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2016-01-28

VOLCAN COMPAÑIA MINERA: Volcan zinc concentrates tender shows market tightness

Volcan Compañía Minera succesfully concluded its first tender process for year
2016. Treatment charges achieved for the zinc concentrates were at two digit
figures, level not seen for more than two years where they had previously
remained for some time below the 100s level. Bidders and market are already
acknowledging the tightness of the concentrate market amid 10% of the world
mine capacity has faded away. Spot TCs were closer to the 200 mark only 2-3
months ago, to quickly go down below 100s in a matter of weeks. Although the
price of the metal does not reflect the market concentrate tightness yet due
to the existing metal inventories, bidders were betting on higher prices
through base and escalator structures driven in that direction during the
tender. The absence of many financial investors on the commodity world has
brought metal prices down including zinc, despite the fact that the latter
has a bullish story behind it, compared to bigger markets like oil, iron ore
or copper, which drive the commodity world in the current down trend. Zinc is
unfortunately included in the same basket for the time being, but its
fundamentals of supply and demand should prevail and change the current price
direction. It should only be a matter of weeks before the refined zinc
production will start to be threatened by a lack of raw material to convert
into metal. Concentrates availability should start to put more presure on
smelters already affected by low metal prices and more environmental
restrictions. Once this new order settles, metal prices should start a
rebound away from the multi-year lows where they are now. The low investment
on new zinc mining capacity during the last years should guarantee a longer
duration of the uptrend of the zinc price.

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: VOLCAN COMPAÑIA MINERA via Globenewswire

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