Canadian Miners Tune Into Zinc

- November 6th, 2009

By Kishori Krishnan Exclusive To Zinc Investing News
Its a modern day gold rush, the likes of which the northern Manitoba town has not seen for a while.
HudBay Minerals Inc is to commence construction on what is anticipated to become the biggest gold and zinc mine in Canada.
The site is about 700 kilometres north of Winnipeg, […]

By Kishori Krishnan Exclusive To Zinc Investing News

Its a modern day gold rush, the likes of which the northern Manitoba town has not seen for a while.

HudBay Minerals Inc is to commence construction on what is anticipated to become the biggest gold and zinc mine in Canada.

The site is about 700 kilometres north of Winnipeg, near the small town of Snow Lake. The Lalor Lake mine site could operate for up to 20 years and create jobs for hundreds of people, if things go according to plan.

The company plans to spend $500 million on the project.

HudBay had closed the mine earlier this year because of weak zinc prices. With the price of zinc at about $1 per pound, HudBay believes it is profitable to reopen the mine.

Higher gold prices helped HudBay Minerals Inc’s net income to soar to nearly C$ 20 million in the third quarter from C$ 2.8 million in the same period last year despite a 21.3-per cent decline in revenue to C$ 194.6 million from C$ 247.4 million.

Also looking up is the local unit of Canadian miner TVI Pacific Inc, which is to commence construction of a zinc processing facility at its copper mine in the province of Zamboanga del Norte.

The construction, which was started three months ahead of schedule, will enable the miner to sell more mineral resources from its Canatuan copper mine, TVI Resource Development Inc said in a statement posted on its Web site Friday.

The miner will spend $2.5-$3 million for the zinc circuits, which are expected to be operational late April next year.

“As we mine through the copper rich portion of the ore body and start getting into the copper-zinc zone as expected, the ability to separate and monetize the zinc will result in additional revenue,” said TVI Pacific president and chief executive Clifford M James.

Australian fire

Anglo-Swiss miner Xstrata PLC (XTA.LN) said it had restarted operations at the Handlebar Hill zinc-lead mine, part of the Mount Isa mining complex in Australia’s northern Queensland.

Xstrata idled the operation in February this year because of a poor market situation

In 2008, zinc in concentrate output totaled 283,063 metric tons and lead output was 140,023 tons at the mine.

Plummeting zinc prices in the fourth quarter last year that lasted into the first quarter this year forced many zinc mines to shut down because they were no longer profitable.

Change is now inevitable.

Surplus swing?

Incidentally, global lead and zinc markets may witness a change in supply and demand.

The world market for refined lead and refined zinc will be in surplus this year and in 2010, the International Lead and Zinc Study Group (ILZSG) has said.

While the world surplus in refined lead will be an estimated 80,000 tonnes in 2009, it could exceed one lakh tonnes in 2010, the group said in a release.

As for refined zinc, it anticipated that world supply will exceed demand by 3.8 lakh tonnes in 2009 and 2.27 lakh tonnes in 2010.

Interestingly, while refined zinc metal usage worldwide is expected to decrease 5.6 per cent to 10.76 million tonnes in 2009, the largest reduction since 1975, the only countries in which increases are anticipated are China (16.8 per cent) and India (6.2 per cent).

India is expected to show a growth of 10.6 per cent and China 7.6 per cent.

Though demand is set to witness a decline in 2009 in both Europe and the US, it is expected to increase in both the regions next year, the study reported.

Company news

Donner Metals Ltd, in partnership with Xstrata Zinc Canada, is currently exploring for zinc and copper-rich volcanogenic massive sulphide (VMS) deposits in the Matagami Mining Camp in central Qubec.

The company expects to shortly close private placements totaling $3,209,250, an increase in total gross proceeds of $109,250.

Vancouver-based miner Goldcorp Inc said selling more gold at higher prices helped boost revenue by 25 per cent in the latest quarter.

Earlier this month, Goldcorp said the first lead and zinc concentrates have been produced at Penasquito. The initial concentrates have been produced as a by-product of the commissioning process.

It said the mine remains on track for completion of commissioning for the Line 1 processing circuit by the end of the year.

Hecla Mining Company (NYSE:HL) reported net income applicable to common shareholders of $22.5 million, or 9 cents per diluted common share, on revenue of $95.2 million in the third quarter of 2009.

This was as compared with a loss of $7.2 million on revenue of $68.5 million for the corresponding quarter in 2008.

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