Companies that open business in Ukraine gained an opportunity to counteract bureaucracy in State agencies thanks to investor protection organizations. Recently, the Business Ombudsman Council responded to violations of the terms for prolongation of special permits of Avellana Gold Ltd. for the exploration of the Transcarpathian polymetal deposit by the State Service of Geology and Subsoil of Ukraine.

As early as March 2017, the companies “KRK” and “ZGRK” owned by Avellana Gold Ltd. appealed to the State Service of Geology and Subsoil of Ukraine with applications for prolongation of the special permits, which the agency illegally detained, impeding the company's work.

The Business Ombudsman Council has not found any violations in applications and recommends the State Service of Geology and Subsoil of Ukraine to re-examine the applications and a package of documents for extending the validity period of the special permits owned by Avellana Gold Ltd.

"We are pleased that the levers of influence appeared in Ukraine - the Business Ombudsman Council, and together with UkraineInvest and the European Business Association, business has a chance to fight bureaucracy in the power structures," said Andrii Smolin, the Head of Ukrainian representative office of Avellana Gold Ltd.

Avellana Gold Ltd. also holds a dialogue with the US Embassy in Ukraine and enlists the support of Oksana Markarova, a Government commissioner for investments, in resolving bureaucratic problems faced by foreign investors.

The Cabinet of Ministers of Ukraine discussed Draft Resolution on cancellation of the requirement for re-estimation of natural resources reserves every 5 years.

The American Chamber of Commerce in Ukraine emphasized on the necessity to cancel this requirement, since it leads to additional financial and bureaucratic burden on production companies. Moreover, re-estimation of reserves of natural resources increases the production cost of subsoil exploitation, blocking new investments in upstream sector.

The Cabinet of Ministers of Ukraine supported the offer to cancel the requirement for re-estimation of natural resources reserves every 5 years.

Analysts predict another great year for zinc, which reached multi-year highs in 2017.

In 2016, zinc was the best-performing LME metal, jumping more than 64% in 12 months. In 2017, zinc continued to climb, but at a slower pace: it’s gained over 21% since January.
Zinc’s highest point of the year came in October ($3,369.50). Supply worries and a strong Chinese demand outlook supported the base metal’s rapid price rally. The lowest point of the year for zinc came in June ($2,435). A stronger US dollar and risk aversion due to geopolitical tensions turned investors away from the base metal.

One of the key zinc trends this year has been the depletion of zinc stocks built up over the past 10 years; they have run out due to mine closures and cutbacks.

According to CRU Group, that led to a deeper refined zinc metal deficit and to a drawdown in global stocks. For his part, Junior Stock Review founder Brian Leni said that while he was expecting higher zinc prices in 2017, that didn’t translate into gains for the junior zinc stocks as he had estimated.

Supply and demand dynamics

According to the International Lead and Zinc Study Group, global refined zinc metal production is forecast to fall by 1.4 percent this year, to 13.53 million tonnes. However, next year the group predicts an increase of 3.9 percent, to 14.06 million tonnes.

That said, CRU Group analysts expect around 775,000 tonnes of new zinc mine supply to come onstream next year, with MMG’s Dugald River mine and Vedanta’s Gamsberg mine being notable contributors to production.

Despite those additions, CRU Group analysts believe global zinc stocks will continue to be rapidly drawn down in the first half of 2018, although this depletion will slow down in the second half of the year.

Similarly, CRU Group analysts expect Chinese zinc demand to grow next year, but at a slower rate. High prices will also begin to constrain demand growth next year in China and elsewhere. Outside of China, Li expects demand in the US and Europe to increase next year as industrial activities in both economies continue to gather pace.
With all that in mind, analysts forecast that the refined zinc market will remain in deficit in 2018. CRU Group estimates that the deficit will moderate from this year’s 750,000 tonnes to around 200,000 tonnes.

Key factors to watch

As the new year starts, investors should keep an eye on several catalysts that could impact the zinc market. CRU Group analysts mentioned Glencore’s mine output and the price-related response of Chinese mine supply as major factors that could potentially impact the market. Similarly, investors are suggested that watch winter capacity cuts in China, which depend on pollution levels and how local governments carry out the winter cuts. Looking ahead, zinc prices are on track to climb even higher in 2018 than they were this year. Experts said, on an annual average, basis zinc prices could rise to $3,154 in 2018.

Leni also remains very bullish on zinc, and expects the metal to continue to head toward $2 per pound, supported by falling global inventories, Chinese mine closures and stable steel market demand. For investors interested in zinc stocks, there are many zinc-focused companies to keep an eye on next year: e.g. Adventus Zinc, Solitario Zinc, Tinka Resources and Vendetta Mining.

However, investors should know that in a rising zinc price environment, many junior companies will boast a focus or exposure to zinc. More than ever, it will be paramount to do your due diligence.

The State Geological and Subsurface Survey of Ukraine groundlessly refuses American investor Avellana Gold the extension of the licenses for geological exploration of the Transcarpathian deposit of polymetals.

On this occasion, November 30, the head of Avellana Gold Brian C Savage met with the Head of investment protection company Ukrinvest Daniel Bilak and the government investment commissioner Oksana Markarova.

“ The State Geological and Subsurface Survey of Ukraine deliberately impedes the work of the company, putting forward requirements that are contrary to the legislation of Ukraine and are based on facts that do not correspond to reality” – Brian C Savage said.

Participants of the meeting, Oksana Markarova and Daniel Bilak, expressed their readiness to examine the situation in detail and make proposals to Prime Minister Volodymyr Groisman on solution of the difficulties that the bureaucratic system creates for foreign investors.

"This meeting is our hope for support in solving the problem. Now, we are preparing a legal summary of the violations of the State Geological and Subsurface Survey of Ukraine for non-issuance of licenses, "- added Brian C Savage.

Today, Avellana Gold is the only mining company in Ukraine, which, over the next five years, plans to invest $100 million in the extraction of polymetals in Transcarpathia. The project provides for the creation of 500 jobs with a perspective of 20-40 years. The company also has committed to carry out reclamation and landscaping on the territory of the deposit.

SHANGHAI, Oct. 27 (SMM) – Zinc price will remain strong in early 2018 but fall slightly in the latter half of the year as supply and demand are expected to be balanced, SMM predicts.

LME 3-month zinc will move between $2,450-3,500 per tonne in 2018. SHFE zinc should fluctuate between 20,500-29,700 yuan per tonne.