00 a year ago. This is a change of 5.75 per cent from last month and 8.43 per cent from last year.

The Business Research Company said that the Russia-Ukraine war also has disrupted the chances of global economic recovery from the COVID-19 pandemic, in the short term, at least. Economic sanctions from multiple countries has been imposed on Russia following its war with Ukraine, along with a surge in commodity prices, as well as supply chain disruptions, causing inflation across goods and services and affecting many markets across the world. The zinc market size is expected to grow from $45.7 billion in 2027 at a compound annual growth rate (CAGR) of 11.6 per cent.

As the market tries to make this comeback work out, more investing opportunities continue to emerge. So far, there are already a few engaging performers worth checking out ….

Fireweed Metals Corp. (TSXV:FWZ) is a mineral exploration company with three projects located in northern Canada: the Macmillan Pass Zinc-Lead-Silver Project, the Mactung Tungsten Project and the Gayna River Zinc-Lead-Gallium-Germanium Project.

The Vancouver-based firm recently the final set of results from the 2022 drill program at Tom, Macmillan Pass, in Yukon.

Highlights:

• Multiple wide and high-grade intersections at the Tom deposit
• Hole TS22-009 intersected a true width of 40.6 m at 15.2 per cent zinc, 14.6 per cent lead, and 181.6 g/t silver, including 20.9 m of 20.7 per cent zinc, 22.4 per cent lead, and 280.0 g/t silver
• Hole TS22-001 intersected a true width of 26.9 m of 9.3 per cent zinc, 5.4 per cent lead, and 61.5 g/t silver, including 12.8 m of 11.4 per cent zinc, 8.9 per cent lead, and 114.9 g/t silver
• Hole TS22-002 intersected a true width of 16.9 m of 10.7 per cent zinc, 5.0 per cent lead, and 98.8 g/t silver, including 3.3 m of 18.9 per cent zinc, 14.2 per cent lead, and 324.0 g/t silver
• Many of the 2022 drill holes have demonstrated significantly better grades and/or wider intersections than the current Mineral Resource block model at the same location

Hudbay Minerals Inc. (TSX:HBM) is a diversified mining company with operations, property developments, and exploration activities across the United States. The major mines that Hudbay operates are located in Manitoba, Canada, Arizona, United States, and Peru. The company is principally focused on the discovery, production, and marketing of base and precious metals. Hudbay produces copper concentrate, which contains copper, gold, and silver, as well as zinc.

Hudbay released its Q4 and full year 2022 financial results, highlighting an increase in cash generated from operating activities to US$487.8 million in 2022 from US$385.1 million in 2021.

Meanwhile, operating cash flow before changes in non‑cash working capital decreased to US$391.7 million from US$483.9 million in 2021. The decrease is the result of lower copper prices, lower zinc sales volumes and inflationary cost pressures on mine operating costs, partially offset by higher zinc prices and higher gold sales volumes. Zinc sales volumes were lower than the prior year due to the planned closure of the company’s 777 mine in June 2022.

During Q4 2022, its Manitoba operations produced 33,060 ounces of gold, 2,258 tonnes of copper, 6,326 tonnes of zinc and 139,758 ounces of silver. Gold, zinc, and silver production was lower than Q3 2022 primarily because of lower grades at the Lalor mine. Year-over-year metal production was impacted by the planned closure of 777 in June 2022, resulting in a decrease in copper, zinc, and silver production, while full year gold production increased by 13 per cent, compared to the prior year, as New Britannia ramped up to full production. Full year production of all metals in Manitoba achieved the 2022 annual guidance ranges.

Hecla Mining Co. (NYSE:HL) produces and explores silver, gold, lead, and zinc. The operating business segments are Greens Creek, Lucky Friday, Keno Hill, Casa Berardi, and Nevada operations.

Last week, Hecla released its preliminary silver and gold production and progress on Keno Hill for Q1 2023.

Highlights (Q1 2023 vs Q4 2022):

• 10 per cent increase in silver production and as anticipated 9 per cent decrease in gold production
• Greens Creek silver production increased 14 per cent
• Lucky Friday silver production increased 3 per cent
• Lead production increased 6 per cent, zinc production unchanged
• Development at Keno Hill 30 per cent more than Q4 2022

“Hecla’s silver mines delivered another strong operational quarter with new milestones achieved at both Greens Creek and Lucky Friday,” said the company’s President and CEO, Phillips Baker, Jr. “Greens Creek set a new quarterly throughput record as we continue our work towards achieving 2,600 tpd while Lucky Friday reported its fourth consecutive quarter of silver production exceeding 1 million ounces. Keno Hill’s increased development keeps it on track for commencing production in the third quarter, so silver production is expected to be in excess of 2.5 million ounces for the year.”

He added, “This quarter’s production growth is an important step toward producing approximately 17 million ounces of silver this year and increasing production to 20 million ounces by 2025, allowing Hecla to continue to be the world’s fastest growing established silver producer.”

This market has endured many issues, but companies like these advancing their reach in this business appear to be on track to see impressive dividends.