Monday, June 01, 2009

Zinc: Canada Zinc Metals CZX.v - Why Chinese are buying into Zinc Play in Canada? CZX.v, CDNX, FXI,,, TEC

Now we have some hints why Chinese Tongling is buying into Canada Zinc Metals CZX.v at market premium of 52% to its current market price of 0.28CAD. For us it is Junior Investment Cycle all over again. We have a chance to buy the second time into this story with help of Mr Market. Company today announced closing of its financing with Chinese Giant Tongling after receiving of all necessary approvals on both sides. Chinese are getting 13% in the company and CEO is talking about them as Strategic Investor. Chinese are talking about district play - confirming our ideas. Everything is very significant in this Deal to our decoupling theory and Chinese recovery: price they are ready to pay for the Non controlling stake in the company, Lukas Lundin still involved in the company with his stake, time of closing when Zinc is taking off from "End of The World" level.
This stake does not look to us particularly large to be truly "strategic" and now with all financing approvals in place will be interesting to monitor further developments: will Chinese buy into the market with prices still below their 0.425CAD?
What are the value drivers here:
1. If you are in a world wide Depression and Deflation camp skip these pages.
2. Why is it the second chance: just look at the company price chart below.
3. What is the district play: please refer to the company website and map above. Canada Zinc Metals's Akie holds 23.6 million tons of high grade Zinc, nearby J/V between TEC and Korea Zinc holds another 50 million tons. District play can mean 100 million tons with further discoveries and deals among these three players and now CZX.v has a strong backing strategic partner with deep pockets. Significance of 100 million potential reminds us about Ozernoe play in Russia with Lundin Mining, where they have been ask to get out as from strategic reserves. There are couple of similar size deposits out there, but some of them are in places like Iran, Pakistan and Afganistan. With 100 million tons district in friendly Canada can be within top ten Zinc deposits around the world.
4. If you are in Inflation and decoupling camp you will recognise Macro trend below of Commodity cycle when sometimes Zinc price advance can make Gold Bugs like us jealous.

5. Our Green Mobility revolution and New Deal for US Corp., needs a lot of Zinc and Copper to build infrastructure for the Next Industrial revolution. New power grids in the Next Big Thing means a lot of Zinc and Copper used. You can find a lot of supporting our Investment Case information on this blog under search Zinc for your further homework. Chart below shows that slowly fear is making room for greed in commodity plays and China was very active in this field from February.

"Canada Zinc Metals Announces Closing of $4.9 Million Private Placement Subscribed to by Tongling Nonferrous Metals Group Holdings Co. Ltd."

"Vancouver, British Columbia CANADA, June 01, 2009 /FSC/ - Canada Zinc Metals Corp. (CZX - TSX Venture, MTSZF - OTCBB, AOF7E1 - FWB), ("Canada Zinc Metals" or the "Company") is pleased to announce that, further to its news releases dated January 26, 2009 and March 23, 2009, it has received final approvals from the TSX Venture Exchange and the relevant Chinese authorities with respect to the closing of the non-brokered private placement subscribed to by Tongling Nonferrous Metals Group Holdings Co. Ltd. ("Tongling"). Pursuant to the private placement, Tongling has purchased 11,500,000 units of the Company at a price of $0.425 per unit for gross proceeds of $4,887,500 and now holds a 13% equity position in Canada Zinc Metals. Each unit consists of one common share and one half of a common share purchase warrant. Each whole warrant entitles Tongling to purchase, at any time within 24 months from closing, one common share of the Company at a price of $0.60 during the first year and at a price of $0.80 during the second year. These units are subject to a hold period expiring on September 27, 2009.
"We welcome Tongling as a strategic shareholder of Canada Zinc Metals," stated Mr. Peeyush Varshney, CEO of Canada Zinc Metals. "Our Company continues to attract the interest of the world's premier base metal mining companies. The Cardiac Creek deposit is one of the most significant discoveries in Canada in the past several years." The proceeds of the private placement will be used to fund further exploration and advancement of the Company's SEDEX zinc-lead properties and for working capital purposes.
"Along with the Akie property, Canada Zinc Metals' significant prospective land package in the Kechika Trough represents a potential long-term district development opportunity," commented Mr. Li Dongqing, Chief Engineering Officer of Tongling. "We look forward to continuing to build our relationship with the Company." Tongling Nonferrous Metals Group Holdings Co. Ltd., based in Tongling, Anhui, is a state-owned holding company, and one of China's largest copper smelting companies. Tongling's principal activities are exploration, mining, ore processing, smelting & refining and products processing of copper, lead, zinc, gold, silver and other non-ferrous and rare metals. About Canada Zinc Metals Corp. Canada Zinc Metals is a mineral exploration company focused on unlocking the potential of a future long life mining district in British Columbia, Canada.
The Company is the dominant land holder in a world class mineral belt called the Kechika Trough which hosts in excess of 80 million tonnes of base metal resources. Canada Zinc Metals owns a total of 78,526 hectares in 233 claims which extend northwestward from the Akie property for a distance of 125 km. About the Akie Property The Akie zinc-lead property is situated within the southern-most part (Kechika Trough) of the regionally extensive Paleozoic Selwyn Basin, one of the most prolific sedimentary basins in the world for the occurrence of SEDEX zinc-lead-silver and stratiform barite deposits. Drilling on the Akie property by Inmet Mining Corporation during the period 1994 to 1996 and by Canada Zinc Metals since 2005 has identified a significant body of baritic-zinc-lead SEDEX mineralization (Cardiac Creek deposit). The deposit is hosted by variably siliceous, fine grained clastic rocks of the Middle to Late Devonian 'Gunsteel' formation.
The Company has filed a NI 43-101 report supporting the estimated inferred resource of 23.6 million tonnes grading 7.6% Zn, 1.5% Pb and 13.0 g/t Ag (at a 5% Zn cut off grade). The complete NI 43-101 technical report, titled "Geology, Diamond Drilling and Preliminary Resource Estimation, Akie Zinc-Lead-Silver Property, Northeast British Columbia, Canada" and dated May 30, 2008, can be viewed on SEDAR. Two similar deposits, Cirque and South Cirque, located some 20 km northwest of Akie and owned under a joint venture by Teck Cominco and Korea Zinc, are also hosted by Gunsteel rocks and have a combined geologic inventory in excess of 50 million tonnes. The TSX Venture Exchange has neither approved nor disapproved the contents of this press release. ON BEHALF OF THE BOARD OF DIRECTORS CANADA ZINC METALS CORP. "PEEYUSH VARSHNEY" PEEYUSH VARSHNEY, LL.B CEO & CHAIRMAN"

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