ZInco do Brasil Developing and operating world-class mining assets
Zinco do Brasil
| Zinco Do Brasil 100 Park Avenue Suite 1600 New York, NY 10017 Ph: (212) 984-0628 Email: info@turkpowercorp.com Website: http://www.zincodobrasil.com Ryan E. Hart: CEO |
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SOS: Delaware .Year end: 05/31 |
Zinco do Brasil, Inc.
Company Profile
Zinco do Brasil, Inc. (“Zinco”) is a publicly listed company (Ticker: ZNBR). The Company recently acquired 99.9% of Zinco do Brasil Mineracao Ltda., which owns 30 mineral rights for a total of 44,665 hectares in the Brazilian state of Minas Gerais. The mineral rights are split between two projects: “Salobro”, which consists of 2 mining rights for an area of 1,685 hectares, and “Gorutuba” with 28 mining rights for an area of 42,980 hectares.
The Company expects the Salobro reserves to increase by 30 – 50% during the exploration drillings scheduled for Q2 and Q3 of 2013 to prove up reserves to 43-101 standard. The Salobro project is expected to go into production in Q1 of 2016 and to produce in excess of 30,000 metric tons of Zinc and 5,000 metric tons of Lead per year during the mine-life of 10 years (13 – 15 years after reserve increase of 30 – 50%), with an IRR of 24 – 71% (pending Zinc and Lead prices) and a payback of 1.4 to 3.5 years from commencement of operation.
The Gorutuba project consists of 28 mining rights containing an area of 42,980 hectares in total. Geophysical interpretation of the area was developed based on data gained from airborne geophysical survey conducted by the State of Minas Gerais. The study revealed that the geophysical characteristics of the Salobro deposit are highly correlated with seven targets within the Gorutuba project area, showing similar anomalies like Salobro. The extent of the seven selected targets is 17 km (compared to 2.35km of Salobro) and a drill program is scheduled to start during 2013 to confirm each deposit. Initial geochemical studies indicated other anomalies of Copper and Gold within the Gorutuba projects/targets.
Zinc and Lead Outlook & Market
The near term outlook for zinc consumption remains positive despite a global economic slowdown in most countries and particularly in Europe, with forecast growth of 5.2% in 2013 and 5% in 2014. The Asian economies are key to the moderate growth forecast over the next few years.The expected closure of many large mines over the next several years and the lack of major new mines in the development pipeline continue to provide a very bullish intermediate to long term outlook for zinc. The closure of several large mines are evident in the reduced growth in mine output in 2014 and a shift from oversupply to supply shortfall.
The Supply Challenge for new Zinc and Lead Projects
An overview of new mine development is instructive and indicates that many of the new mines rely on existing mine and ormill infrastructure. These include Half Mile Lake (Canada) and Brace McLeod (Canada); other projects are restarts or expansions: ScoZinc (Canada), Satander (Peru), Pachapaqui (Peru), Lombador (Spain), Olympias (Greece), Rasp (Australia); and some new mines like Dairi (Indonesia), Al Massane (Saudi Arabia), Altintopkan (Tajikistan), Khandiza (Uzbekistan), Dugald River (Australia), Perkoa (Burkina Faso) and Bisha (Eritrea).Almost all of the restarts and expansions are small, with less than 100,000 tonnes annual production, whereas the new mines are generally larger and in all cases financed by large mining companies. The costs of the restarts and expansions are modest compared to the new mines, and most of these types of projects are now underway, leaving the new mine projects with much higher capital cost for development.
Much of the new mine supply must come from new greenfields projects. As senior project debt financing remains essentially unavailable to small producers and developers these projects will require either joint venture financing or sale to a major company, to advance them to production. Most major mining companies have left the zinc space, with Anglo being the most recent example. Selwyn selected Yunnan Chihong Zinc & Germanium Co. Ltd. to finance Selwyn Project to bankable feasibility and provide project senior project debt with the Chinese banks.
The few remaining major mining companies interested in zinc and lead, and outside of China, include Xstrata, Hindustan Zinc, Glencore Nyrstar, Votorantim and Teck. They will largely be responsible for ensuring adequate global zinc supply outside of China.
Given the approximate 1.9M tonnes of lost production due to pending mine closures by 2015, and annual demand growth of more than 500,000 tonnes per annum, one or more of these large mines is needed each year commencing 2015.
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