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Gold/Mining/Energy : ZINC The base metal. News and Views. Symbol Zn -- Ignore unavailable to you. Want to Upgrade?

To: Claude Cormier who wrote (27)	2/3/1999 1:06:00 PM
From: Ray Hughes	Respond to of 3270

'Morning Claude: Rescan Engineering projected, in the Aljustrel project pre-feasibility study (Oct. '98), a zinc net breakeven operating cost of US$0.36 per pound. Subsequently, ongoing feasibility study work (completion expected Sept. '99) reduced projected operating costs in several areas. We (not Rescan) now project the zinc net breakeven at about US$0.33 per pound. This figure is net of by-product revenue from lead and silver. As is industry standard practice, Pb and Ag smelter revenues are deducted from overall costs to yield the net breakeven cost for the principal metal produced - zinc in this case. The figures cited are based on Pb selling at US$0.24 per pound and Ag at US$5.00 per oz. Based on production of 1.5 million oz. Ag per year, a US$1.00 rise in Ag price cuts zinc breakeven cost by US$0.01 per pound. Hence, with some help from a silver bull market, we may well realize the US$0.33 per pound projected breakeven. The Aljustrel project is imbued with several "high quality" characteristics: 1) it would be profitable at the present US$0.445/lb. LME zinc price, 2) the project will enjoy approx. US$100 million of tax shelter owing to available write-offs from the old project, 3) there are several deposits whose mineralized extent has not been fully drilled off so there is upside to the size and potential life of mine, and 4) its would be a major mine and, therefore, command attention from mining Securities Analysts. RH