Zinc stocks falling; junior stocks rising
Toronto listed micro-to-small caps dominate the top 10 risers in the zinc equity space over the past 12 months, according to Mining Journal research, with Peru and Canada the most favoured exploration jurisdictions. In a market segment in which major producers’ project pipelines are bare, the leading juniors’ stocks are highly leveraged to exploration success given the sub-US$40 million market caps of eight of the top 10 at the start of this month.
Deposit grade and metallurgy, as ever, along with location, will be key to cost-curve positioning for newcomers to the fairly exclusive zinc producers club. But on the basis of strong demand and stable pricing projections for the metal – plus the potential for price spikes on supply shortfalls that look increasingly likely for zinc – the outlook must be seen as extremely favourable right now for explorers with decent projects taking shape.
Mining Journal’s top-10 for the year to May 31 (full list below) has companies covering the spectrum of grass roots exploration to those pursuing resource and reserve extensions as economic studies advance.
We’ll be speaking with company leaders over the next weeks and months to bring readers real insights into the projects that will make the grade in a market with attractive supply-demand fundamentals but a history of emerging players tripping up on the way to the producers’ table.
With North American mining investors particularly sensitive to resource security risks it’s perhaps no surprise that Canada and Peru feature strongly in the exploration/development portfolios of the sector’s best stock-price risers of the past year.
‘Safety’ is also the dominant investment jurisdiction theme for expanding producers in the space, such as Trevali Mining Corp (TSX: TOR), and then the established leaders with brownfields expansion scope such as MMG (Minmetals), Teck Resources and Glencore.
Tinka Resources (TSXV: TK), still off its 2013 peaks but tracking north again on the back of exploration success at Ayawilca in the central Peru highlands, is the next marker on the road for investors in its more junior exploration peers. Its market value has risen to US$96 million in the past year and the company can look to the likes of Arizona Mining (TSX: AZ) for guidance on how the market rewards sustained exploration progress.
Tinka and those smaller explorers on Mining Journal’s top-10 list will clearly emerge in the sights of big zinc metal refiners and supply-chain kingpins – Nyrstar, Glencore, Teck and Korea Zinc – and the likes of South32, even as some of the sector’s top players continue to rationalise development-project lists through asset sales. This has been evidenced by the increasing rate of strategic investments in smaller players in the sector over the past 12 months.
What are these big players and leading market commentators saying about zinc and its outlook?
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