The Mines and Money (M&M) Americas conference in Toronto on October 15-17 included a presentation from the CEO of Pasinex Resources Ltd, Steven Williams, who said his goal for investors was to "make some money out of building a mid-tier zinc company".
Pasinex's assets are centred on the 50%-owned producing Pinargozu mine in Turkey and the Spur mine in Nevada. The latter was acquired a year ago and was drilled in the summer this year. Pinargozu was developed using 'bootstrap' methods (and no debt) and cash flow from the direct shipped ore will be used to develop the company's exciting assets in Nevada.
Mining Beacon (MB) caught up with Mr Williams to ask him for more details on the company's zinc deposits in Nevada, and when can investors expect to see a feasibility study?
Steven Williams (SW): Our Nevada zinc project, called Spur, is still at the early-exploration stage. We made an exciting discovery this summer of sulphide mineralisation in a black shale host. This is indicative of what we call a Sedex-style mineralisation, and we are excited because many of the biggest zinc deposits in the world are of this style.
MB: So, more drilling before a feasibility study?
SW: Yes, it is early days, but we are keen to get back drilling. We want to test for the extensions of this black shale hosted zinc mineralisation and see where this takes us. We are still quite some time yet away from a feasibility. There is a lot more drilling yet to be done but we like this start and we will be back drilling next year.
MB: What do you consider the most important change, for Pasinex, in the mining-investment landscape over the past few years?
SW: Pasinex has gone through enormous change. We started off as just another wannabe explorer and have now developed into a mining operator (albeit with a small mine). That is our joint venture mine in Turkey called Pinargozu. This represents a huge change — and all in six years (and six years that have been very difficult ones for the mining industry in general). This change has not been without its pressures and challenges, and we are still working on some issues — but we have evolved into a profitable miner, and all without any corporate debt!
MB: No debt?
SW: Yes. It is noteworthy because the mining-investment market during this time has been difficult. The years 2014-16 were very difficult times, and it was hard to get any love in the capital markets. Things are somewhat better now but still not easy. Meantime, as I said, Pasinex has changed and evolved. For us, this has meant that we need to keep updating our story and try to look at different types of investors as we grow.
MB: On what aspect of Pasniex should investors focus?
SW: As I said, Pasinex has changed and I believe we will continue to change. Next year we will be back drilling at Spur; look out for our results. Also, we see the business in Turkey as evolving, and urge people to keep an eye on the next steps in the business there.
MB: What sets your company apart from others in the same investment space?
SW: Oh that is easy. Zinc, zinc and zinc. Also, our cash flow from what is a profitable mine in Turkey, and the exciting exploration upside, particularly with our Spur project in Nevada. We think this will turn into shareholder value. It will still take some time but we are making the changes and undertaking the exploration that will reward our investors.
MB: At the global level, what development over the past 12 months do you think has been the most important for the zinc market?
SW: Zinc has gone through an interesting time in the past year. Zinc metal stocks are at very low historical levels, and we are now at 'days' of stock available compared with 'months' of stocks several years ago. That is why the price has gone up! However, production is slowly ramping up again and, with time (although it may still take another year at least), we will slowly see zinc stocks start to increase. Nevertheless, this is still a strong time for zinc because stock levels did get to such low levels.
MB: What opportunities do you expect to emerge for zinc over the next 12 months?
SW: I see another strong year for zinc, but I also believe we may have already passed the metal's price peak. I think we saw that peak price in February when zinc touched US$1.65/lb. We are now in the US$1.20-1.25/lb range, and forecasts for next year seem to be US$1.15-1.25/lb. Nevertheless, these are still strong zinc prices and Pasinex will still be quite profitable because our cost of production is below US$0.40/lb.
MB: So, you are confident?
SW: Certainly. Zinc is predominantly used in galvanizing or rust protection. That use accounts for 65-70% of all zinc use. The metal is therefore used widely, and consumption is very much tied to global growth/construction and development (where we use steel). So, provided we continue to have overall global economic growth — we will consume zinc. At this stage I see a strong future for zinc but maybe not with the stellar highs that we saw in early 2018.
MB: What do you see as the key risks or challenges facing your company?
SW: Obviously we are tied to the zinc price as we are solely in zinc. Though, as stated above, I remain strong on zinc — I also recognize it will not remain a stellar metal over the next couple of years. So there is some market challenge for us because we are so tied to zinc.
Also, we are an emerging company. Mining is a tough game and particularly tough when you build mining operations. There are risk and challenges in that endeavour. We see that now and we will continue to see that. We will face challenges in 2019; geological, mining and political, amongst others. We will however continue to work through these challenges, which is also what mining is all about. I think people need to understand that — mining is a long-term game where todays problems can work into tomorrow's opportunity.
MB: Did you get what you hoped from presenting at the M&M Americas event?
SW: I was impressed with the new format at Mines and Money. The one-on-one meetings were enjoyable and enabled us to meet people the company had not previously met. I thank Mines and Money for this opportunity and hope to see them continue to finesse their format and encourage investors and miners/explorers to meet. Do that and we are all happy and in front! MB: Thank you.