Callinex Mines Inc. (TSX.V:CNX) (OTC:CLLXF) Announces Final Drill Results for Nash Creek Project That Show Significant Zinc Mineralization
Zinc Prices Hitting New Highs
The next time you are in your car, take a look at the street signs and lamp posts you pass. A large number of them will have a mute, silver colour on them. That “silver” is actually the coating of zinc.
Galvanizing is one of the most widely used methods for protecting metal from corrosion. In other words, despite being everywhere, zinc is so often overlooked.
But not anymore.
After years of limited investment in new production, zinc has caught the market off-guard, and users are scrambling.
Zinc prices are hitting ten-year highs and the smart money is not about to let this opportunity slide.
Monthly zinc prices ($/t)
Key to the Zinc Game: Quality Deposits
Unlike gold, there are no zinc ETFs, and zinc cannot be stored physically for value. No one is about to sell you zinc. So, the main options for a serious investor to get exposure to this current bull run is through investing in companies with access to quality zinc deposits.
Callinex Mines Inc. (TSX.V:CNX) (OTC:CLLXF) presents an exciting investment opportunity. Currently exploring zinc-rich deposits in Canada, the company is poised to benefit from the fortunes of the zinc market.
There are a number of reasons for this, namely:
- A near-surface deposit means that mining and operating costs are lower compared with underground deposits, which make up 80% of the world’s zinc mines.
In the case of Callinex Mines Inc. (TSX.V:CNX) (OTC:CLLXF), the fact that the mineralization occurs near surface means that the deposit is amenable to open pit mining instead of underground, which is typically associated with lower production costs. This could mean higher profitability and higher returns to investors.
- A polymetallic deposit is great from the perspective is that it provides a natural hedge or portfolio diversity and safeguards investors against a downward price movement of any single metal.
Callinex’s VMS deposits contain a number of different base metals, so in addition to zinc, there is also lead and silver as potential revenue streams. Lead is among the top ten most used metal in the world and its prices have just hit six-year highs, while silver is currently poised to rally.
Monthly lead prices ($/t)
- Finally, VMS deposits occur in clusters. This means a company can concentrate its efforts in one or two places and be assured of having potential to discovery high value material. In the case of Callinex, they are exploring in two main projects in the Bathurst Mining District. Not only is the company focused on their flagship Nash Creek Project, they’re also operating at one of the largest zinc mines in the world, the Superjack Project.
In addition to the mineralization appearing in clusters, a look at the neighborhood shows that Nash Creek is 25km to Glencore’s Brunswick smelter and to close to other enviable infrastructure including being only 1km from the Provincial Highway and 25km from a deep-water port, railway and power plant near the town of Belledune.
Having proximity to enviable infrastructure should allow Callinex Mines (TSX.V:CNX) (OTC:CLLXF) to expedite its timeline to production.
Callinex Mines (TSX.V:CNX) (OTC:CLLXF)’ Results Confirm Mineralization and Enable the Company to Upgrade the NI 43-101 Mineral Resource Statement
Callinex Mines has just released an updated resource estimate for its flagship Nash Creek project. The new NI 43-101 report shows that indicated zinc equivalent pounds have increased by 74%, to 965 million pounds, and inferred zinc equivalent pounds have increased by 385%, to 407 million pounds since the the project was acquired in 2016, showing tremendous growth.
The current mineral resource now shows the following: Indicated mineral resource totaling 13.6 Mt averaging 3.2% ZnEq (2.7% Zn, 0.6% Pb and 17.9 g/t Ag) containing 803 million pounds of zinc equivalent mineralization and an Inferred mineral resource totaling 5.9 Mt averaging 3.1% ZnEq (2.7% Zn, 0.5% Pb and 14.0 g/t Ag) containing 407 million pounds of zinc equivalent mineralization.
Next month, the company looks to follow that up with a Preliminary Economic Assessment on Nash Creek to demonstrate its economic viability. The newly released resource estimates are promising signs of what’s to come at Nash Creek, especially with zinc hovering around $1.40 per pound.
Mega Shortage In the Zinc Market!
Zinc has to be one of the most uninspiring metals. Ubiquitous of course, but for decades the price went nowhere. Then boom! Over the last 18 months, the zinc price rallied, catching everyone off-guard, climbing over 40% and suddenly consumers are scrambling and simply cannot seem to get enough.
