Rick Rule once told me, "You raise money with gold projects, and you make money with industrial metal projects."
In other words, most investors are looking for those spectacular gains that gold stocks offer when they are on a tear, but the world runs on industrial metals, like steel, copper, aluminum, zinc and iron ore.
In this group, you'll find that miners are supplying the market with excessive amounts of steel, aluminum, iron ore and copper, but the zinc market is not enjoying the same abundance.
In fact, Wealth Research Group's industrial metals division found a severe supply shortage with this particular metal, which is the third most in-demand metal in the world.
China, which consumes about half of all major commodities, is responsible for 47% of the global demand for zinc.
The reason, which is what makes this opportunity for a breakout so imminent, is that zinc is used for coating metals.
Every bridge, building, car and countless other steel products are galvanized with zinc coating—it's the anti-corrosion metal.
The challenge with zinc that Keith Neumeyer identified is that the demand rises about 2%–3% per year, so most investment firms overlook it because it isn't in hyper-growth, but the supply is shrinking and stockpiles are dwindling, so there's a huge gap forming.
2017 and 2018 mark the record deficit years of this century, and because zinc is mostly a byproduct and not the primary metal mined, there aren't many pure zinc producers.
That's what Keith Neumeyer wanted to be involved with, and that's why he has become a core investor with this company.
China has its ups and downs, but the overall trend is to Westernize, and that means megacities to house 50 million inhabitants, road systems that span the length of Eurasia, and the largest car industry in the world—much bigger than that of the U.S.
Going back to 2009, it had already become on par with Europe and the U.S., and it has now surpassed them.
Wealth Research Group has been looking at the zinc market since 2016, and the price of the metal has been rising steadily.
Mark my words: At the time of this writing, this new zinc stock trades for CA$0.65, and in 30 days, now that the news release of the completed acquisition and financing has been released, I expect this company to trade north of CA$1.00.
The name of the game right now is to partner, as a shareholder, with companies who are experts at sifting through deal flow, finding potential near-term zinc assets, and turning them into producing mines in no time.
The CEO of the company Mr. Neumeyer emailed me about was the manager of mining for Barrick at the Bulyanhulu gold mine in Tanzania from 1999 to 2002. There, he oversaw the building of a multimillion-ounce, high-grade underground mine in 24 months and achieved over 2 million man hours without a lost-time accident.
That's why Wealth Research Group has also taken a position with this pure zinc play.
We evaluated the company using our proprietary due diligence process, which I've shared with you HERE.
What made us so confident is the high grade of the flagship project.
This Peruvian past-producing mine has zinc grades of over 20%, which is almost unheard of.
Worldwide, there are approximately 978 zinc deposits with ore grades under 10%—674 of them are actually under 6%!
There are an additional 125 deposits with ore grades of 10 to 14%.
Less than 100 are between 14 and 20%.
Higher than 20% ore grades and we are now talking about a handful.
Grades in the 7 to 8% range can be mined from underground—this asset is in the highest-percentile bracket and on the surface!
Lior Gantz, an editor of Wealth Research Group, has built and runs numerous successful businesses and has traveled to over 30 countries in the past decade in pursuit of thrills and opportunities, gaining valuable knowledge and experience. He is an advocate of meticulous risk management, balanced asset allocation and proper position sizing. As a deep-value investor, Gantz loves researching businesses that are off the radar and completely unknown to most financial publications.
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Disclosures:
1) Lior Gantz: I, or members of my immediate household or family, own shares of the following companies referred to in this article: None. Wealth Research Group LLC owns shares of Zinc One. I personally am, or members of my immediate household or family are, paid by the following companies referred to in this article: None. My company has a financial relationship with the following companies referred to in this article: Zinc One. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own shares of Zinc One, a company mentioned in this article.
Charts and images courtesy of the author
