Zincore encouraged by results at Peru zinc project

TORONTO: Zincore Metals Inc said on Tuesday it is encouraged by new results from its Accha zinc project in southern Peru, where the latest round of drilling has intersected high grade levels of zinc.

The Vancouver-based company said results from 10 drill holes at the Yanque deposit indicate that the asset has a high percentage of mineralization at and near the surface. This could allow it to be developed as an open-pit mine, the company said.

Zincore Chief Executive Jorge Benavides said he is confident that the company's ongoing pre-feasibility study will confirm the technical and economic viability of the project.

"As evidenced by the recent C$663 million takeover offer by Nyrstar NV for Breakwater Resources, many market participants see the potential for a significant shortage of available zinc supply versus global demand within the next few years," Benavides said.

Experts predict a global zinc surplus in 2011 but expect markets to tighten and prices for the metal to rise around 2013.

Belgium-based Nyrstar, one of the world's largest zinc smelters, has been aggressively pursuing pure-play zinc miners in the last year. Last month, it launched a friendly bid for Canadian miner Breakwater Resources.

Despite the recent interest in zinc projects, Zincore's shares have fallen more than 65 percent in the last three months, in part due to political uncertainty sparked by recent protests against mining in Peru.

Last month, protests against mining and energy projects in south-eastern Peru turned deadly, killing at least five people and spurring the government to revoke the mining license of Canada's Bear Creek Mining in a bid to calm the unrest.

Shares of Zincore were flat at midday on Tuesday at 32 Canadian cents on the Toronto Stock Exchange.

Copyright Reuters, 2011