NEW YORK, NY--(Marketwired - Oct 29, 2013) - Zinco do Brasil Inc. (OTCQB: ZNBR) (the "Company"), a mine development company focused on bringing into production an advanced stage zinc and lead project in Brazil, is pleased to share with its investors the below article regarding a possible upcoming zinc supply shortage.
Metal Bulls Pin Their Hopes On Zinc As Mines Close
By Martin Sandbu in London
So you think the commodities supercycle is over? For zinc bulls, it may be just beginning.
The price of zinc has remained subdued since the financial crisis even as copper, gold and tin rose to record highs. But the metal, used to rustproof steel in everything from cars to building materials, has an increasingly vocal following among analysts and investors who believe that it could witness a sharp rally in the coming years.
Wood Mackenzie, a leading consultancy, predicts that zinc prices will average more than $3,500 a tonne from 2016-18 -- compared with just $1,940 so far this year.
After years of falling prices, a zinc boom could deliver sizeable profits to large miners such as Glencore Xstrata, the world's biggest producer and trader of zinc; Canada's Teck; and trading houses such as Noble Group, which have carved out positions in the market.
The bullish argument is based on the expected closure of a number of large zinc mines -- together with a lack of new projects ready to replace them. Unlike copper and iron ore, where a wave of new supply is poised to hit the market after mining companies spent billions on new projects and expansion, years of relatively low zinc prices have disincentivised investment.
There is likely to be a structural deficit in the zinc market in the short to medium-term future," said Daniel Maté, head of zinc trading at Glencore Xstrata and one of the trading house's top shareholders, at an investor briefing last month.
At issue is the closure of some of the world's largest zinc mines. Brunswick and Perseverance in Canada, owned by Xstrata, closed this year. Then late next year Vedanta is planning to close Lisheen in Ireland, among the dozen largest global mines. And in 2016 the world's third-largest zinc mine, Century in Australia, is due to cease production.
At the same time, there are few large-scale zinc projects ready to fill the gap left by these closures. And those that exist are suffering delays. On Friday, MMG, the international mining arm of Minmetals of China, said its Dugald River project in Australia was "unlikely" to meet a previously announced plan of starting production in 2015.
"We are in an environment in which mining companies are reviewing, deferring or cancelling potential projects generally," says Sanjay Saraf, head of base metals research at consultancy Thomson Reuters GFMS.
"More than 2m tonnes of new supply is needed by 2016," argues Mr Maté of Glencore Xstrata. "There is a real shortage of quality projects in the pipeline which are anywhere near ready for production."
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Additional reporting by Jack Farchy and James Wilson
About Zinco do Brasil, Inc.
Zinco do Brasil is a publicly listed company (OTCQB: ZNBR). The Company is in the process of acquiring 99.9% of Zinco do Brasil Mineracao Ltda., which owns 57 mineral rights for a total of 82,379 hectares in the Brazilian state of Minas Gerais. The mineral rights of Porteirinha Project are split between three blocks: Salobro, which consists of 2 mining rights for an area of 1,210 hectares, Gorutuba covering 44761 ha in 33 tenements and Tocandira with 22 mining rights for an area of 36,408 hectares.
The Company expects the Salobro historic mineral resources to increase by 30 - 50% during the exploration drilling program scheduled for Q1 and Q2 of 2014. The results of the drillling will be incorporated with the existing drill data to prove up the historic zinc and lead mineral resources to NI 43-101 standard. Salobro is planned to go into production in Q1 of 2016 and to produce in excess of 30,000 metric tons of zinc and 5,000 metric tons of lead per year during the currently estimated mine-life of 10 years (13 - 15 years after anticipated mineral resource increase of 30 - 50%).
The Gorutuba block consists of 33 mining rights containing an area of 44,761 hectares in total. Geophysical interpretation of the area was developed based on ground geophysical data acquired by Vale and by magnetic data gained from airborne geophysical survey conducted by the State of Minas Gerais. The studies revealed that the geophysical characteristics of the Salobro deposit are highly correlated with seven targets within the Gorutuba block area, showing similar anomalies like Salobro. The aerial extent of the seven selected targets is 17 km (compared to 2.35km of Salobro) and a drill program is scheduled to start during 2013 to confirm each deposit. Initial geochemical surveys indicated other anomalies of copper and gold within the Gorutuba projects/targets.
The Tocandira block consists of 22 mining rights for an area of 36,408 hectares. During the geochemical work in 7 blocks Zinco's field team discovered an iron mineralization. After in-depth analysis of the underlying aeromagnetic database available, the Company decided to file applications for 15 additional mining rights.
Certain statements in this news release are forward-looking statements. Words such as "expects", "intends", "plans", "planned", "proposes", "may", "could", "should", "anticipates", "estimates", "likely", "possible", "potential", "believes" and words of similar import may identify forward-looking statements. Such statements are based on management's and the Company's independent mining consultant's current expectations, estimates and projections about the companies' businesses, are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Actual results could vary materially from the description contained herein due to many factors beyond the control of the Company, including, but not limited to, the successful completion of the merger; the combined company's ability to raise the required additional capital to develop its mining assets and to identify other acquisition and/or joint venture opportunities in the mining sector, and to establish the technical and managerial infrastructure necessary to take advantage of, and successfully participate in, such opportunities; future economic conditions; demand for zinc and other minerals the company may seek to extract; political stability; and changes in governmental regulations, and financial capabilities of the Company. Additional information on risks and other factors that may affect the business and financial results of Zinco do Brasil and the combined company can be found in filings of Zinco do Brasil with the U.S. Securities and Exchange Commission. The Company encourages any current or potential shareholder to read all the public filings before making a decision to invest in the shares of any public company.
The information provided in this news release may contain forward-looking statements within the definition of the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. These statements are based on Zinco do Brasil Inc.'s current expectations and beliefs and are subject to a number of risks and uncertainties that can cause actual results to differ materially from those described, including but not limited to, the results from the start up activities and ongoing production potential of Salobro Zinc Project. Readers are cautioned to review the risk factors identified by the company in its filings with US securities agencies. Forward-looking statements are based on management's expectations, beliefs and opinions on the date the statements are made. Zinco do Brasil, Inc. assumes no obligation to update forward-looking statements if management's expectations, beliefs, or opinions, or other factors, should change.