Great Investments

Great investments with tremendous potential in a modernizing world.

Tuesday, May 23, 2006


Worldwide Zinc Crisis, MMGG to Apply for Listing

This article by Tom Dyson shows how bad the worldwide zinc crisis is already. Here's the zinc discussion from the article:

"The world is out of zinc...

I’m not joking. All industrial metals are scarce right now, but none are as scarce as zinc. There simply isn’t any available.

I learned this yesterday on the golf course. Chris Hancock specializes in Asia. He is the author of a publication called the Asia Strategy Report. We were paired together in a corporate golf outing. While contemplating my approach shot to the sixteenth green, Chris started talking about zinc…

Kohler Inc. is a huge manufacturing conglomerate, best known for making bathroom fittings like sinks, latrines and faucets. They coat their products with zinc to stop corrosion.

“I was just in Hong Kong,” Chris told me, “and while I was there, I met up with a friend of mine who’s the manager of several Kohler plants in China. He told me they’re having trouble with zinc… they can’t find it anywhere.”

Chris continued: “At first I didn’t pay much attention. But then at dinner that night, I sat next to a guy from my MBA class. He’s an investment banker with UBS Warburg. He says all the traders at Warburg are buying zinc like crazy and that the zinc price is about to run. But get this...

On the plane back from Shanghai, we start chatting to the lady in the seat next to us. It turns out she manages a plant in Chicago for one of the large office supply retailers. She said she’d been in China visiting factories. We told her we had been doing the same thing. We asked her how her trip went - if she’d had any problems sourcing materials for her plant – and she told us she did. She couldn’t get hold of any zinc!”"

Crisis to get Worse; Metalline Mining in the right place at the right time

With their drill-proven 5 billion pounds of zinc, Metalline Mining (MMGG) has one of the very few huge zinc mines in the world ready to go into production in the next few years. The article shows why they're in the right place at the right time to be an enormous winning long-term investment.

Keep in mind, there are also a number of large zinc mines that will be closing in coming years, with few mines coming online (even fewer if Yukon Zinc's Wolverine project doesn't get financed), making the "zinc crisis" even worse. Other than Metalline Mining's mine in Mexico, the two biggest zinc mines scheduled to start production in the next 5 years are in Iran and Bolivia, two very unstable regions. If there's a war in Iran and if Bolivia nationalizes the mines in their country, the "zinc crisis" could become very dire.

Given that there's already a crisis, and even with these mines there wouldn't be enough zinc produced to match even current production, it looks like the crisis will get much worse. China and India's growth will require a lot more zinc, which is not easily replaceable like some of copper can be. For most applications (e.g., galvanized steel), zinc is only a tiny portion of product costs, so there shouldn't be high price sensitivity to curtail demand.

In addition to their zinc, Metalline Mining's recent stellar silver drilling results means you get a high-grade silver stock thrown in "for free," as the stock is actually down over 17% from where it closed before announcing the silver drilling results, having been caught up in the recent selloff in mining stocks.

Metalline Mining to apply for listing on a "senior exchange"

Metalline Mining recently confirmed their intent to file a listing application with a senior exchange, hidden in their Schedule 14A about the annual meeting July 7, page 21:

"For example, the Company intends to file a listing application with a senior stock exchange. Any senior stock exchange listing would require the Company to have at least 50% of its board comprising of independent directors. Moreover, a senior exchange listing would require adding directors with financial expertise."

Once they get off the bulletin board, they can attract much more investor interest, particularly from institutional investors who won't touch a bulletin board stock. We think when they formally announce their listing application, the stock will rally. After the recent pullback to retest the breakout area around the multi-year high, MMGG's chart is set up very nicely for such a rally...

The future looks very bright for Metalline Mining...

The future not only looks bright for Metalline Mining, but it also looks bright for nearly all zinc related stocks. As proof that many are starting to worry about the zinc supply, see this Schwab alert regarding a Reuters report.
Post a Comment

<< Home


January 2006   February 2006   March 2006   April 2006   May 2006   July 2006   August 2006   October 2006   November 2006   December 2006   January 2007   February 2007   March 2007   April 2007   May 2007   June 2007   August 2007   October 2007   November 2007   May 2008   September 2008   October 2008   January 2009   May 2010  

Great Investments Home    Email GreatInvestments

Great Investment Articles Blog     Great Trades Blog

Disclaimer: Great Investments may have a position in all or some of the stocks discussed in this blog, but is not paid by any company to promote their stock. Great Investments contains opinions, none of which constitute a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. Great Investments does not provide personalized investment advice.

Seeking Alpha Certified

Enter your email address in the box below to get emailed any new blog entries (within an hour or so of an update). Your email address won't be listed or sold.


This page is powered by Blogger. Isn't yours?