Gold, silver, platinum, and copper prices increased sharply in November amid rising inflation and speculation that China will scale back its COVID-19 restrictions following mass protests. While these headline metals took the spotlight, investors shouldn’t ignore lesser-known metals that could have even more attractive fundamentals over the coming years.
In this article, we’ll examine why zinc could become a promising opportunity and why investors may want to consider junior mining companies like Slave Lake Zinc Corp. (CSE: SLZ) to capitalize on it.
Supply Is Driving Prices
Zinc production has been falling for several years. In 2012, Glencore shuttered its Brunswick and Perseverance mines in Canada. A few years later, the Century mine in Australia and the Lisheen mine in Ireland shut down. And in 2016, Glencore shut down another zinc and lead mine due to depleted reserves, taking millions of tons out of production.
In addition, zinc production is energy-intensive, so higher energy prices have led to production cuts in producing mines. These dynamics have led to sharply higher zinc prices in recent months despite slowing demand. And since production takes time to turn on, a dovish Federal Reserve or a decision to scale back COVID-19 restrictions in China could spike prices.
Prices Drive Resource Value
The depletion of leading zinc mines has many companies seeking new supplies around the world. But, like most metals, few attractive surface mines are left. As a result, these companies wait until prices are high enough to justify more intensive types of mines or focus on different metals altogether until market conditions improve.
At the same time, zinc prices drive the value of prospective resources. For example, a junior miner with significant reserves might value the mine by multiplying the reserves by the market price (or an expected market price). If prices are higher, they become a multiplier for the value of the resources and, by extension, the value of the company exploring them.
Slave Lake’s Unique Position
Slave Lake Zinc Corp. (CSE: SLZ) is actively exploring a zinc/lead prospect at O’Connor Lake in the South Slave district of Canada’s Northwest Territories. With vein structures discovered in the 1950s, the company is confirming the presence of zinc and other metals through aerial surveys and other modern exploration techniques.
Following the detailed aerial survey, the company plans to conduct a thorough exploration using ground surveys and drilling, starting at the original lease area with historic and new targets. And after confirming the presence of such reserves, the company could partner with a major producer to exploit the resources and bring new zinc production online.
Looking Ahead
Many investors focus on precious metals like gold and silver, but zinc has unique market dynamics that are worth a second look. With an undersupplied market and depleting reserves, junior mining firms, like Slave Lake Zinc Corp. (CSE: SLZ), are well-positioned to build significant value through their exploration and resource estimates.
For more information, visit the company’s website or complete the form below to download their investor presentation.
