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SMRS Primed to Benefit as Goldman Sachs Raises

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QualityStocks Member Level  Tuesday, 05/24/16 08:40:11 AM
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SMRS Primed to Benefit as Goldman Sachs Raises Six-Month Zinc Price Forecast

Zinc recorded a mild decline last week as the U.S. dollar strengthened against foreign currencies, but industry analysts remain bullish regarding the metal moving forward. On Thursday, Goldman Sachs upped its six-month price forecast for zinc to $2,100 a metric ton, an increase of more than 23 percent over previous forecasts. The investment banking firm cited stronger than previously anticipated demand from China and a tightening supply stemming from mine depletions and producer discipline as primary factors in its calculation.

“We view zinc as the bullish exception in the metals space, and remain very bearish on the outlook for the other base metals prices, most notably copper and aluminum, where we see very strong supply growth,” analysts with Goldman Sachs wrote in the firm’s May 19 report. “Zinc has by far the most bullish supply-side dynamic.”

Star Mountain Resources, Inc. (OTC: SMRS) is in a favorable strategic position to capitalize on this market growth following its 2015 acquisition of the Balmat mining complex in St. Lawrence County, New York. In February, the company announced the results from an Industry Guide 7 (IG7) Mineral Reserve Report for the property, which reflected 585,000 tons of proven and probable reserves with 9.2 percent grade zinc that’s expected to generate roughly $80.8 million in revenue over Star Mountain’s initial 2.5-year mine plan.

“We believe the findings in the IG7 report are very positive and reaffirm our confidence that the geological and engineering conditions reflected in the long production history of the Balmat mining operation can be sustained well into the future beyond the initial 2.5-year plan,” Joe Marchal, chief executive officer of Star Mountain, stated in a news release. “We continue to evaluate the current zinc market and the best strategy to move forward with a production plan and schedule.”

Last month, Star Mountain took a major step toward commencing operations at the Balmat property when it secured a $500,000 loan from a New York public benefit trust. Marchal referred to the promissory note as “one of many partnerships in our plan to re-commence operations at the Balmat Mine.” This capital is expected to play a key role as the company continues to prepare the mining complex for operations before putting it back into production in order to capitalize on the expected strengthening of zinc prices in the months to come.

Star Mountain is led by an experienced management team featuring decades of applicable industry experience. CEO Joe Marchal has worked in the financial sector since 1983, most recently serving as CEO for the Asia-Pacific Region of Chi-X Global, Inc. The company’s president and chief operating officer, Mark Osterberg, Ph.D., has worked for major gold and base metal mining firms for over 30 years, during which time he has provided high level technical expertise and managed both domestic and international exploration and development projects. This combined experience, along with the experience of other members of the management team, played a key role in Star Mountain’s acquisition of the Balmat zinc mine late last year.

“The recent rebound in zinc prices along with a strengthening world-wide economy validates our decision in November 2015 to acquire the Balmat zinc mine at a deeply discounted price and its 585,000 tons of proven and probable reserves of 9.2% grade zinc plus the mineralized material adjacent to the current reserves that in all likelihood will be reclassified to reserve status as the mine progresses,” concluded Marchal.

For more information, visit www.starmountainresources.com

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