VIDEO - Zinc Prices Under Pressure Despite Low Stockpiles

Interview conducted by Priscila Barrera; article text by Olivia Da Silva.

Although zinc is one of the “least-loved metals” right now, Pasinex Resources (CSE:PSE) President and CEO Steve Williams still thinks it has an important place in the market.

Speaking with the Investing News Network at Mines and Money Americas, Williams explained that the metal is key for essential applications like rust protection and galvanizing. He also shared his thoughts on zinc’s current price performance and potential future movement.

“Last week at LME Week in London, the [forecast from one group] was about $1.10 next year, which is softer even than where we are right at the moment, and I’m thinking that’s probably the reality,” he said.

Williams explained that prices may have come down in anticipation of increased supply coming into the market, and noted that usually new production has less of an impact than expected.

He added, “but nevertheless it is coming on, and I think the market knows that. And so I think we’re probably going to have a bit more pressure on the zinc price going into next year.”

In closing, he highlighted the work Pasinex currently has on the go, including drilling just north of its Pinargozu zinc mine in Turkey, along with a SEDEX-style zinc deposit in Nevada.

Read the transcript below for the full interview, or click here to view our Mines and Money Americas interview playlist on YouTube.

INN: We’re here at Mines and Money Americas. It’s the last day of the conference. Are investors still interested in zinc?

SW: Yeah, I think so. Yes, I would say so. We’ve definitely had some people that have come along and are specifically interested in zinc, but zinc is the one of the least-loved metals out there. That’s probably because it’s used for galvanizing, rust protection, and I guess that’s not a glamorous thing, but it’s a very important thing, it’s what makes steel work. But yeah, people are still interested in zinc.

INN: Okay, that’s good to know. And the zinc price has had maybe a tough year if we can say it that way. You mentioned earlier today in your presentation that stocks are undervalued. Has the market performed as you expected this year?

SW: Yeah, the zinc price peaked I think [at the] end of January. It was about $1.65 per pound, at the moment it’s about $1.20 per pound. So it’s come down a lot from that, and it’s sort of a bit strange, and I got a question today about that.

It’s a bit strange because the stocks of zinc metal are still very low. I think we’re looking at about eight, nine days of stock, which is very, very low. And if you go back … there were — the stocks were a lot, lot bigger, you know, months of stock. And so we’re still very low on stock, yet the zinc price has come down. I think part of that is that the market is anticipating more production coming on. There’s a mine reopened in Australia, and I think the market’s already sort of anticipated that a bit into the price. But normally you would think that the zinc price should be a bit higher. It’s sort of an unusual position right at the moment.

INN: Looking ahead to next year, what do you expect for prices and for the market in general?

SW: I think we’ve seen a peak, and last week at LME Week in London, the sort of forecast from one group anyhow was about $1.10 next year, which is softer even than where we are right at the moment, and I’m thinking that’s probably the reality. There is some more production coming on, people always are a bit more optimistic on how impactful that production’s going to be … but nevertheless it is coming on, and I think the market knows that, and so I think we’re probably going to have a bit more pressure on the zinc price going into next year. That’s what we’re anticipating anyhow.

INN: In the current state of the resource market, why should investors look into Pasinex?

SW: It’s a good question. I mean, despite the zinc price coming down, we’ve got a producing mine now in Turkey. We’re doing about 40 million pounds of production of zinc a year, and our costs running all in, including mine development and exploration, all in is running US$0.35 to US$0.40 per pound. So even if the zinc price does soften a bit next year, which is what I’m anticipating, we’re still going to be very profitable. We’re still going to be generating cash. So yeah, we’re going to be good next year.

INN: Are there any other company milestones that investors should keep an eye out for?

SW: I mean, the big thing — it’s all about the future and it’s all about exploration, and we’ve got two exploration plays. One that we’re really excited about is Nevada. We’ve got what we think is a SEDEX-style zinc deposit in Nevada, and so we’ll be drilling that again in the spring of next year. So definitely watch that because that one we think can be exciting.

And then we’re also drilling in Turkey. We think there’s a lot more zinc around where we are. We’re actually drilling at the property due north of Pinargozu, the mine, right at the moment. And so hopefully later this year we should have some results coming out, hopefully some more pleasant results.

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Securities Disclosure: Priscila Barrera and Olivia Da Silva hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Pasinex Resources is a client of the Investing News Network. This article is not paid-for content.

The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.