Spectacular recent rises in the prices of zinc and lead have quietly propelled the earnings potential of some Western Australian base metals players.
Spectacular recent rises in the prices of zinc and lead have quietly propelled the earnings potential of some Western Australian base metals players.
As with iron ore and other commodities, the gains in the so-called ‘Cinderella metals’ are being fuelled by the growing economies of China and India, according to analysts.
An indication of just how well the market rates this extra earnings capacity is evident in the share price of West Perth-based Kagara Zinc Ltd, which continues to move into record territory.
Kagara owns the Mount Garnet zinc operation in Queensland, which produced nearly 100,000 tonnes in the year to September 2005 of the corrosive protector, along with other metals.
On recent trading the producer had a market capitalisation of more than $513 million.
The best-performed stock in the S&P/ASX 100 Index last year was Peter Mansell-chaired zinc miner Zinifex Ltd, which surged $2.37 to $6.68.
Melbourne-based Zinifex owns the large Century zinc mine in Queensland and the Rosebury zinc, lead, silver, gold and copper mine in Tasmania.
The zinc miners have risen on the price of high-grade zinc, which has grown strongly in the past 12 months, reaching record highs of $US2,065 a tonne this week on the London Metal Exchange.
Also experiencing record prices on the LME is lead, trading above $US1,200/t this week.
The state’s listed lead miners have been buoyed by the records, with several notable capital gains.
Shares in Perilya, one of Australia’s largest zinc-lead-silver miners, have risen nearly 50 per cent this year, putting it alongside the best performing stocks in the last two weeks.
The price of the metal is also improving the prospects of West Perth-based Abra Mining Ltd, another budding lead producer.
Abra shares have firmed in line with the rising price of the metal, trading recently at 26 cents.
Non-executive director Ian Gould said lead had suffered from a poor image, but high demand for lead-acid batteries in China and India was a good sign.
“Lead had suffered from the ‘lead-is-dead’ syndrome for some time,” he said.
But an important point for miners of the metal, he said, was the fact that scrap lead stockpiles were very low in developing countries, increasing demand for new production.
In an open briefing to the market this week, Jabiru Metals Ltd managing director Gary Comb said an October 2005 bankable feasibility study for its Jaguar copper, zinc, lead and silver project in WA, estimated a net present value of $60.5 million.
At that time, the prices of zinc and lead on the LME were about $US1,500/t and $US1,010/t respectively.
Senior Hartleys resources analyst Rob Brierley attributed the run on both metals to higher energy prices, with zinc and lead racing to catch up with charges on production.
“Zinc has really happened in the last month or so,” he said.
• Kagara’s Mount Garnet zinc operation in Qld produced nearly 100,000t to September 2005.
• Zinifex Ltd was 2005’s S&P/ASX 100 Index best performed stock. Share price lifted from $2.37 to $6.68.
• Zinc price to $US2,065/t on London Metals Exchange this week; lead traded above $US1,200/t.
