Junior Zinc Mining Companies on the Rise

Zinc has been on a steady rise over the past year, with junior zinc mining companies bearing the fruit of the blooming market.

Zinc has gone from just over US$0.80 per pound to the current price of roughly $1.05. Overall, the price of the metal has risen 17 percent this year.

Declining zinc production looks set to help boost prices even further in 2015 and 2016. Three mines that were responsible for about 12 percent of worldwide zinc production have shut their doors over the past 2 1/2 years.

With rising prices, several zinc juniors have seen exponential share price rises since the start of 2014. InZinc Mining (TSX:IZN), Pasinex Resources (CSE:PSE) and Cypress Development (TSX:CYP) have all seen their share prices increase by over 100 percent.

InZinc Mining, based in Western Utah, has seen a 135-percent increase in its share price this year and is currently hovering around $0.20 a share. The boost started when it changed its name from Lithic Resources to its current incarnation of InZinc.

Shortly afterwards, InZinc filed a positive preliminary economic assessment( PEA) for its West Desert project. The PEA gives an internal rate of return of 23 percent and a post-tax net present value of $258.1 million. The report estimates that about 1.5 billion pounds of zinc will flow from the mine, as well as 146.7 million pounds of copper and 14.9 metric tons of iron magnetite concentrate.

As those numbers indicate, InZinc’s project contains some copper in addition to zinc. Copper took a large plummet in March and is on a slow road to recovery. With InZinc maintaining a focus on copper, the middling price of the bronze metal could impact its estimations for West Desert.

Pasinex Resources is a mining exploration company that’s listed on the Canadian Securities Exchange and is focused on developing mining properties in and around Turkey. The company has enjoyed a near meteoric rise since January, with its share price rocketing up 140 percent. Drilling on its Pinargozu and Akkaya properties helped buttress its share price in March and April.

The company holds the mines in a 50-50 joint venture with Akmetal Madencilik. While Pasinex struggled during stages of its drilling program — limited drill access roads, preparation of water lines and targets beyond the depth-reach of the drill all hampered drilling — the company recovered to present assay results in early September.

Results show that about 570 tonnes of mined ore returned 34-percent zinc and 50 grams per tonne (g/t) gold. Further exploration drilling is underway at the Pinargozu project with results expected in October 2014.

Private placements have also done their bit to help boost the share price of Pasinex, with the company raising over $1 million to boost its coffers.

Much like InZinc, Pasinex’s properties hold both zinc and copper, meaning the company’s share price is susceptible to fluctuation in the red metal’s price.

Finally, Cypress Development’s share price looks to have stabilized and climbed following a lackluster spring and early summer. The company experienced a slight downward trend from early February to late June. During that time, it acquired a 100-percent interest in the South Bay zinc-copper-silver project and completed a NI 43-101 technical report on its Gunman zinc-silver project in Nevada.

The company’s share price began to really take off in late June as it started its Phase 2 drilling program at Gunman, with reports of 12-percent zinc and 121 g/t silver at 175 feet of drilling. Samples from Gunman eventually showed 35-percent zinc and 11-percent copper, bolstering Cypress’ share price further.

September has seen a slight drop in the company’s share price even though Cypress announced the purchase of additional land surrounding the Gunman project, bring it to 2,300 acres. For the year, Cypress’ share price is up more than 133 percent.

All three companies are exploration companies that have yet to produce zinc from the properties they own, meaning that it’s uncertain whether they’ll make it into production in time to take advantage of the higher zinc price. That said, looking ahead there seems to be no end in sight to the base metal’s price rise. According to Goldman Sachs (NYSE:GS), zinc production is expected to fall short of demand this year — for the first time since 2007 — setting the stage for higher zinc prices in 2015 and 2016.

Securities Disclosure: I, Nick Wells, hold no direct investment interest in any company mentioned in this article.