I’m Steve Williams. I’m CEO of Pasinex Resources. Our ticker symbol is PSE. This is a zinc story, this is a production and profitability story, and still an exploration upside story. We’re mining zinc in Turkey. We’re mining, we are producing, we’re selling, we are already profitable, and we’ve still got more exploration upside.
The mine is called Pinargozu. It’s in the south of Turkey. It’s a joint venture between us, a 50/50 joint venture between us and a Turkish mining partner called Akmetal. It’s a carbonate replacement type zinc. And it’s direct shipping ore. We’re mining 32% zinc. We mine it, we crush it, we sell it.
This year, we’re gonna do 60,000 tons of production, which is about 40 million pounds of zinc. It’s gonna be around $25 million USD in revenue, and we’re gonna push off at least a 50% pre-tax margin. If you have a look at our Q1 results that we put out Friday, you can see we’re already on target to achieve that this year. So this is already a really spectacular story, I think.
It’s direct shipping ore. We’re mining 32% zinc. And at that grade, we can sell it direct…A little bit about zinc. Sure a lot of you have heard a lot about zinc, so I’ll give you Steve Williams’ one minute executive summary of zinc. As we know, the zinc price run up a lot in 2016. But this year we sort of hit a bit of a, so far this year, we hit a bit of a ceiling at about $1.30 USD per pound. Sort of bounced between a $1.30 down to $1.15, $1.20, $1.20 yesterday, I haven’t looked today yet. But still, the big picture is that there is supply side shortage of zinc. We know this actually quite intimately. Since we started producing zinc, and there’s not a lot of people that are bringing zinc on right at the moment, us and Trevali, really.
Since we’ve started producing zinc, we have not had to market our zinc. We have had people coming to us. We have been approached by over 40 groups wanting to buy our zinc. That tells me that there is a true demand, supply-side shortage for zinc, and people need zinc mine production. The big picture over here on the right, that’s the LME stocks. And you can see that the LME stocks in zinc are still going down. You need to be a little bit careful with that graph because that’s LME stocks. Doesn’t tell us anything about China. China consumes 50% of the world’s zinc, and they do have stockpiles in China. And we don’t know what’s going on with their stockpiles. But still, LME stocks are going down. We keep getting demand for our zinc. That tells me that it’s just a matter of time before the zinc price breaks through the $1.30 ceiling that it hit, and we see some upside. So I think we’ll go through summer and I think in the second half of this year, we’re gonna see the zinc price going through $1.30, $1.50 and maybe even higher. I’m looking forward to that.
This is where the mine is. We’re down in the south of Turkey in what’s called the Taurus Mountains. We’re an hour and half north of the city of Adana. The city of Adana is the fifth largest city in Turkey. It’s 2.2 million people. It’s a big city. Frequent flights to Istanbul, frequent flights to Ankara. We’re another hour down the road from Adana to the port of Mersin. Mersin is one of the major commodity ports in Turkey. So it’s very easy to get our product out to market.
One of the great things about Turkey is that you know, we’ve been building this mine over the last three years. Hard slog getting in, building the mine. One thing we didn’t have to build, not one cent, was infrastructure. Turkey is magnificent, you know, that white line there, that’s the road that runs within two kilometers of our mine. That’s a major road going down to a city of 2.2 million people. And another hour down the road to a major commodity port on the Mediterranean Sea. All that infrastructure is there, and that’s a major advantage that Turkey has.
This is our resource. We haven’t published the resource yet, and I know that that’s been a bit of a sort of, people are saying, “Well, why?” I can tell you quite simply why, because basically, you know, the last three years have been tough years, and, you know, our way through the tough years was to build a mine. So we just focused on building the mine. We’ve always had an internal resource because we needed to have it to do our mine planning. And now, this year, we’ve actually commissioned CSA global. They’re actually already at the mine site, and they’re going to be doing our official 43-101 and resource, should be out August. But I can tell you that’s the actual wireframe of our resource. And we’ve got, at the current rate of 60,000 tons, we’ve got several years in front of us as we stand right at the moment. It’s not going to run out tomorrow.
This is the mine. We’ve got three adits into the side of the mountain. This is the third adit. This is the lowest down adit. We installed this adit last year, and that enabled us to significantly increase our production, and I’ll show you that in a second. So, yeah, we’ve really increased the number of mining spaces we have, and that’s really increased our productivity.
And that’s this picture. The graph at the top is the year-by-year zinc production that we’ve been putting out of the mine. We actually started mining in 2014, but like a very small amount. And then since then, each year, we’ve been increasing the production. This year we will double the production from what we did last year. And the graph down on the bottom is the last five quarters. First quarter this year going back to the first quarter last year. And you can see every quarter, we’ve increased production from the mine. And we haven’t finished yet.
This is a spectacular deposit. I know, you’ve probably heard that before but, you know, I’ve been mining all my life, and I’ve never seen anything like this. I don’t know whether you can see some of these numbers. This is some numbers we published on some of our sulfides from last year. But we’ve got 8 meters here of 55.6% zinc. And then including 4.9 meters of 62% zinc. Pure, massive zinc sulfide. Sphalerite. I’ve never seen anything like it. And I can tell you it’s real, because we’re underground now. We can see it. We’ve got faces where we see this mineralization. It is spectacular. So that’s why we’re doing direct shipping because we’ve got spectacular in-situ grades. And at good widths, you know, very, very definite mining widths. So that’s why we can have the productivity we’re having.
This is a carbonate replacement zinc. This is the cartoon. The model of a carbonate replacement zinc by the guru of carbonate replacement zinc’s, a guy called Peter Megaw, who has visited our mine, by the way. You have these arms coming out, chimneys and mantles, they’re called. And these arms, these chimneys and mantles, can run kilometers, three, four, five kilometers. Where you see carbonate replacement zinc, so a lot of the silver deposits that we know in Mexico and Peru are actually carbonate replacement zinc, so zinc-silver deposits. And so you see these things in Mexico and Peru. And so you get these three, four, five kilometers of these mantles and chimneys. We’re high up in the system. We’re only down about 250 meters. So, we think there’s a lot, lot more to be found here. We’re very early in this. It’s still an early play, and I think this can go a lot, lot bigger…
It’s also a bigger regional play. Carbonate replacement zincs are based around carbonates, limestone. The pink area here is showing you the limestone province in the south of Turkey. And there’s been small-scale zinc mining going on there for quite a long time. So, we think there’s a lot more zinc to be found. No logic says that this is an isolated mine. There’s more to be found.
So that’s it. Zinc. Forty million pounds of zinc, $25 million USD revenue this year, 50% margin pre-tax. And still with a significant exploration upside.
Thank you. PSE. Buy our stock. We’re still undervalued.