21-Apr-2020: NCZ LAUNCHES A$51.1 MILLION CAPITAL RAISING
--- click on link above for more ---
Disclosure: I sold out of NCZ a couple of months ago, and now play zinc via Red River (RVR) and South32 (S32). I'd rather see copper start moving north seriously before I got too bullish on zinc again. RVR also have some gold projects, and zinc is only a very minor part of what S32 produce.
New Century Resources Limited (Company or New Century) (ASX:NCZ) is pleased to announce the initiation of slurry commissioning of the upgraded rougher circuit, allowing the full capacity of the entire processing plant to be incorporated into operations for the first time.
The Company now plans to progressively transition from 9Mtpa to 12Mtpa (33% throughput increase) over the remainder of FY20.
The rougher circuit upgrade was delivered under budget and four weeks ahead of schedule, with the achievement representing the third and final milestone of refurbishment activities required for the scheduled ramp up to 12Mtpa throughput (see Figure 5).
The upgraded rougher circuit is anticipated to provide a further increase to overall zinc metal production, with the additional volumetric capacity allowing for both higher throughput rates and improved recoveries (via longer slurry residence time through the rougher/scavenger circuit).
The rougher expansion also allows for continued lowering of overall unit costs of production via increasing metal production against a 70% fixed cost base on site.
[...continues... click on link above for more - and the associated photos]
NCZ has been a huge dissapointment so far. Plenty of promise early, but execution could have been a lot better, and the market has sold this one down savagely over the past year (~80% down over 12 months). The big question is if they can improve production and lower costs enough to stay in business. There have been plenty of positive announcements by the company, and they had an excellent initial advantage in that so much infrastructure had been left in place for them by the previous owners of the Century zinc mine, so the costs to re-start production were supposed to be relatively low. However, when you compare them to their peers, their ongoing costs are still too high, and the grades have been too low. They look to me like they are almost priced now like they are going to fail (go broke), and so they could now be one of those very high risk/high potential return situations where they could easily double and more just by staying in business and slowly improving their own situation (more zinc at lower costs). Or they could go broke.
27-Feb-2019: New Century Resources (NCZ) have today released a presentation that they have put together for their North American Roadshow (being held this month). That presso, titled, "North American Roadshow Presentation, February 2019" can be viewed here.
Below is the second half of this [26 July 2018] article from MiningNews.net:
Other already-established hard rock resources such as those at Silver King are also being eyed, while New Century envisages spending somewhere in the order of A$3-5 million annually on exploration.
In addition, Walta noted any successes by well-regarded exploration juniors such as Pursuit Minerals and Red Metals in the region could have obvious implications for the Century operation given the established infrastructure in this isolated part of the world.
A further comment made by Walta regarding the value of the infrastructure that it now owns was along the lines that even if not one more zinc (or base metal) tonne was added to the current equation, Century could operate for circa 10-plus years and then become a phosphate operation for another couple of decades.
But for now, at "three minutes to midnight", it's all about getting the tailings reprocessing up and running.
Disclosure: I hold a small parcel of NCZ shares.
[26 July 2018]
Speaking to analysts in Perth on Wednesday, New Century CEO Patrick Walta relayed a whole swag of numbers explaining why the acquirer of the Century operation has become more bullish on the opportunity at hand.
New Century's work since acquisition has seen the project's tailings tonnage increase by 10%, grade increase by 12%, planned throughput increase from 13 million tonnes per annum to 15Mtpa, and targeted recoveries increase from 50% to 63%.
The compounding benefits of all those significant increases are then turbo-charged by a doubled zinc price.
Walta also pointed to an analyst note earlier this month by market supporter Credit Suisse that gave New Century a net present value of A$1.4 billion (undiluted), just over double the company's current capitalisation.
Moreover it was pointed out that the Credit Suisse modelling used a zinc price of US$1.04 per pound of zinc versus a recent price of around $1.34/lb, with use of the recent spot price (of $1.34/lb) resulting in an NPV of just under $2 billion.
Regarding the zinc price, Walta refrained from pondering what may happen with the Trump trade war rumbles while indicating he was struggling to see how the wave of zinc supply assumed/feared by some in the market was going to materialise - given the big hurdles still to be cleared by some of the new developments being factored-in to the supply side of the equation.
And certainly within the timeframes being envisaged!
In any case, New Century is also looking at hedging opportunities - via consultant Noah's Rule - after it recently got five offers from banks.
On expected recoveries, Walta made the point that bank due diligence undertaken by SRK assumed a downside level of 55%, which according to the CEO, still gives an NPV of $1.2 billion.
Above and beyond the tailings resource and recoveries, Walta also pointed to the hard rock resources that have continued to emerge at the project, including from an anticipated cutback of the South Block that would mine part of the original Century orebody.
MMG was unable to do that cutback because of the culturally sensitive Magazine Hill that sits above the cutback area, but New Century received heritage access approvals from the local custodians about two months ago.
