"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."
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.
"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.
StockWatch:
2010-11-18 08:00 ET - News Release
Mr. Peeyush Varshney reports
CANADA ZINC METALS ANNOUNCES CLOSING OF $18 MILLION PRIVATE PLACEMENT
Further to Canada Zinc Metals Corp.'s news in Stockwatch July 26, 2010, and Oct. 26, 2010, 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.
Pursuant to the private placement, Tongling has purchased 31,386,224 units of the Company at a price of $0.5735 per unit for gross proceeds of $18,000,000 and now holds a 36.5% 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 $0.675 during the first year and at a price of $0.775 during the second year. These units are subject to a hold period expiring on March 17, 2011.
The proceeds of the private placement will be used primarily to fund further exploration and advancement of the Company's Akie zinc-lead property.
"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, Vice-President and Chief Engineer 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.
Given the nature and size of the strategic investment, the Company has agreed to permit Tongling to appoint up to two nominees as members of the board of directors of Canada Zinc Metals for so long as Tongling maintains an interest of at least 20% of the outstanding common shares of the Company.
Subject to certain conditions, Tongling has agreed to vote its common shares of the Company in support of the board of directors recommended by the management of Canada Zinc Metals until the earlier of 3 years from the date of closing the private placement or the date that Tongling owns at least 50% of the outstanding common shares of the Company.
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 outlined a NI 43-101 compliant inferred resource of 23.6 million tonnes grading 7.6% zinc, 1.5% lead and 13.0 g/t silver (at a 5% zinc cut off grade).
Two similar deposits, Cirque and Cirque South Cirque, located some 20 km northwest of Akie and owned under a joint venture by Teck Resources and Korea Zinc, are also hosted by Gunsteel rocks and have a combined geologic inventory in excess of 50 million tonnes (not 43-101 compliant) grading approximately 10% combined zinc + lead.
In addition to the Akie property, Canada Zinc Metals Corp. controls a large contiguous group of claims which comprise the Kechika Regional project. These claims are underlain by geology identical to that on the Akie property (Cardiac Creek deposit) and Cirque. This project includes the 100% owned Mt. Alcock property, which has yielded a historic drill intercept of 8.8 metres grading 9.3% zinc+lead, numerous zinc-lead-barite occurrences, and several regional base metal anomalies."
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