QUESTION #2:  What is the certainty that IMP will have sufficient Ore to meet the full 24 year business plan? 

 

ANSWER:  Current exploration-based resource as provided by our geologist partner (AIMS) appears likely to be well below the actual reserve that will be identified when a full JORC Standard exploration program is completed.  The current reseource is based on actual boreholes, of which 52 have been drilled and analyzed thus far, while AIMS projects 200 boreholes will be required for the veins identified thus far to be fully explored down to 100 meters of depth.  And yet these identified veins represent only perhaps 30% of the mine's potential. Thus, as more boreholes are drilled, more Ore will be recognized as meeting the JORC standard of being "reserve" (see for more information about the JORC standard).  Since the current exploration effort has already revealed a projected 4.8 million metric tons of metal resource, translating to 3.5 million metric tons of fully processed metal ingot, there would appear to be sufficient Ore reserve already identified, keeping in mind that a resource is a projection based on a geologists professional opinion incorporating all available data, while a reserve is a technical definition created by and for the financial markets so as to allow bankers and investors to assess a particular "prove" value to a mine.  That a resource does not meet this standard of proof only indicates that the resource is as yet unproven, not that it is unlikely.  Furthermore, there are numerous veins that have been identified but not explored with drilling that will be explored, which should also increase the reserve projection.  Thus, IMP is comfortable that the current business plan assuming approximately 9.2 million metric tons of ore are mined and 2.3 million metric tons are required in order to produce 1.75 million metric tons of metal ingot, is very realistic.  Of course, once operations begin, IMP will be executing a full JORC compliant exploration program involving a projected 24,000 meters of borehole drilling.  When this is completed, IMP expects to have revealed considerably more than the resource currently projected.

 

 

QUESTION #3:  What is the current fundamental market situation for Lead & Zinc?  

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ANSWER:  Base metal prices have been declining over the past ten years from historical highs in the early 2000s, but are clearly stabilizing since 2017.  More importantly, the general trend for price stability is actually masking a more specific trend for Lead and Zinc metals moving in an upward direction.  Over the past year, in 2019, prices have been artificially declining due to the affects of the trade war.  However, it seems likely that this period of uncertainty will shortly be ending, at which we point the Chinese market will rebound.  

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​1)  For Lead metal, the price had been rising since 2008, when it crashed from highs to lows, as the demand for Lead in China grew due to heavy reliance on Lead for motorcycle batteries and solar and wind power batteries as China emphasis renewable energy.  When Lead and Zinc prices were lower in 2015, a number of mines went out of business or stopped production prior to bankruptcy, but the reason for this was that those mines tended to be underground operations with high mining costs.  The removal from the market of such operations during lower price periods in 2015 combined with the rise of demand in 2016 as China's economy strengthened, improved prospects for Lead, as does the general drift towards more electrically powered cars.  The drop of the lead price of approximately $500 since the highs in 2018, and then the subsequent partial rebound at the end of 2019, will create a less crowded market, opening doors for IMP in the Lead industry in Indonesia, where it will likely sell the bulk of its Lead Ingots.  The price of lead currently at $2,022 per metric ton, appears to be stabilizing, and represents a price that is below the $2,205 per metric ton price set by regulators for the TKS: AZ public offering.   As such, it would appear the Lead price will likely be rising over the coming year.

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2)  For Zinc metal, as with Lead, the price had been rising as demand in China grew along with China's economy.  While Zinc is primarily used for galvanization, there remained a large market for Zinc as a part of various alloys such as nickel, brass, aluminum solder, and silver.  Additionally, Zinc oxide is a common contributing element in the manufacture of a number of products, including cosmetics, pharmaceuticals, inks, paints, rubber, plastics, soaps, textiles, batteries, and a variety of electrical devices.  While the decline in Steel production had a negative impact on demand for Zinc in the period between 2008 to 2015, Zinc has begun to be used in a wider variety of products than ever before, and this bodes well for its future price.  Given the low price for Iron Ore, the market is clearly using less steel than previously, and yet the price of Zinc has been rising since the middle of 2015, indicating that the market is finding uses for Zinc other than for galvanization.  Currently the price of Zinc at $2,457 is just slightly higher than the price set for public offering for TKS: AZ at $2,425, suggesting there is still room for growth, as the TKS: AZ price was set as a conservative projection.  Either way, however, as more and more mines exhaust their surface reserves and are forced underground, the price of Zinc will stabilise and slowly grow in order to ensure the needed Zinc supply globally.   

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