Lone Clone...
I have been around the commodity markets for a while and I would say I'm much better at understanding the larger, producing companies (Trevali isn't large, but it is a multi-mine operation so I put it in this category).
I agree that companies have their core competencies that they typically focus on. Most companies do not do a good job at going from exploration to feasibility to developer to producer well. That is irrelevant to the discussion on Trevali IMO.
I will admit that buying Trevali at this point is a little atypical of my normal style. Typically I focus on buying in the midst of the deepest darkest pain for the industry when analysts are saying that the industry is dead and prices will never improve. A good example of this is the met coal industry. I was buying TECK in the $4s early in 2016 when all the analysts said that met coal prices are never going above $100 again. Now met coal prices are at $300 and I sold the last of my TECK shares in the $26s.
For the zinc market, as I mentioned in my post on Trevali, I believe that prices hit $1.50 before they hit $1.00 again. I think with inventories at just 16 days of consumption, the market is getting very tight. I have not seen any significant new zinc projects are going to come online in the next 1-2 years that will crush the zinc market. Will their be mine restarts? Of course there will be, but I don't think that will be enough to significantly increase inventories in the industry and until prices are high enough to incentivize new zinc projects, this market will continue to do well.
I definitely understand how cyclical these commodities are, but I'm pretty confident that this cycle still has plenty of legs. I'm primarily looking for 1-2 things for this story to blow up: 1) new zinc project announcements and 2) a significnat decline in Chinese demand. If you have anything on either of those two topics, I'd love to hear it. The back and forth can always make us better investors.
Just trying to make a few bucks.