So naturally, the question to ask is why did this happen and more importantly, will zinc prices continue to climb?
A Look at the Why?
The fortunes of the zinc market really started to change in late 2015 when Glencore revealed its intention to cut 500,000 tonnes of zinc concentrate production, pushing the market into deficit. At this time, there were still plenty inventories around, so prices did not improve just yet.
However, at the same time that all this was going on with Glencore, zinc was still needed to sustain high growth markets.
Roughly 60% of all zinc use is in construction for galvanised steel with demand rising around 2-4% per annum (approximately 280,000-560,000 tonnes per year) driven by global recoveries in GDP growth and continued urbanisation and infrastructure development.
End user markets for zinc
In short, over 1.5 million tonnes of material is expected to be taken out the market within the next two years.
Looking a the supply/demand balance, there is no question that the zinc market is presently in deficit. In the absence of stored stocks, the volumes of which are always challenging to estimate, the zinc market is expected to remain in deficit, supporting prices.
Even Great Deposits Need Strong Leadership
The junior mining space is littered with spectacular examples of great deposits failing under poor leadership.
In evaluating a mining stock, one cannot overemphasize the need for solid leadership. The best deposit, governed by poor leadership, will be guaranteed to go nowhere, while an experienced management team can steer an exploration company with average grades to success.
Callinex Mines Inc. (TSX.V:CNX) (OTC:CLLXF)’s management team can be described as an “Awesome Foursome” bunch of overachievers in the mining space.
When asked about the Company’s technical abilities, Max Porterfield, CEO of Callinex, responds confidently;
“Collectively our technical team has been associated with the discovery of three of the four largest mines in the Flin Flon’s Greenstone Belt’s history as well as numerous others worldwide.”
A quick overview of management’s bios, indicates tremendous depth of knowledge.
- Company Chairman, Mike Muzylowski, is a member of the Canadian Mining Hall of Fame, and brings with him over 50 years’ experience, including the discovery and development of no less than 16 mineral deposits through to production. Twelve of these mines mineral discoveries were in VMS deposits in the Flin Flon Mining District
- Chief Geologist, Jim Pickell has over 40 years’ experience in the trenches and won the Bell Dennis award for the discovery of the 777 Mine within the Flin Flon district of Manitoba. Then Alan Vowles, the Company’s Consulting Geophysicist won the same award for his work in the discovery of the Lalor Lake Mine, which is a very large zinc/gold mine in the Flin Flon area.
Callinex Mines Inc. (TSX.V:CNX) (OTC:CLLXF) Well Positioned as a Potential 2018 Breakout Stock
In 2017, five companies broke out to become the darlings of the equity world, returning significant profits to investors.
Given the positive metrics of Callinex Mines Inc. (TSX.V:CNX) (OTC:CLLXF), when taken against the positive market fundamentals for zinc, it is foreseeable that the company could take its place among them.
Ivanhoe Mines (TSX: IVN) – Current Price: $2.75; 2017 gain: 68 percent
Trevali Mining (TSX: TV) – Current Price: $1.46; 2017 gain: 29.2 percent
Karmin Exploration (TSX.V: KAR) – Current Price: $1.1; 2017 gain: 221 percent
Teck Resources (TSX: TECK) – Current Price: $26.67; 2017 gain: 30 percent
The Bottom Line on Gaining Exposure to the Zinc Rally
There are strong fundamentals supporting a zinc market rally. Prices have already reached ten-year highs, but given the number of mine closures, there is certainly room for further growth in this market.
By comparison, there are limited new projects coming online compared to the number of announced mine closures. Additionally the additional mine production volumes appear to be coming mainly from existing mines, which are well diversified and not necessarily focused on the fortunes of the zinc market.
Callinex Mines Inc. (TSX.V:CNX) (OTC:CLLXF) is a junior mining company, leveraged to take full advantage of the zinc market rally. Its top management has over a hundred years experience between them, has previously delivered shareholder value and have each been recognised for their contributions in the field of mine exploration.
The Company’s flagship asset is in an enviable location, close to unrivalled infrastructure and its most recent drill results demonstrates clear mineralization at surface. The upcoming Preliminary Economic Assessment could unveil the world-class potential of the Nash Creek project.
