Zinc Declines on Dampened Chinese Growth Forecast

By Leia Michele Toovey-Exclusive to Zinc Investing News

Zinc declined in London Thursday as expectations of slower growth in China decreased the demand outlook for base metals. China’s attempts to cool inflation are expected to result in an 8.7 percent growth rate in 2011, down from 10 percent in 2010.

In early trade, zinc dropped 1.3 percent to US $2,448 a tonne on the London Metal Exchange.
On the MCX, zinc futures prices swayed by 0.40 per cent to Rs 111.70 per kg, with a turnover of 273 lots. The metal for January delivery also edged lower by 0.32 percent, to Rs 110.60 per kg, with a turnover of 641 lots. On Wednesday, zinc touched the low of 109.2 after opening at 109.4, and finally settled at 110.95.

Zinc prices have rallied in line with the strong price trends in the other base metals, but the metal is currently only about half its pre-recession value. In May 2006, prices touched $4,600 per tonne; in the depths of the recession prices slid to just over $1000 per tonne. This drastic price decrease forced many zinc miners to shut-down operations. Now, not all of these miners have re-opened, and for this fact analysts expect the metal to continue its rally through the first half of 2011.

Company News

Korea Zinc Co., the world’s second-biggest zinc smelter, announced Wednesday that its fourth-quarter earnings fell 6.5 percent from a year earlier due to reduced output. According to a regulatory filing, net income reached US$100 million in the October-December period, compared with a profit of US $110 million year earlier. Sales gained 4.4 percent to US $736 million over the cited period, and operating income also climbed 6.4 percent to US $108 million. Korea Zinc has been working to improve and maintain part of its plants in South Korea.

Thunder Mountain Gold, Inc. (TSXV:THM), a U.S.-based exploration, recently released the final results of the 2010 drilling program at its South Mountain Project in Owyhee County, Idaho. The drilling project included five holes drilled into a new intrusive breccia target located to the south of a historic mine area, and two reverse circulation holes used to test the down-dip extensions of two of the nine historic carbonate-hosted polymetallic ore zones. The last hole, placed to test the down-dip extension of the Laxey ore shoot, intercepted 25 feet of 8.56% zinc and 1.15 ounce per tonne (OPT) of silver. This intercept proves the extension of the Laxey ore zone approximately 120 feet below the maximum depth mined during World War II when over 51,000 tonnes of sulfide ore were mined. The grade of this ore mined over the 800 feet of shaft and stope mining was 15% zinc, 10 OPT silver, 0.06 OPT gold, 2.3% lead and 0.7% copper. “We have been particularly pleased with the portion of the 2010 drilling program that tested the extensions of the sulfide ore zones at South Mountain,” said Jim Collord, President and CEO of the Company. “The positive intercepts demonstrate that the high-grade mineralization continues and is open to depth. We are planning our detailed core drilling at South Mountain for 2011 to target the extensions of the historic high-grade polymetallic ore zones in order to expand our base and precious metal resource.”

Globex Mining (TSX:GMX) (FSX:G1M) announced Thursday plans to spin off its copper-gold-zinc assets in the Chibougamau mining district in Quebec into a new company. Globex shareholders will receive shares in the new company that will be called Chibougamau Independent Mines. The new company will include claims covering the former Bateman Bay, Grandroy, Kokko Creek, Quebec Chibougamau and S-3 Mines, as well as recently-acquired parts of the Copper Cliff and Jaculet Mines. The spin-off will also include other copper and gold claims, including the un-mined Berrigan deposit and Tommy Zones. Globex said it expects to retain certain shares of Chibougamau Independent Mines, as well as a gross metal royalty on any future mineral production from the transferred assets. The deal, which remains subject to regulatory approvals, is expected to complete in the first half of this year.