Focus: Uncommitted projects

摘要

The uncertainty stemming from the emergence of a "credit crunch" has led to many questioning how this will impact on the ability of some companies to raise finance for their still uncommitted mining projects. It is certainly beyond the scope of this report to examine the specific impact it may have on today's uncommitted zinc-lead mining projects. However, an overview of these projects is perhaps warranted in light of the recent fall in the zinc price to as low as around 2,800 dollars/t. After all, one must question the chances of them ultimately securing finance now given that they have not managed to do so during the last seventeen months when zinc prices have been trading at over 3,000 dollars/t. We are not suggesting that 3,000 dollars/t is any kind of watershed, but zinc's recent fall has coincided tears being shed and the emergence of a more widely held bearish view of zinc's fundamentals, including among our peers. There is arguably, all but, an infinite list of uncommitted mine projects that are being touted by their proponents. Within this list, two categories of project can be created. Firstly, there are those projects that are owned by companies with existing operations. Aside from regulatory hurdles, these projects could possess the greatest chance of proceeding because the companies involved may be able and willing to finance them out of existing cash flow. Of course, these same companies could also opt to put their projects on hold for another cycle. After all, a pipeline of feasible projects will still help to justify a company's share price. The second group of projects are those that are owned by companies with no existing operations. These are exposed to the willingness of others to provide finance, either through the provision of debt or through the purchase of equity.