The thing you have to ask yourself is...If zinc prices jumped, my cash position improved, and I found a partner etc, would I be able to get it into production by 2015? I think the answer is no. If all things went well, maybe 2017-18 at the earliest. Therein, lies the problem. KZLs disaster planning, that they were forced to learn the hard way during 2011, should dictate, like the last zinc boon, that at some point prices will peak (I think late 2015) and then subsequently fall as the supply side responds. You don't want to be stuck in 2016 with a project draining cash and a year away from production, especially as prices fall due to pressure from a supply side response.
It would be a great time to put AB on the market when New Brunswick comes offline in March 2013, maybe even in January. KZL bought it for 2.5 mill plus invested some change. They might get closer to 40 mill for it then as a bit of zinc euphoria takes over. They have enough projects in the pipeline to exploit and should use the proceeds to bring those into production fast with a view to cutting exploration and development by late 2015 and suring up their cash position. That will put them in a nice position to endure lower prices and acquire scalable projects during much lower zinc prices in 2016-2017.
If there is one thing they learned from Lounge Lizard and September 2011 - timing is everything.
KZL Price at posting:
15.0¢ Sentiment: Hold Disclosure: Held
