Pulacayo Project Feasibility Study - Apogee Silver

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Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report 090644-3-0000-20-IFI-100 tons (see Figure 19.7). At these historically high prices, numerous zinc mine reactivations occurred which, combined with ever-expanding output in China, rapidly reversed the market imbalances. Figure 19.7: Zinc Prices: 1989 to Present Exacerbated by the global financial crisis, zinc inventories on the LME began their relentless increase in 2007 to the point where they now sit above the 1 Million mt mark, a 17 year high and alone representing close to four weeks supply (Figure 19.8). Figure 19.8: LME Zinc Inventories: 2007 to Present TWP Sudamérica S.A. Av. Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473 Page 211
Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report 090644-3-0000-20-IFI-100 In the face of rising stocks and slower economic growth, prices have largely retreated from their lofty levels but they continue to be sustained by warehousing finance activities. In addition, although zinc prices dropped below the USD 2,000/mt (USD 0.90/lb) mark in May 2012, they appear to have found support around the USD 1,800/mt (USD 0.80/lb) level. After peaking about one year after the zinc price highs, lead metal prices have followed a not too dissimilar trend to zinc. With LME lead stocks hovering below 50,000 mt, lead prices reached a high in October 2007 above USD 3,700/mt (approx. USD 1.70/lb), but they too retraced along with the rest of the metals complex, hitting lows in late 2008 under USD 970/mt (USD 0.45/lb) at the height of the global financial crisis. With relatively strong fundamentals however, lead prices rebounded fairly rapidly in 2009, peaking in April 2011 above USD 2,900/mt (USD 1.30/lb) before trending back down with the rest of the metals complex. Although prices have held up relatively well since, they are currently trading around the USD 1,800/mt (USD 0.80/lb) level where support appears to have been established. Figure 19.9: Lead Prices: 1989 to Present Looking forward, support for zinc and lead prices remains sound with most pundits pointing towards limited downside risk as prices trade into the mine cost curve for both metals. However, over time, the outlook for the two metals diverges somewhat due to their respective fundamental outlooks. 19.2.2.1 Zinc Price Outlook As noted, the zinc metal market remains mired in significant surplus. This oversupply situation is expected to persist at least through 2012 and 2013, with on-going projected surpluses over the next two years forecast to add over 500,000 tons to the 1 Million tons currently in inventory on the TWP Sudamérica S.A. Av. Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473 Page 212
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Pulacayo Project Feasibility Study - Apogee Silver

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