Don't be buying Zinc right now!
COINB0Y
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Small zinc miners in big trouble
Posted: August 15, 2008, 11:30 AM by Peter Koven
Mining
The falling zinc price has already led to some mine closures across the industry for large players. But the problems could be much worse for a couple of small Canadian companies that rely on zinc to stay in business.
One of them is Strategic Acquisition Resource Corp., which operates the Mid-Tennessee zinc mine complex. Stefan Ioannou, an analyst at Haywood Securities, wrote in a note that his "worst fears feel inevitable" for this company. He cut his target price from $3.00 a share to just 15¢. He said the mine is not profitable at today's prices, and that the company could face a cash crunch in October.
"We anticipate Middle Tennessee Mines will have to be put on care and maintenance this fall while the company attempts to re-organize its capital structure and obtain necessary funding, on the order of $40-million, to re-establish its economic stability — this will not be an easy task," he wrote.
Another one with big financial concerns is Blue Note Mining Inc., which re-opened the Caribou mining complex in New Brunswick. The company's management recently noted that higher zinc and lead prices would be needed to keep Blue Note as a going concern.
Analyst John Redstone of Desjardins Securities shares that outlook. As a result, he put his rating for the company under review (it was previously a "buy-speculative").
Posted: August 15, 2008, 11:30 AM by Peter Koven
Mining
The falling zinc price has already led to some mine closures across the industry for large players. But the problems could be much worse for a couple of small Canadian companies that rely on zinc to stay in business.
One of them is Strategic Acquisition Resource Corp., which operates the Mid-Tennessee zinc mine complex. Stefan Ioannou, an analyst at Haywood Securities, wrote in a note that his "worst fears feel inevitable" for this company. He cut his target price from $3.00 a share to just 15¢. He said the mine is not profitable at today's prices, and that the company could face a cash crunch in October.
"We anticipate Middle Tennessee Mines will have to be put on care and maintenance this fall while the company attempts to re-organize its capital structure and obtain necessary funding, on the order of $40-million, to re-establish its economic stability — this will not be an easy task," he wrote.
Another one with big financial concerns is Blue Note Mining Inc., which re-opened the Caribou mining complex in New Brunswick. The company's management recently noted that higher zinc and lead prices would be needed to keep Blue Note as a going concern.
Analyst John Redstone of Desjardins Securities shares that outlook. As a result, he put his rating for the company under review (it was previously a "buy-speculative").
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