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@Brandon @PamplonaTrader: the deal with Hudbay for TJ was done, at least on a handshake basis, in 2015. You're hearing about it just now because it was never going to be public until we were nearing our IPO. I think the Zn market was very different when we initially engaged them and I also think that they simply did not want a Zn asset that wasn't going to feed their plant in Flin Flon.
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@TheGalvanizer $emo acting a little moody this morning
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@CriticalInvestor @TheGalvanizer yes looks like investors want Aznalcollar approval. I quoted from a 2007 report, it mentioned 100Mt with an average grade for all metals separately. The other report mentioned in here seems from 2000-2001. It also quotes a 50Mt resource at much lower grades from 1986. Will ask the company for details, and why Glencore wants to get rid of it. $EMO
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@TheGalvanizer Sometimes assets are divested and there isn't anything more to it than that - look at Lundin and the 130,000 m of drilling (i think it was roughly that) they put in to the project Hannan picked up off them in Ireland. I think in the case of Glencore it's more the fact they aren't exactly the most prolific explorers and imagine that development is far less of interest than asset divestment securing offtake for its trading business.
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@TheGalvanizer That being said interested in any info shared here to keep my files updated
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@PamplonaTrader Instead of off-takes, why wouldn't Glencore just start doing zinc streaming deals? Wouldn't that be more profitable than doing a zinc off-take + 2.5% NSR?
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@CriticalInvestor @PamplonaTrader Too much upfront capital/long timeline to production perhaps
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@PamplonaTrader @CriticalInvestor, hmmm. They don't seem to be opposed to royalty deals. Red Kite also likes making big royalty deals on earlier stage projects but not streaming deals which tend to be closer to production when the economics of a project are better understood. Maybe mine operators don't view zinc as a by-product and more as a co-product and reluctant to sell a stream.
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@PamplonaTrader After thinking on earlier points made about commodity trading firms being more interested in the metal... RedKite has done some big royalty deals but most of these royalties are not payable in-kind. So why not do streams instead?
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@CriticalInvestor Fair point, but I would think Glencore is still cleaning up their balance sheet. And those royalty deals are done by others like Franco Nevada I think, is Glencore buying royalties themselves? Don't follow them closely.
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@Brandon @PamplonaTrader: my feeling is that streaming deals aren't going to be so popular in a bull market and given I'd argue we're in the early stages of a zinc bull market it could be that Glencore couldn't get a zinc stream deal at a price that made sense.
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@PamplonaTrader That makes sense @Brandon. But why haven't these trading houses done streaming deals in weak markets? Using RedKite as an example again, in recent years they were very actively acquiring royalties and negotiating offtakes but weren't doing any streaming deals.
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@Brandon Not sure. Could be that in a weak market they didn't have the remit to do streaming deals (or many deals at all). It's a classic problem with miners, isn't it, that they don't do deals at the bottom and instead make all their acquisitions at the top?
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@PamplonaTrader "They" as in the royalty and streaming companies?
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@PamplonaTrader IIRC 2015 was a hyperactive year for royalty and streaming deals.
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@HRA-Coffin Prospective miners hate streaming deals in part because potential acquirers hate streaming deals. They view them as being the equivalent of a large royalty that adds to fixed cash costs. I think royalty/streaming companies that were active two years ago will end up looking smart (if the individual deals were) but in a better market they will find themselves overpaying. Juniors with projects that look viable will be asking for the moon because they know putting a stream in place makes them a much less appealing takeover target. I know for a fact, for instance, that $GQC has had basically every streamer on the street trying to do a deal on Romero. Bill has turned them all down because he feels when the time comes to do a financing package he wants maximum flexibility as he will be shipping a copper con. He thinks he'll get a better offer with less strings, or at least strings he's not worried about, with a smelter at that point as he's got clean concentrate to sell.
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@Brandon A few years ago I was attending a conference in Asia and a speaker was talking about how their streaming deals offered so much more value for the money than equity deals at low prices. I asked him personally afterwards if that didn't mean that they were overpaying, and he didn't really have a great response. I think the truth is somewhere in the middle, that they may overpay a bit as streaming companies were "hot" and they had to deploy capital, and also that the risks associated with taking on a stream are not something that the streamers will talk openly about as they don't want to scare away deals.
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@CriticalInvestor Aren't streaming deals the most negative for mining companies, with the highest WACC on average? I think I read somewhere that streams (and royalties) are only good for the royalty/streaming companies (except when projects are so risky that they fall apart before commercial production of course)
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@ocotilloredux I'll have a 15 worksheet editable spreadsheet out tomorrow summarizing all the zinc production listed in the modules along with an update based upon 2016 year end reporting.
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@tommy Don't really know what to say to @ocotilloredux, other than thanks! The definitive guide to ~zinc mines. Incredible body of research herein @ocotilloredux/zinc-mining-ramblings-the-summary #index
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@ocotilloredux Thanks for linking @tommy . The spreadsheet says data as of April 2017 but I wrapped it up early since the weather is fining up and you know what that means... the clubs come out of the closet. Cheers.
