Tuesday, November 16, 2010

Canada Zinc Metals: 18 mil CAD private placement with Tongling Nonferrous Metals Group Holdings Co czx.v, lun.to, tnr.v, bwr.to, cs.to, imn.to, ncu.to, tko.to, wrn.to, qux.to, rio, bls.to, tck


  "Today's call - from the World Bank "to debate the return of the Gold Standard" - we are finding just fascinating and it would be unbelievable just a few months ago. We can expect some tree shaking and corrections now in Gold and Silver markets, but they will only provide more buying opportunities to those who seeks ones."

  Ireland is a non starter for any serious discussion about reasons for Mr Market depressed mood these few days - just due to the size of its economy - it will be bailed out. There will be no Lehman Brothers any more - insolvent financial system will never recover from another shock. Constant pump of liquidity is the name of the game - all Central Banks have The License to Print now. Real Things will appreciate against all FIAT currencies.
  The reason behind the-long-time-due correction in the overheated markets is China and its Inflation. Everybody is rushing to sell today - we will send you back to the 2002, when the previous cycle of Higher Nominal Rates has been started. Study the charts of Gold, Silver, Copper and Zinc for starters - the keys to the commodities super-cycle are real growth in Emerging Markets and Negative Real Rates.    The US Dollar party will be very short lived, even green buck can not take seriously all those talks about QE "not debasing dollar value". Now with "crashing markets" and "non-existing" Inflation in official statistics General Bernanke can chop every tree in the DC area for his QE games, problem will come later when the price of Oil will be too expensive to run his choppers to drop the bucks.
   As per Inflation - just jump across the pond - UK is the indicator of things to come after QE and universal bailouts. Inflation there is above 3% and will "stay now at elevated levels throughout 2011" And it is when they have already students on the streets after first austerity measures. Who will dare to try it at home? 
     Canada Zinc Metals in this sense, is a very interesting indicator with Chinese Tongling taking its stake above 36% in the company during this financing. We guess they have some clues about the real state of the Chinese economy and why do they need one of the world's top zinc deposits in Canada, into which they are buying with premium to the market price.


Canada Zinc 31,386,224-unit private placement
2010-11-16 19:04 ET - Private Placement

The TSX Venture Exchange has accepted for filing documentation with respect to a non-brokered private placement announced July 26, 2010.

Shares:  31,386,224
Price:  57.35 cents
Warrants:  15,693,112 share purchase warrants to purchase 15,693,112 shares
Exercise price:  67.5 cents for a one-year period; 77.5 cents in the second year
Placees:  one
Insider:  Tongling Nonferrous Metals Group Holdings Co. 31,386,224
Shareholder approval was obtained with respect to this private placement at an annual general and special meeting that was held on Sept. 30, 2010.

"This company is in a consolidation pattern - nobody wants it - apart from Chinese giant Tongling, another Chinese investor and Lundin Mining, which is still sniffing around this deposit. Will it be in the end the same "nobody wants time" as we had with other juniors this August? We do not know, but we like the things, which insiders or industry leaders or both are buying. We had a very exciting run after summer napping time in Almaden Minerals, Copper Fox Metals, Goldstone Resources, Sunridge Gold, Avino Silver, Alkane Resources, NGeX Resources, Revett Minerals - to name a few among other companies. 

Canada Zinc Metals and TNR Gold are still lagging the performance and they are late to the QE party, but whether it is still a buying opportunity will be decided by the Mr Market in the end, as usual.

What is the common sense in the so different investment situations: when Erick Sprott  buys into Avino Silver, Silver Wheaton buys into Revett Minerals, Lukas Lundin buys into NGeX Resources and invest more to keep its stake in Sunridge Gold, Panasonic buys into Tesla, Tongling buys into Canada Zinc Metals and Nova Gold sells 50% of 1 mil NON 43-101 historical resource of gold at Shotgun for shares of TNR Gold and significantly increase its position in that company? All these situations are common only in one, but very powerful in investment world thing: industry and/or company insiders are buying in. Can they be mistaken - yes, by all means - but we like to follow the "smart" money.

Tongling, apparently, has spent some time and money with one of the leading consultants in the industry on DD before making a decision to increase its stake to over 30% in Canada Zinc Metals. Time will tell you and us, as usual - who is making mistake us or the market in pricing of this M&A situation in Canada with Chinese deep pockets. Catalyst will be:

1. Closing of Tongling financing.
2. Higher zinc and lead prices (QE multiplied by Zinc shortage, according to some reports).
4. New discoveries at the North Lead anomaly.
5. Lukas Lundin involvement."

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