Deveron confidently acquires 66 claims towards enhancing their zinc and graphite rich Rockstone property
Deveron Resources Ltd. (‘Deveron’, TSX-: DVR) has started 2015 by acquiring 66 additional unit claims related to its zinc and graphite rich Rockstone Property, near Thunder Bay, Ontario, presenting very similar geological features to the core Rockstone property. Last November, Deveron filed a NI 43-101 compliant report with SEDAR. The acquisition, especially considering sluggish performance of the commodity sector, suggests that Deveron’s management is confident about the quality of the deposit. Deveron’s majority – 65.8% – shareholder is Greencastle Resources Ltd. (‘Greencastle’). Deveron will pay Greencastle CAD$ 150,000, investing some CAD$ 2.0 million on exploration over the next three years, earning a 60% interest while retaining an option to acquire 100% interest by incurring all expenditures required to produce a bankable feasibility study.
Deveron has already examined conductive features identified during Greencastle’s 2012 four-hole drilling campaign for further exploration, given strong evidence of a substantial base metal resource, including high grades of zinc, copper and graphite. One of the holes explored by Greencastle intersected a section of 24 metres containing 1% combined zinc and copper. Deveron has since re-tested it, finding that it contains graphite of up to 25% carbon. Should the volumes, as predicted are high, then the mining operation will be relatively easier and cheaper to extract than comparable projects, thanks to the availability of excellent infrastructure. Moreover, zinc is one of the few raw materials benefiting from steady or rising prices because of a production deficit, expected to last for the next few years. Important zinc mines in Australia (the huge Century mine) or in Ireland (Vedanta) are slated for closure. Indeed, 2014 was quite good for zinc and 2015 could be even better.
Last summer zing rose to a price of USD$ 2,325 per ton, the highest price of the past three years (in 2010, zinc prices exceeded USD$ 2,600/ton while in 2008 they reached USD$ 4,000/ton). If it had not been for the existence of stockpiles, zinc prices could have risen even higher. As for the stockpiles, their presence does not mean that they will not somehow be depleted and if 2014 didn’t produce record prices, 2015 could come rather close as both mine shutdowns and depleting stockpiles will create shortages of supply. The only risk to the bullish scenario is if China, which is the largest zinc producer in the world and its largest consumer, decides to ramp up production to take advantage – ironically of the higher prices. Currently, China is importing zinc because it is more profitable than producing it. Nevertheless, while the commodities sector decides to pick up, zinc is poised for a bullish performance in 2015. The zinc evidence from Deveron’s Property suggests that the grades are high, given that northern Ontario has shown potential to yield zinc grades in the order of 6-8%.
Zinc demand in North America, meanwhile, is growing and the low oil prices should lead to better industrial sector performance, generating more demand for zinc. As for graphite, it is also poised for a strong year as automotive and large consumer goods manufacturers plan to build facilities for the exclusive purpose of making Li-ion batteries. Tesla Motors, BMW and Samsung have announced the expansion of their battery supply contracts. Northern Ontario has surprisingly good grades and varieties of graphite to offer and Deveron can expect to discover battery grade graphite. Such optimistic forecasts are good news for nickel producers in Canada as they seek funding and investors projects heading toward feasibility.