Pasinex Resources with CEO Steve Williams - High Grade Zinc in Turkey

00:00:06 I'm Steve Williams CEO Ethnics Resource’s 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're producing, we’re selling. We're already profitable and we've still got more exploration upside. The mine is called Pinal Gazo. It's in the south of Turkey. It's a 50/50 joint venture between us and the Turkish mining partner called ACMATEL.

00:00:46 It's a Carbonite replacement type zinc. It's direct shipping ore. We’re mining 32 percent zinc. We mine it. We crush it. We sell it. This year we're going to do 60,000 tons of production, which is about 40 million pounds of zinc. It's going to be around 25 million U.S. in revenue. We're going to push off at least a 50 percent pre-tax margin. If you have a look at our quarter one results that we put out Friday you can see we're already on target to achieve that this year.

00:01:23 This is already a really spectacular story I think. It's direct shipping ore. We're mining 32 percent zinc and at that grade we can sell it direct. A little bit about zinc - I'm sure a lot of you have heard a lot about zinc. I'll give you Steve William's one minute executive summary of zinc. As we know the zinc price ran up a lot in 2016. This year we hit a bit of a ceiling at about a $1.30 U.S. per Pound, it sort of bounced between a $1.30 down $1.15, $1.20yesterday, I haven't looked today yet but still the big picture is that there is supply side shortage of zinc.

00:02:15 We know this actually quite intimately. Since we started producing zinc and there are not a lot of people that are bringing zinc on right at the moment - Arsen Trevally 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.

00:02:47 The big picture is over here on the right. That's the LME stocks and you can see that the LME stocks and zinc are still going down. You need to be a little bit careful with that graph because that's LME stocks. It doesn't tell us anything about China. China consumes 50 percent of the world's zinc. They do have stockpiles in China. We don't know what's going on with their stockpile 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 dollar 30 ceiling that it had hit.

00:03:22 We see some upside so I think we'll go through summer and I think in the second half of this year we're going to see the zinc price going through a $1.30, $1.50 and maybe even higher. I'm looking forward to that. This is where the mine is. We're down the south of Turkey in what's called the Taurus Mountains - we’re an hour and a half north of the city of Aruna. Aruna is the fifth largest city in Turkey. It has 2.2 million people. It's a big city, frequent flights to Istanbul, frequent flights to Ankara.

00:03:55 We're another round down the road from Adana to the Port of Mersin. Mersin is one of the major commodity ports in Turkey. It's very easy to get our product out to market. One of the great things about Turkey is that we've been building this mine over the last three years, and it was a hard slog getting in and building the mine. One thing we didn't have to build was infrastructure. Turkey is magnificent. You know that white line there - that's the road that runs within two kilometers of our mine.

00:04:30 That's a major road going down to the city of 2.2 million people then another out on 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 a resource yet and I know that people are saying “well why?” I can tell you quite simply why, because the last three years have been tough years and our way through the tough years was to build a mine. We just focused on building the mine.

00:05:11 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. They're going to be doing our official 43-101 and resource should be out August. I can tell you that's the actual wireframe of a resource. 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.

00:05:47 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 adits last year. That enabled us to significantly increase our production. I'll show you that in a second. Yeah, we've really increased the number of mining spaces we have and that's really increased our productivity. That's this picture. The graph at the top is the year by year zinc production that we will be putting out of the mine. We actually started mining in 2014 but a very small amount, and then since then each year we've been increasing the production.

00:06:31 This year we will double the production from what we did last year and the graph down at 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. We haven't finished yet. This is a spectacular deposit. I know. You’ve probably heard that before. 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.

00:07:08 We've got eight meters here or 55.6 percent zinc and then including 4.9 meters of 62 percent 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 phases 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 - very definite mining widths. That's why we can have the productivity we're having.

00:07:77 This is a carbonate replacement zinc. This is the cartoon, the model of a carbonate replacement zinc by the Guru of carbonate replacement zinc. He’s a guy called Peter McGough, who has visited our mine by the way. You have these arms coming out- chimneys and mantas they're called and these arms, these chimneys and mantas can run kilometers three, four, five kilometers. What you see carbonate replacement zincs, a lot of the silver deposits that we know in Mexico and Peru are actually carbonate replacement zincs. They're zincs silver deposits. You see these things in Mexico and Peru andyou get these three, four, five kilometers of these mantas and chimneys.

00:08:42 We're high up in the system. We're only down about 250 meters. 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. There's been small-scale zinc mining going on there for quite a long time.

00:09:20 We think there's a lot more zinc to be found. There’s no logic says that this is an isolated mine. There's more to be found. That's it. 40 million pounds of zinc, 25 million U.S. revenue this year and a 50 percent margin pre-tax, and still with a significant exploration upside. PSE, buy a stock - we're still undervalued.