Continued in next straw
20-Jan-2020: December 2019 Quarter Operational Results
Summary: NCZ are still unprofitable, however they have consistently increased production and lowered C1 cash costs every quarter for the past 4 quarters, admittedly from a rather low base. Their three biggest headwinds are (1) low zinc recovery of around 50% of ore slurry processed (albeit slowly improving), (2) low zinc price (which they expect to improve based on basic forward supply/demand fundamentals), and (3) much higher treatment costs. While Zinc prices dropped by around 9% in 2019 - from US$1.14/lb to US$1.04/lb, treatment (smelting) charges rose a whopping 89% - from US$167/t to US$315/t being eqiv. to a further US$0.16/lb decrease in zinc price for miners like NCZ who rely on overseas smelters to treat their zinc concentrate. When you consider that NCZ's C1 cost guidance for the March 2020 quarter (this current quarter) is $0.85 to $0.95/lb, it's easy to see why they are struggling to achieve profitability, despite now being the world's 15th largest zinc producer and Australia's 4th largest zinc producer (in terms of tonnes per annum produced, which is 120 thousand tonnes (kt) p.a. in NCZ's case - based on their current monthly run-rate annualised).
To give some context, S32's Cannington is expected to produce 60kt of Zn this year, with only 33kt for SOL's Jaguar zinc mine (that they bought off IGO) and 21kt for Red River's (RVR's) Thalanga. Heron's (HRR's) Woodlawn is only expected to produce 17kt of zinc. Those are the main players (in terms of producers rather than explorers or developers) that you can buy shares in on the ASX for exposure to zinc. There are other producers but they are either private companies or are listed on overseas exchanges.
I have a small parcel of NCZ shares, and I bought a few more this morning on the weakness in the SP after the above reports were issued. I also own shares in S32, SOL and RVR, but not HRR.
NCZ have been a disastrous investment over the past few years. They peaked at $1.51/share in October 2017, were down to 72 cents by the end of 2018, dropped to 27.5 cents in 2019 (Dec 31 closing price), and they're trading at 26 cents/share today (Mon 20-Jan-2020).
Despite that dreadful performance they actually look to me like a reasonably play on a recovering zinc price via a company that has dissapointed the market and has been marked down appropriately - but is slowly improving their performance. The company specific risks are around their very survival. They have some debt, although it does look reasonably manageable - and they aren't making money yet. They need to continue to lower costs and they also need a higher zinc price. Lower treatment (smelting) charges would also obviously be a big help. IF they survive (and they may not), there could well be significant upside, PROVIDED they don't survive via large dillutive capital raisings which drive the SP even lower. So - they have to be considered VERY HIGH RISK!
More of a gamble than an investment. But for those of us who like the occasional flutter with money we can afford to lose, they look interesting from here. These sort of plays can multi-bag or go to zero, or anything in between of course, but there is certainly plenty of potential - in both directions.
27 June 2019:
Part 2 (of 2) of:
No Regrets over Century Sale: MMG (24 July 2018)
MMG has rejected suggestions it may have closed down the Century zinc mine in Queensland too early
MMG maintained guidance of 560,000 to 590,000t of copper, including 410,000-430,000t from Las Bambas, and 190,000-220,000t of zinc for 2018.
MMG has not traded on the ASX since September 2017. The stock rose by 6.7% today in Hong Kong to HK$4.95.
Source: MiningNews.Net website
Disclosure: I hold a small amount of NCZ.
No Regrets over Century Sale: MMG (24 July 2018)
MMG has rejected suggestions it may have closed down the Century zinc mine in Queensland too early.
The Melbourne-based, dual-listed miner closed the depleted operation in late 2015 and did a deal with newcomer New Century Resources that would see New Century rehabilitate it and process the tailings.
New Century secured the entire operation and A$46.6 million in funding from MMG, but would take on the rehabilitation liabilities and be responsible for replacing the $193.7 million financial assurance bond MMG had in place via profits from the restarted operation.
Melbourne-based New Century has grown from nothing into a $600 million-plus ASX 300 company on the verge of production in a little over a year.
First production is due within weeks.
"I think it's a little bit too early to tell how successful New Century will be there, although we did notice that they've just revised their guidance for the next quarter from 13,000 tonnes down to 4000t," MMG chief financial officer Ross Carroll said on a conference call today.
Carroll noted that the company didn't leave reserves in the ground.
"We did some numbers - we also got some independent experts to look at it at the time and we thought it was pretty marginal for us," he said.
"Now New Century is a different type of operator so maybe they can do it marginally better than what we could have, or done it a different way because they are a tailings remediation specialist, but from our perspective, we don't believe we've left a lot of value on the table and we'd still do the deal tomorrow if we had the opportunity."
MMG Jerry Jiao said the company was hopeful of New Century's success.
"Their success is our success also because we have our liabilities with them, so if they can reach a good progress that would also be good for MMG," he said.
Carroll added: "As Jerry said, we hope they'll be successful, at least for the first two or three years anyway."
Meanwhile, MMG reported June quarter production of 137,398 tonnes of copper and 58,090t of zinc, which contributed to a 3% rise in overall output for the first half of 2018.
The new Dugald River zinc mine in Queensland reached commercial production ahead of schedule and produced 38,648t of zinc in concentrate for the quarter.
Continued in the next straw (Pt 2), which includes the source.