Posted: Monday Aug 1 1:07:31PM 2016
I was on the zinc bandwagon last year but nothing happened. The closing of several big mines didn't have much effect on prices. This year has been different. Zinc has been the star of the base metal camp. There is a shortfall and prices have risen.
My previous pick was Trevali. They had a difficult time in 2015 but have risen from C$.35 to the current price of .87 this year. The Canadian mine has come on stream and things look good for Trevali. But because it's one of the only pure plays on zinc, it's pretty fairly valued so I went looking for an alternative.
Came up with buying options on Nevsun. They are in Eritrea with the Bisha mine. Gold heavy during the early years but 5 profitable years have been mostly from copper. Now Bisha is transitioning to base metal and will be producing zinc along with copper and a smidge of gold. Zinc production will be 70-100million pounds in 2016 and ramp up to 200+million pounds/yr for the next 8 years. 1.7billion pounds of zinc over the estimated 8 year life. Not a pure play but safe. NSU has no debt and 200 million in cash. Pays almost 5% dividend. I won't get that because I'm using options but if the market goes crazy for zinc, they should find Nevsun after they announce first zinc production this month.