Zinc Investing News

By Daniella D’Alimonte 

At US$0.76 per pound, zinc has made a slight recovery over the last week after it dropped to an over two and a half year low of US$0.73 earlier this month.

 BHP Billiton Ltd., which currently sits at around US$58 per pound (NYSE PLC), has been in the news for some time now. The Australian company has a take-over plan for Rio Tinto in the works, in order to create “the world’s premier diversified resources company”, according to BHP’s website. Rio Tinto mines coal, besides producing copper, aluminum, zinc and iron and has resources businesses world-wide.

Also, second quarter financial results have been released by BHP, with record profits. Up over 14 per cent from 2007, the company’s net profit for the year, ending June 30, is at US$15.4 billion. However, like many other mining companies, BHP’s production costs have increased. A rise in fuel costs, energy and raw materials account for about half of this years US$1.18 billion rise in costs, the company told the Canadian Press. Underlying earnings also took a hit, dropping US$1.12 billion due to exchange rate movement.

BHP maintains a positive long-term outlook for product demands from developing countries, it said in its financial statement.

“Demand for raw materials in the emerging market economies has remained strong. China, in particular, remains a key driver of global commodity consumption through its position as a net importer of raw materials”, said the company.

Some economists are questioning the longevity of this demand due to slowing growth. The company’s confidence, however, remains clear by its decision to raise its dividend to US$0.41 a share, up from the previous year’s US$0.27.

Fortuna Silver Mines Inc. (TSX: FVI), which mines zinc and lead in addition to silver, also announced increases in its second quarter financial statement. The company had a net income of US$2.39 million as well as a mine operating income of US$2.89 million.

Fortuna’s production rose during this year’s second quarter compared to 2007. It produced 186,276 ounces of silver, up 56 per cent, 2,629 MT of zinc, up 64 per cent, and 1,633 MT of lead, an increase of 72 per cent.

Effective August 14, Hindustan Zinc has lowered its prices for zinc and lead in reaction to global prices. Zinc was lowered by US$55, to about US$1,860 per tonne while lead, down US$241, is now selling for US$2,074 per tonne.

Zeehan Zinc Ltd. said it plans to sell off excess equipment in order to fund exploration plans, which will cost around US$2.6 million over the next year. The company has started drilling at its Tasmanian Comstock and Oceana properties in search of commercial amounts of zinc, silver, lead and nickel.

Zeehan has also entered into a commercial relationship with Zinifex Australia Limited, according to Zeehan’s website. The company signed a contract to sell a trial amount of 500 tonnes of ore to Zinifex.

The board of directors for Silvercorp Metals Inc. (TSX: SVM) have proposed a shareholder rights plan. This plan would afford fair and equal treatment to shareholders in the event of a takeover bid for Silvercorp’s outstanding securities. Although the board claims it is not aware of any current takeover bids, it feels that the company’s shares are undervalued in relation to its financial performance, current projects and prospects. The plan would provide time to the company, as well as shareholders, to assess any bids as well as allow for competing bids.

The plan has been sent to the TSX Exchange for approval. It must also be agreed upon by shareholder in order to be implemented.