ONTZINC CORPORATION (CDNX: OTZ) Trades on Toronto's TSX Venture Exchange

Dear Reader, 

Today's profile features a company that is well-positioned in the metals industry with a key edge in Zinc mining. What does Zinc mining have to do with the rest of the world?  Just about everything. The U.S. Penny is 98% zinc with a copper coating.  Zinc is the third most used nonferrous metal (after aluminum and copper), of which the U.S. consumes more than one million metric tons annually.  The average person will use 730 pounds of zinc in his or her lifetime according to the U.S. Bureau of Mines.

Read on:  Zinc makes the average automobile last longer, 17 pounds of zinc protect it from rust, another 20 pounds are used to make zinc die cast parts like door handles and locks, and each tire contains about 1/2 pound of zinc, which is needed to cure rubber.

More? Sure there's more: Zinc sheets are used in architecture and zinc-air batteries provide more than 12 hours of usage on a single charge; almost 10 times the run-time of other batteries.  A high-purity alloy of zinc and copper is now at the forefront of water purification technology for use in residential, municipal, industrial and medical filtration systems and zinc bolsters immunity, boosts brain activity, heals skin, stimulates taste, smell and mood and relieves the symptoms of the common cold.  The toy market is an important user of zinc and law enforcement officials around the world conduct safer and more reliable undercover work with a new high-tech tape that is primarily made of zinc. 

The demand for zinc has seen 40 years of unrelenting growth and growth is expected to increase as Asian demand accelerates. So where does all this zinc come from?  Our featured company today is a major provider to wholesalers and manufacturers and we think you'll like their story.
 

ABOUT OTZ

With a market capitalization of US $37 million, ONTZINC (OTZ) has been trading in the Cdn $.30 cent range on the Venture Exchange in Toronto.  The Company intends to seek a listing for its stock in the United States shortly, a move that would provide superior exposure to North American investors.  OTZ is in a position to control a substantial piece of the global zinc market.  At full operating capacity at the Company’s two locations, OTZ could produce some 300 million pounds of zinc per year for potential annual cash flows of between $75 and $100 million. 

In September, 2003, ONTZINC  reported that its subsidiary, St. Lawrence Zinc Company LLC completed the purchase of the Balmat Zinc Mine in St. Lawrence County, New York. The Balmat purchase brings OTZ’s zinc holdings to three. Through its ScoZinc subsidiary, the Company has a 100% interest in the Scotia Mine near Halifax, Nova Scotia. OTZ also holds mineral leases in Southwestern Ontario, Canada. 

The Balmat and Scotia mines, when fully optimized, could produce 300 million pounds of zinc annually.  With a replacement value in the order of $400 million, these mines represent world-class facilities. OTZ through its wholly owned subsidiary ScoZinc Limited holds a 100% interest in the Scotia Mine (also known as the Gays River Mine) near Halifax, Nova Scotia. OTZ management believes that this mine can be re-opened during an improving zinc market and be economically viable. OTZ also has an advanced exploration project for Mississippi Valley-type zinc mineralization in Southwestern Ontario. 
 

At full capacity,  the Balmat and Scotia mines could produce approximately 1.6 million tons of ore annually.  OTZ has two outstanding mining assets  with proven reserves  and low-cost operational milling facilities. The Company operates in a buoyant metals market forecasted to continue trending upward. The Company is well financed, with significant working capital and no debt.

Later this year, OTZ expects to commence an aggressive surface exploration and drilling program to test for larger resource targets on the Balmat property’s 56,000 acres of mineral leases. By expanding current reserves, production could increase to 1.2 million tons/year. 

The total mineral resource outlined to date at the Scotia Mine is estimated to be 5,131,668 tons. The Scotia Mine consists of mineral rights and land ownership, plus four exploration licenses in the general vicinity of the mine.  Excellent exploration potential on ground owned by the Scotia Mine is expected to be drilled to further extend mine life.

In Southwestern Ontario, OTZ's mineral leases are underlain by a geological setting similar to that hosting the major Mississippi Valley-type (“MVT”) districts of North America. MVT deposits are large, world-class zinc-lead resources that occur in districts with potential for 300 to 500 million tons of ore. OTZ has designed a $3 million exploration program to test this potential starting in the Spring 2004.

THE PROPERTIES

Balmat St. Lawrence Zinc LLC

OTZ in close cooperation with the key management personnel of the Balmat Mine has developed a new mining plan based on the production of approximately 2000 tons of ore per day using mining methods that will reduce dilution and increase the average grade of ore being delivered to the mill.  The 5000 ton per day mill will be operated for approximately two weeks per month on a campaign basis. The mining operations will be conducted on a seven days per week basis, two shifts per day of ten hours each.  Balmat, once the third largest zinc mine in the U.S., produced 33 million tons of ore grading 8.7% zinc from 1930 through 2001 when the previous owners placed the mine on standby in the face of mounting corporate debt and deteriorating metal prices.  OTZ's plan is to commence production in early 2004 at an initial annual rate of 400,000 tons (representing 30% capacity) building to 100% capacity as new reserves are established. An additional $18.25 million over 10 years is to be made available for Balmat through the New York state “Empire Zone Development Capital Program”

The Balmat-Edwards mining district is located in St. Lawrence County, New York approximately 25 miles south of the St. Lawrence River and the Canada-US border. The milling capacity at Balmat is 5,000 tons per day in a modern, highly automated facility. With a focus on establishing new reserves and reducing mining dilution, the Balmat mine is expected to generate significant cash flow to OTZ.  Production costs are expected to range from $0.30 to $0.35 per pound while current prices for zinc are expected to trend inexorably upwards.  Though today’s zinc price is only US $0.43 per pound, the 40-year average in 2003 dollars is $0.73 per pound.

