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Sunday, September 25, 2022

(TSXV: ZNX) ZincX Focused on Unlocking Long Term Potential

ZincX Resources Corp. (TSX-V: ZNX) is one of very few mineral exploration company focused on unlocking the long-term mining potential of the Zn-Pb-Ag enriched Kechika Trough district located in the low-risk development environment British Columbia.

First, who cares about Zinc?

Investors, most likely. Mainly because there are very few pure zinc plays. ZincX is one of the very few.

Demand for Zinc is here to stay, but whether supply will keep up remains. The ILZSG — International Lead and Zinc Study Groupexpects a slight surplus of 44,000 metric tons in 2022. Cuoco says much will depend on factors such as zinc concentrate production. The timing of the restart of European smelters and ongoing freight issues could shape the surplus-deficit balances for Zinc over the next six months. (Recycling Today)

Why Zinc? Why Own ZincX?

Zinc has a myriad of growth vectors. The supply-demand is such that any new use, say in EVs, could tip the supply-demand balance into potentially consistent shortages.

Salient Investment Points for ZincX

  • Very few pure-play Zinc plays out there.
  • Potential takeover target for majors seeking zinc supply
  • A chronic shortage of Zinc is occurring; coincidental with the depletion of significant zinc mines coupled with minimal new mine developments leading to very bullish views on Zinc
  • Considering “spinout” of regional properties into another publicly-traded vehicle for the benefit of existing ZNX shareholders
  • Stable Jurisdiction with Road Access and close to power with Permits secured.
  • Validated by 3 Majors (Tongling, Korean Zinc, Teka)

And the ZincX kicker?

PEA valued the Project at a Net Present Value of $649M with a base case for Zinc at $1.21 a pound. 

Zinc is $2.00 per pound, which gives the Project an estimated $2 billion value.

First Property:

The Akie property consists of 46 mineral claims covering an area of approximately 116km2 and is located in northeastern British Columbia within the geological district known as the Kechika Trough.

The Cardiac Creek property is underlain by the prospective black siliceous shales of the Gunsteel Formation, which hosts the Cardiac Creek deposit, large sediment-hosted strata bound SEDEX type Zn-Pb-Ag deposit.

From late 2005 to present-day, the Company has conducted numerous exploration programs completing a substantial amount of drilling focused on defining its primary asset, the Cardiac Creek deposit.

Cardiac Creek ESTIMATE OF MINERAL RESOURCES (5% ZINC CUT-OFF)*

CONTAINED METAL:

CATEGORY

TONNES (MILLION)

ZN (%)

PB (%)

AG (G/T)

ZN (MLBS)

PB (MLBS)

AG (MOZ)

Indicated

22.7

8.32

1.61

14.1

4,162

804

10.3

Inferred

7.5

7.04

1.24

12.0

1,169

205

2.9

Second Property:

The Kechika Regional Project consists of 11 different property blocks comprising 184 mineral claims covering 682km. The Project is located in northeastern British Columbia within the geological district known as the Kechika Trough. From south to north, the property blocks include Pie, Cirque East, Yuen, Yuen North, Mt. Alcock, Kwad, Weiss, Bear/Spa, Driftpile South, Saint, and Thro. The Company owns 100% of eight of the eleven property blocks. It maintains a significant 49% interest in the Pie, Cirque East, and Yuen properties with partners Teck Resources Ltd. and Korea Zinc Co. Ltd.

Historically, Zinc is used for a bunch of real-world applications. The most interesting is the potential for Zinc in EV batteries as a range extender. In the simulation, the vehicle performance compares favourably to a similar vehicle with a single energy storage system (Single ESS) powertrain, travelling up to 75 km further under test conditions. (Aims Press)

Like other commodities such as Lithium, graphite and other specialties/industrial/battery metals, ZincX represents a proxy for the growth/shortage of Zinc as well as the potential for new uses that will further raise demand and strain supply.

Bottom Line

ZNX is a good trader with average daily volume exceeding 50k shares. The market cap is $21 million, but not outrageous given the size of the deposits and the potential.

ZincX has lots of moves. Peeyush Varshney, President and CEO, commented, “We are pleased to be working with our largest shareholder and strategic partner, Tongling, in initiating another round of metallurgical testing on the Cardiac Creek deposit to enhance both the metallurgical characteristics and economic potential of the deposit. We look forward to the results of this work in the coming months. In the interim, our team is pressing forward with the planning on the 2022 exploration program.” (PR Feb 2022)

This PR will update you on all the most recent data. The reasons to own ZincX as a way into the zinc market seem to outweigh any reason to eschew the shares. Dollar-cost averaging may make sense as results and growth unfold.

Think of this piece as a Primer. There is lots more: Lots.

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