DONNER METALS BUILDS ZINC MINE WITH XSTRATA
January 20, 2012 by metalinvestmentnews
China’s GDP grew 8.9 % in Q4, 2011 strengthening evidence of a “soft landing” with continued growth and modest inflation.
“Current data should ease investors’ fear about hard landing risks in China,” confirmed Jian Chang of Barclays Capital in Hong Kong.
On Jan 17, 2012 Zinc gained 1.4% to $1,989 a tonne.
Some leading metals analysts are now predicting that zinc is due for a rebound.
Zinc is the key ingredient in galvanized steel. China’s imports about 15,000 tonnes of zinc every month. China’s share of world demand has grown 260% in a decade.
Morgan Stanley postulated this week that zinc is an “ideal candidate” for a new ETF, (Exchange Traded Fund) a security that tracks a commodity or index.
Pure zinc plays are rare. One company worth looking at is Donner Metals (DON-TSX.V), a Canadian junior partnered with Xstrata (XTA.L) the $31 billion international mining mammoth.
Donner’s lead asset is in the Matagami base metal camp located in the Abitibi region of central Québec. This joint venture partnership with Xstrata covers six areas governing 4,737 square kilometres of prime stratigraphy which has yielded high-grade base metal production since 1963.
Donner’s project is in a world-class mining district, with 18 known Volcanogenic Massive Sulphides (VMS) deposits including 10 past producers of varying sizes, including the giant Matagami Lake Deposit (25.64 million tonnes of 8.2% zinc, 0.56% copper, 20.91g/t silver and 0.41g/t gold) discovered in 1957 and mined from 1963 to 1988.
The area is host to historical production of 8,600 million pounds of zinc and 853 million pounds of copper. The Matagami area is well serviced by established infrastructure including the town of Matagami, power, a permitted tailings facility, railway, airport and well-developed road and highway networks.
Xstrata Zinc is currently producing from its low-cost and wholly-owned Perseverance Deposit which feeds its refurbished 2,950 tonnes per day Matagami mill complex.
On Jan 16, 2012 Donner provided an update on the development of the Bracemac-McLeod Mine.
The main access ramp reached 2,300 metres at Bracemac in early December, in advance of the scheduled year-end target, allowing full multi-face development to begin later in January. Total development now stands at 2,500 metres, including the main ramp to McLeod, three ramps turned off to the Bracemac Zones, and a turn-off to the backfill raise.
David Patterson, Donner Chairman and Chief Financial Officer, states, “Having Xstrata as a partner in this project has ensured cost control and has reduced the risk for Donner.”
Kunal Shah, head of research commodities at Nirmal Bang Securities stated last week that “Zinc is likely to move up.”
Barclays Capital expects zinc prices to trade in a $2,000 to $2,500 a tonne range next year.
Donner has 161 million shares outstanding, trading at .21 with a market cap of $33 million.
The Bracemac-McLeod Mine is scheduled to be ready for production in early 2013.