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SMRS Management is Minding its Mine

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QualityStocks Member Level  Wednesday, 08/17/16 01:18:11 PM
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SMRS Management is Minding its Mine

Late last year, when Star Mountain Resources (OTC: SMRS) acquired the Balmat zinc mine near Gouverneur in St. Lawrence County, New York, its president, Mark Osterberg, spoke to North Country Public Radio. At the time, according to the news report, zinc was selling ‘for just pennies on the pound’. Prospects for the metal looked grim. Yet the Star Mountain management team was casting a perspicacious eye to the future. Osterberg, noting that his company was well aware of the economic climate, said at the time:

“The mining cycle is down, which means that assets like Balmat are available at bargain prices. So we think we bought the property at a very good price and we believe the commodity prices are going to come back up.”

His crystal ball has not let him down, as current market conditions indicate. Zinc prices are climbing, and so are Star Mountain’s fortunes.

At the start of this year, zinc prices were hovering around $0.65 per pound. Now they are closer to $1.02 per pound, appreciating by an astonishing 57 percent in a little over seven months. The consensus attributes this buoyant market to tightening supplies. A Reuters story warns that ‘Zinc deficit looms, prices up, but output restarts unlikely’ (http://nnw.fm/z8GmU). A Bloomberg piece declares a ‘Zinc Supply Crunch as China-Owned Miner Seeks Peru Deposits’ (http://nnw.fm/S7G9m). Peru has the world’s third-largest reserves of zinc, with an estimated 25 million tonnes (metric tons), after Australia, with 63 million tonnes, and China, with 38 million tonnes, according to Statista. The ‘China-owned miner’ in that Bloomberg report was MMG Limited (OTC: MMLTF), an Australian-Chinese mining giant.

Last year, MMG Limited, in a report (http://nnw.fm/m8LPU) on its website, announced it had shuttered its mining operations at Century in Australia. The Century mine was said to be the world’s third largest. In 2014, it produced 465,696 tonnes and accounted for around 3.5 percent of global zinc output in that year. Its 2015 production has been estimated at 350,000 tonnes. Supply anxieties have been further exacerbated after Vedanta Zinc International (NYSE: VEDL) closed its Irish Lisheen mine in October 2015. Lisheen was Europe’s second-largest zinc mine with a capacity of around 175,000 tonnes, according to a HardAssetsInvestor story (http://nnw.fm/J2wFh). Quoting Bloomberg Intelligence, the story said Lisheen’s closure would reduce global supplies by another 1.3 percent. Adding to the supply slump news is a Bloomberg Business report (http://nnw.fm/Pf0Nu) stating that Glencore plc (OTC: GLNCY) would cut output from mines in Australia, Peru and Kazakhstan totaling around 500,000 metric tonnes, which would amount to about four percent of global production. Taken together, these closures will have reduced global supplies by between 7-10 percent.

At a recent conference call, the CEO of MMG Limited said:

“There is so little zinc around. Those people who are in zinc are also bullish about the zinc market so they don’t want to sell. That’s why we keep coming back to the focus we’ve got on finding zinc.”

All of this proves how sagacious the management team at Star Mountain Resources has been. Heading the team is CEO Joseph Marchal, who previously served as chief executive officer for the Asia-Pacific Region of Chi-X Global Inc., a subsidiary of Instinet, the equity-trading arm of the Nomura Group. President and COO Mark Osterberg, PhD has worked for major gold and base metal mining companies and has over 30 years’ experience in the mining business. The CFO is Wayne Rich, who was previously the chief financial officer of Northern Zinc. Star Mountain acquired a 100 percent interest in Northern Zinc, which, in turn, acquired all the issued and outstanding common stock of Balmat Holding Corporation and its wholly-owned subsidiary, St. Lawrence Zinc Company, LLC, which owns the Balmat Zinc Mine.

Thomas Bidgood, PhD is VP technical services. He has over thirty years’ experience in the operations and exploration sides of the mining business and, from 2001 to 2011, was professor and chairman of the natural sciences and math departments of the Colorado Christian University in Lakewood, CO. The operations manager is John Heinzig, who was previously director of private equity funds at Summit Capital USA. Ryan Schermerhorn is site manager. He was previously site manager of St. Lawrence Zinc Company’s Balmat Mine and Mill from 2009 through 2015.

For more information, visit www.starmountainresources.com

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