Australian comment Zinifex rockets as zinc price runs hot
Richard Owen
24dec05
ZINIFEX shares jumped almost 6 per cent yesterday after zinc prices surged to a near 17-year high on the London Metal Exchange on Thursday as supply worries triggered buying.
Zinc rose another $US46 to $US1896 a tonne – its highest since March 1989 – after gaining $US30 the previous day in response to news that China's third largest smelter, with a capacity of about 180,000 tonnes a year, had been temporarily shut down.
It was closed following the discovery of toxic levels of cadmium in the North River in Guangdong Province.
Cadmium, an element widely used in batteries, can cause liver and kidney damage and can be carcinogenic in compounds.
Zinifex shares hit an intraday high of $7.07 before closing up 20¢ at a record $6.88 on heavy turnover of 6 million.
Other zinc producers enjoyed a more muted investor response during the half-day trading, with Kagara Zinc rising 1¢ to $2.14 and CBH Resources ending steady at 19¢ after trading up 1¢ at times.
However, Aim Resources recoiled 0.4¢, 6 per cent, to close at 6.4¢, having vaulted 25 per cent on Thursday after the dual London-listed company said a bankable feasibility study had shown development of its proposed zinc mine in the African country of Burkina Faso could generate revenue of $1.7 billion.
The mine would take about two years to develop and required $72.5 million in capital costs, according to the newly completed study by Snowden, mining consultancy arm of Britain's Barclays Bank.
CBH, undertaking a feasibility study on its West Australian Sulphur Springs zinc-copper project, expects to make a development decision in the second quarter of next year.
Chairman Jim Wall said the open-pit mine, expected to cost about $80 million, would start producing about 60,000 tonnes of zinc concentrates and 50,000 tonnes of copper concentrates a year from the second half of 2007.
Benchmark zinc futures on the London Metal Exchange have risen 47 per cent this year. |