ScoZinc

The Scotia Mine, located outside Halifax, Nova Scotia, has the capacity to produce 1,300 tons per day or 400,000 tons per year from a modern open-pit operation.  Previous operators of Scotia achieved zinc and lead recoveries of 90% and 91% respectively.  While current reserves are sufficient for a minimum 8 years’ mine life, exploration potential in the region could add many years of additional operation. It is the intention of ONTZINC to develop an expanded business plan for the Scotia Mine and bring it into production as market conditions justify.  The total mineral resource outlined to date at the Scotia Mine is estimated to be 5,131,668 tons. The Scotia Mine consists of 615 hectares of mineral rights and 569 hectares of land ownership, plus four exploration licenses in the general vicinity of the mine.

The Scotia Mine assets acquired from Pasminco Canada Ltd. include the mine property, concentrator, maintenance facilities, administration buildings, and associated infrastructure. Optimization of the mine planning should extend the mine life to 10 - 15 years. Excellent exploration potential on ground owned by Scotia Mine in the area can in the future be drilled for further prolongation of mine life. The Scotia Mine is located approximately 48 kilometres northwest of Halifax and one kilometre east of the community of Gays River in the Halifax Regional Municipality in the Province of Nova Scotia Access to the site is by paved roads and is approximately fifteen kilometres off the Trans-Canada Highway.  The mine is in a rural-residential area of Central Nova Scotia that is typified by rolling topography and abundant surface water. The geology in the area consists of Mississipian Age limestones and dolomites contained in a reef structure overlaying older quartzites and slates.

A steel, 14,000 square foot, storage building is leased from the Nova Scotia Business Development Corporation. It sits on 4.56 acres of land on the Marine Terminal at Sheet Harbour, Nova Scotia, approximately 80 road kilometres from the mine. This building has the capacity to hold approximately 10,000 tons of lead/zinc concentrates. Alongside the dock, there is a ship loading conveyor system with the capacity to load 500 tons of concentrate per hour. This loading facility is owned outright by Scotia Mine. The in place mill and related facilities have a replacement value of approximately $50 milion.

Southwestern Ontario

Southwestern Ontario is underlain by a geological setting similar to that hosting the major Mississippi Valley-type districts of North America. During the fall of 2001, the company completed an advanced technology geochemical (MMI) survey that has outlined 24 extensive zinc geochemical anomalies with dimensions indicative of the potential for a number of large zinc resources in the project area. Several of the zinc geochemical anomalies were evaluated using Quantec's new Titan24 deep penetrating, 3D induced polarization and magneto-telluric system. The geophysical results indicated the presence of sulphide mineralization co-incident with the geochemical targets and at the inferred depth of the geological target zone.  Mississippi Valley Type (“MVT”) deposits are large, world-class zinc-lead resources that occur in districts with potential for 300 to 500 million tons of ore. In eastern North America major districts that have total production in excess of 1.4 billion tons occur on the southeast, southwest and west perimeter of the Michigan-Illinois sedimentary basin.

A new zinc district in southwestern Ontario would benefit from the well developed mining infrastructure that supports numerous major underground and open pit industrial mineral operations.    In addition, a base metal project in this area would benefit from access to Great Lakes ports from which concentrate can be shipped anywhere in the world.

ONTZINC MANAGEMENT

Clifford H. Frame, the Chairman and Chief Executive Officer of ONTZINC, was the Chairman and director of the company prior to its amalgamation with Pan American Resources Inc. in July 2002.  Prior thereto, Mr. Frame was a mining consultant and served as a director and/or senior officer of some of the most successful mining companies in the world, including Inco, Denison Mines Limited, Tara Mines, and Curragh Inc. He is also a two-time recipient of Canada's Mining Man of the Year Award.

Mr. Frame’s experience and reputation have enabled the company to assemble a world class group of mining professionals to manage ONTZINC’s operations and accelerate the company’s acquisition and finance goals for a smooth roll-out of existing mine plans and continued growth. As a consequence, ONTZINC has emerged from the laborious work of assembling a property portfolio ready to launch real mining operations:

• ONTZINC has two outstanding mining assets with proven reserves and low-cost operational milling facilities.
• The Company operates in a buoyant metals market forecasted to continue trending upward.
• The exploration potential exists for exploration to add substantially to proven reserves.
• The Company is well financed, with significant working capital and no debt.

OTZ FINANCIAL HIGHLIGHTS

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To Contact ONTZINC Corporation

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