SMRS Strategically Positioned to Capitalize on Global Zinc Supply Deficit
Star Mountain Resources, Inc. (OTC: SMRS) is a minerals exploration company focused on acquiring and consolidating mining claims, mineral leases, producing mines and historic mines with future growth potential. In November 2015, the company leveraged this strategy when it acquired Northern Zinc and Balmat Holding Corporation, including St. Lawrence Zinc Company, LLC and its mining operations in the Balmat mining district of St. Lawrence County, New York. Notably, the Balmat mining complex includes a permitted and equipped zinc mine, a 5,000 ton per day floatation mill, an office complex and all of the necessary infrastructure to commence operation of the mine.
Earlier this year, Star Mountain gave prospective shareholders some additional insight into the potential of the Balmat mine property when it released results from its Industry Guide 7 Mineral Reserve Report. In addition to supporting the company’s initial reserve estimates and reflecting 585,000 tons of proven and probable reserves with 9.2 percent grade zinc – a haul that could generate roughly $80.8 million in revenue over an initial 2.5-year mine plan – the report also suggests that the Balmat property could contain the reserves needed to support a larger, 8.5-year mine plan moving forward. Upon release of these findings, Mark Osterberg, president and chief operating officer of Star Mountain, noted that the company’s management was “very encouraged” and looking forward to “developing a strategy to move forward in a timely, cost effective and profitable manner.”
In large part, the recommencement of mining operations at the Balmat property depends on the zinc market. Despite ongoing market turbulence affecting commodity values, predominantly oil and natural gas, indicators for base metals have been promising in recent weeks. July saw a surge in the values of nickel, copper and zinc as a result of rising Chinese demand, monetary stimulus and supply cuts. Zinc prices, in particular, have risen nearly 45 percent since the beginning of 2016, climbing to a 14-month high of more than $1.02 per pound to close out the month. These gains follow a series of mine shutdowns and closures in China, Australia and Peru.
Andrew Michelmore, CEO of Australian-Chinese global resources firm MMG, reiterated the bullish conditions of the zinc market in an investor conference call last Thursday (http://nnw.fm/5Y3wI
). “There’s so little zinc around,” he told attendees of the call. “We are very positive about the zinc industry and we’re keen to be involved with more of it.” However, despite favorable conditions, the zinc market has remained relatively quiet in terms of new projects, a fact that can be attributed to a serious lack of viable production projects on the global stage.
For Star Mountain Resources, the acquisition of the Balmat mining project opens the door for a promising transition from a junior exploration firm to full-fledged production in the coming months. With zinc running in deficit since at least 2012, according to Credit Suisse, and the base metal’s market value climbing, the time to capitalize on the foresight of the company’s management team appears to have arrived.
For more information, visit www.starmountainresources.com