StockHopper
I just did some calcs on the Bulman Zinc Oxide deposit of 375,000 tons at 15% Zinc and 2% lead at current spot prices it is worth $37,500,000 in ground just for the Zinc less refining costs. I have not taken into account the lead credits.
They are looking at expanding this resource via negotiation with the Local population. So this should be very positive for ADY due to the oxides being a surface deposit.
StockHopper
The development of a solvent extraction reagent that is specific for zinc will revolutionize the zinc industry, as the process, Solvent Extraction Electro-Winning (SXEW), did for oxide copper production 25 to 30 years ago.
The solvent extraction process consists of leaching the oxide zinc ore with sulfuric acid producing an acidic solution containing zinc and other soluble metals, the leach solution. The leach solution is mixed with the organic extraction solution, which selectively removes and concentrates zinc from the leach solution into the organic extraction solution. The extraction solution is taken to electrolytic reduction cells where SHG zinc (99.995%) is produced. SXEW produces a refined zinc product at the mine site.
The first production test of the Solvent Extraction Electro-Winning process for zinc will be the Anglo American Skorpion deposit, located in Namibia, Africa, which is presently under construction, with production forecast for midyear 2002.
Anglo's feasibility study cash cost of producing refined zinc by SXEW is $0.25 per pound, a 30% advantage over the rest of the zinc industry which produce zinc from a sulfide concentrate through the smelter process at a cost of $0.35 per pound. This new technological advance will make Skorpion the world low cost zinc producer
Sierra Mojada will have competitive advantages over Skorpion because of lower infrastructure development costs and the synergies offered by Penoles from their existing operations. These synergies are, the required acid is available at Penoles' MetMex complex in Torreon (250 km, 150 miles, by railroad), Penoles has electric power sufficient for their operations and the requirements of Sierra Mojada and high voltage power is available at Hercules (80 km, 48 miles), Penoles jointly owns and is the operator of the Coahuila Durango Railroad and consequently acid and other required materials for the mine and extraction plant can be transported by rail at reduced cost over truck transport, lower labor cost and other lower operating costs than Skorpion due to its remote location and hostile environment, Skorpion being located on the edge of the Namib Desert. Anglo must build 1100 km (660 miles) of power line and add electrical capacity to the Namibia grid, build roads, build a sulfur acid plant and port development to import sulfur for the acid plant. Anglo's feasibility study capital cost is $450 million
Sierra Mojada is one of the few known oxide zinc deposits in the world capable of developing the required threshold reserve of 2 million metric tons of contained zinc metal necessary to justify the estimated $250 million capital investment of a mine and extraction plant with an annual production of 180,000 metric tons of zinc metal. The cash cost for producing zinc at Sierra Mojada could be as low as $0.20 per pound.
Sierra Mojada could be one of the world's largest zinc mines and one of the lowest cost producers and possibly the lowest cost producer.
Click Image for Enlargement The red line represents the smelter cash cost of producing zinc, $0.35 per pound.
Anglo American's feasibility study projects US $0.25 per pound for the Skorpion deposit.
Only 5 mines have total cash costs of less than $0.37 per pound. If overhead were accounted for, a total cost basis, few mines except Skorpion would be making a significant profit, only Ammeberg the first orange bar.
On a total cost basis over 50% will require a price in excess of $0.60 to be profitable. Consequently, if price does not increase to the plus $0.60 realm these mines will be forced to close and remove up to 50% of the world zinc production. Not a probable option as the world is unlikely to reduce its zinc consumption by up to 50%. To the contrary, zinc use is forecast to rise 3 to 4% annually over the next 5 years. Producers will have to require higher prices and the consumer will have to absorb the increase in price.
The reduction in production process is underway, a number of mines have closed, are on standby or are operating at reduced capacity due to the present low zinc price, over 600,000 metric tons of production has been removed in the last few months and more will follow without price increase.
Zinc inventories on the London Metal Exchange (LME), in green, reached a low of 190,000 metric tons for 2000. Stocks have subsequently increased to 450,000 metric tons, which is still a relatively low inventory and total inventories are at pre-1992 levels.
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LME inventories over the last 14 years have ranged from a low in 1986 of 26,000 metric tons to 80,000 metric tons for 1990 increasing to a high of 1,400,000 in 1994, decreasing to 770,000 for 1995 and 590,000 for 1996 continuing to decrease to a low of 190,000 for 2000 (International Zinc Association, IZA) and subsequently increasing to 450,000 at present (LME). Zinc consumption in excess of production accounts for the reduction of the high LME inventories over the past 8 years.
Zinc consumption has increased from 500,000 metric tons in 1900 to 8 million metric tons in 2000 (IZA). During the past 25 years the uses of and consumption of zinc has increased dramatically and zinc consumption continues to increase. The world presently consumes 22,000 metric tons of zinc per day.
A market balance study forecasts that some 900,000 metric tons of additional annual capacity will need to be commissioned by 2005, with the total rising to 1,700,000 metric tons by 2007 to meet the forecast growth in demand and to compensate for losses in mine output due to reserve depletion and attrition of output. The probability that these requirements will be met by new discovery and commissioning of new mines is low to highly improbable. Certainly not for the requirement of an additioal 800,000 metric tons between 2005 and 2007, discovery through development is a 5 to 10 year process. This would require that the equivalent of two of the largest recent discoveries Century (600,000 mt) and Antamina (280,000 mt) be discovered and put into production in two years. Consequently, low supply will force zinc prices much higher over the coming 5 to 10 years, unless the rate of discovery accelerates markedly to supply the estimated demand.
Completion of reserve definition, a feasibility study and constructing the mine and extraction plant at Sierra Mojada is forecast to require 3 to 5 years, interestingly 2005 to 2007, the period of the strongest increase in demand and short supply and consequently increasing zinc prices.
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Price history 1986 to 2000 in constant 1999 terms, which adjusts the price for inflation.
Zinc price history for the past 40 years in constant 1999 terms. Demonstrating the periodic sharp rises in price over the years.
The average zinc price for the last 40 years, in terms of value at the time, is $0.61 per pound (IZA).
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Metalline signed an Earn In Agreement on the Sierra Mojada Project with Minera Penoles November 15, 2001 and Penoles become the project operator (News Release dated December 10, 2001). Metalline's and Penoles combined samples, consisting of raise bulk samples, drill and channel samples, in the Red Zinc Manto average 11.8% (July1, 2002). World zinc mines with grades greater than 11% make up 18% of world zinc mines.
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Zinc is one of the most useful and essential metals. Zinc's primary use is corrosion protection in the galvanized steel industry. The recycle life of galvanized steel can be up to 100 years and the added cost is justified by decreased maintenance cost over ungalvanized steel.
The largest use of galvanized steel is in the automobile industry and in commercial and residential construction. Construction is zinc's fastest growing sector where it is used, for Structural support, as galvanized electric power, microwave, cellular and other towers, steel beams, floor joists, studs and trusses and it is used in ductwork, roofing and decorative interior and exterior covering.
Die cast zinc parts are used in automobiles, appliances, tools and computers.
Zinc alloys with copper, tin, lead, aluminum and magnesium are used in the construction, automotive, electrical and consumer products industries.
Other zinc uses are in batteries, tires, rubber goods, paint pigments, ceramic glazes, cosmetics, pharmaceuticals and chemicals.
Zinc is an essential nutrient for all life, plant and animal and is used in the food industries, nutritional supplements, animal feed and fertilizers.
Zinc consumption has grown dramatically over the past 30 years and continues to increase and new uses for zinc are being developed. Zinc fuel cells are under development for generating electricity and could create significant new demand.