CAP EDGE WEEKLY 25th November

November 24, 2014  |  By  | 

Red River Road Show Last week Red River (RVR) came through Perth on a two day road show to brokers and funds. The story was well received and zinc is most definitely the commodity investors are chasing for 2015. As indicated in the chart below, the LME stockpiles have been falling steadily from around October 2012. With inventory levels now below 680,000t and still dropping, the price is starting to react. The Zinc price has been one of the best performing commodities this year and it’s only set to continue next year. The major catalyst of MMG’s Century zinc mine shutting next year should see prices increase significantly. While a rising zinc price helps all zinc producers, the lack of available zinc-producing companies on the ASX makes it a hard choice for investors. Like any boom in a commodity there will be an influx of young hopefuls as the prices run and their projects become viable. When there is money available, then companies tend to pop up. Red River on the other hand managed to buy their zinc asset at great prices. For $5m and $1.5m deferred for an existing plan with exceptional infrastructure, they are already years ahead of other hopefuls. Given that the closure of Century is happening next year and the cycle will last 3-4 years, then only producers will really see the benefits. Here is a chart showing the LME Warehouse and the price reaction of Zinc during the last boom in the zinc price and the forecasts for 2015-20. Medibank IPO

More from TripleC