TERRAMIN AUSTRALIA: A zinc play for a future with rising zinc prices

Supply-demand imbalance

2015 will be when zinc deficit starts to grow, according to the consensus of 3 industry experts (Teck Resources, Wood Mackenzie, CRU). Mr Janes explained that an estimated 11% of current zinc production will cease over the next four years, including the second largest zinc mine in the world -- Century, in Queensland, Australia.

Investment in exploration and development of new mines has slowed down in the past decade which can be blamed largely on an under-performing zinc price trend, he said, and the the deficit in supply-demand will widen in the next 10 years.

The price of zinc had hit as high as US$4,515 a tonne in November 2006 and then slid to as low as US$1,065 a tonne in 2008 at the start of the global financial crisis.

Research house CRU Group is forecasting that the price will shoot up to US$3,800 per tonne in 2018. For more, see: Zinc could hit $4,500/mt by end of the decade: CRU 

Based on estimated (and undisclosed) production costs, the Tala Hamza mine will be very profitable -- if indeed the price of zinc rises substantially in the next few years.

In that case, Terramin's stock price could turbocharge up, as the company's fortune is very much tied to the zinc mine. "We are a near-pure play on zinc," said Mr Kennedy.