A good example of new supply entering the market is Vedanta (one...

A good example of new supply entering the market is Vedanta (one of the largest zn miners in the world) which recently announced development of Gamsberg mine in South Africa. This alone will bring online 250-400 new kt p/a (equiv. ~4% global zn supply) It’ll produce concentrate in approx 9 months

This supply (and others like it all around the world) occurring in response to the 2017 price surge are well-known to the market and reflected in the current zinc price and 2/5y futures settlements

Its the demand side though that represents the greatest additional downside risk for zn imo. US economy is frothy and China/EMs teetering on a precipice. If SHTF over the next several years commodity prices will tank. zn will not be spared.

To summarise - price assumptions in the scoping study are absurd and should be ignored, in my opinion. If one factors in today’s prices the project barely ekes out a profit (and this is using assumptions & models from the company’s own study)

Very little chance of a meaningful positive rerate (eg back up to mid 20s) on the back of Oposura. OTOH the likelihood of dilution and significant l shareprice loss is reasonably high. The risk-reward here is v unattractive