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@tommy updated April to March. adding ocotillo to my courses to play. did bighorn in palm desert earlier this month, bucket list track. come to van and a round at my home course on me.
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@TheGalvanizer Thanks for posting it @Tommy - apologies Doug I got in late last night after a few beers with fellow ceo-r @Evenprime
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@TheGalvanizer Enjoy the golfing weather and send some Vancouver's way
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@TheGalvanizer Always had wondered where your handle had come from - should have guessed a golf course
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@MartinTurenne "Hindustan Zinc to Accelerate Expansion Plans?: Hindustan Zinc Ltd. CEO Sunil Duggal said the company may consider accelerating expansion plans as zinc prices near a nine-year high. "I am very bullish on #zinc prices," Duggal added, forecasting more gains over the next three to four months on the back of depleting supply." https://www.bloomberg.com/news/articles/2017-03-24/big-zinc-rally-to-spur-vedanta-unit-s-mine-expansions-says-ceo
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@ocotilloredux I agree entirely @benjaminCox . The Chinese are not good stewards of reliable data and what they do provide is often fraught with errors. But I look at previous parallels to understand China supply going forward. In my mind what is happening there is no different than a modern day gold rush where people swarm the deposits for easy near surface pickings. You got to ask yourself, what nation can sustain an annual production rate of 4.5-5.0 MT of mined zinc for the long haul? I don't think they fully understand the concept of sustaining capital and the need to apply capital to go deeper once the easy stuff is gone. We saw a somewhat similar analogy with the collapse of communism. When demand collapsed in mother Russia, the miners found themselves with no market to feed so shipped everything off to western markets, not because it was profitable, but because they needed the cash flow. But supply quickly dwindled when the need for positive cash flow to sustain the mine became a fact of life. What China has is cheap labour. I highly doubt they have the world class orebodies to sustain an annual production rate over 4 MT though.
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@TheGalvanizer Spot TC/RC's in China are not suggesting all these mom and pops and turning up with their wheelbarrows of concentrate - the nebulous nature of China will always be such but i think the Beattie Modules and Final Spreadsheet at least give an understanding of the problems in western world zinc production and in itself is still a major pointer to solid times ahead for the right projects
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@ocotilloredux I feel sorry for retail investors without an understanding of the industry since everything is going to be crawling out of the woodwork shortly including 680 year old zinc mines. http://sectornewswire.com/release032417tac.htm It will be tough to separate the wheat from the chaff.
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@ocotilloredux That's chaff by the way.
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@TheGalvanizer Bandwagon Resources announces zinc acquisition!
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@Brandon Sounds interesting, what's their ticker?
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@HRA-Coffin What was that name..I think it's named after a plant? Deadly Nightshade Resources? Hmm...no, that's not it...
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@Brandon Blazin' Mary Jane Zinc Ltd?
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@Brandon If weed companies start pivoting into Zinc then we know we're well past the curve.
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@BenjaminCox #sarcasm
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@ocotilloredux Blue Sky Mining is still my favorite.
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@CriticalInvestor @ocotilloredux Don't patronize Grosso please;)
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@Excelsior @CriticalInvestor - That's Blue Sky Uranium Group. I actually like the Grosso group's work on their silver project under Golden Arrow in Argentina. It was Midnight Oil that had the song Blue Sky Mine #CeoFM https://www.youtube.com/watch?v=Ofrqm6-LCqs+
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@tommy I had a modest idea over coffee this morning. No expectations, no disappointments. Thanks for considering! CEO.CA is growing our web dev team and adding new data services to the site. To pay for it I am working to generate some new revenue. We're getting closer with a few potential sponsors. I found an unconventional story with a very successful backer and a historic zinc lead project, with a lot more to it. I was wondering if I could ask you guys for feedback on it? Non sugarcoated. A quick 15-20 min desktop review by the likes of @ocotilloredux @drilltracker @hra-coffin @robmcleod @pamplonatrader @benjamincox @Brandon @90bigpicture @tim_oliver @criticalinvestor @thegalvanizer etc would be super valuable for our readers, and me, to understand concerns and better gauge the potential. I would write a brief with links to presentations reports etc for you to scan. I'd also commit to donating $1000 in the ~zinc panel's name to a Canadian kids charity of your choice (thinking Boys and Girls Clubs or Breakfast Club of Canada) if a few of you (the more the better) share a few comments or concerns. Just your initial take. I don't mean to presume your opinions are worth $1000 combined. That's obviously too low. But maybe it could be the start of something valuable? No pressure at all. Please let me know your thoughts. Have a great weekend!
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@tommy Imagining ur reactions to my last msg... https://youtu.be/MMzd40i8TfA+
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@TheGalvanizer Intrigued :)
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@Brandon I'm in.
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@Brandon I once got a birthday card from a friend that said "Thanks for being the one friend I can count on for the truth. Asshole."
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@Brandon so you know I'll give you the straight goods.
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@HRA-Coffin Me too
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@ocotilloredux No issues @tommy for areas where I have personal knowledge/background.
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@tommy thank you! i need to do a bit more homework, will share the brief asap-next few days
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