The New Century Resources share price is up 12.12% to 18.5 cents per share today.
New Century Resources Ltd is an Australian-based mineral exploration and development company spread across Australia and the United States of America. Its assets include the Kodiak Coking Coal Project and Century Mine project.
New Century Resources zinc pricing
The New Century Resources share price is jumping on news that the company will benefit from a lowered 2021 zinc concentrate benchmark treatment charge at US$159/t.
The current price is a 47% reduction from the 2020 benchmark of US$299.75/t and New Century Resources says the reduction will “provide significant economic tailwinds for the operations in 2021”.
Zinc is used in a huge variety of medical products, in food production, and in the basic materials and rare earth sectors. There is a large amount of current market tightness around zinc, which continues to drive strong price fundamentals.
The pressure on supply is resulting from prolonged coronavirus related supply interruptions against strong metal demand in China.
What is the zinc benchmark?
The zinc concentrate benchmark is a base-level price on the mineral that’s negotiated annually between industry heavyweights Teck Resources Limited and Korea Zinc Co. Ltd.
It traditionally forms the basis for the pricing of zinc concentrate smelting contracts between other miners and smelters globally. In 2021, approximately 85% of New Resource Century zinc concentrate shipments are anticipated to occur against contracts linked to the annual benchmark TC of US$159/t.
The reduction in the benchmark has significant positive economic implications for New Century. The benchmark represents the largest overall business cost, at approximately 30% of outgoing expenditure.
The 2021 benchmark price is retrospectively applied from 1st January 2021, resulting in New Century receiving back-payment for shipments issued at higher prices during 2021.
New Century Resources share price snapshot
The New Century Resources share price has been on a wild ride over the past 12 months.
From a value of 17 cents per share in April 2020, it rose to 24 cents by May 19, fell to 11 cents by September, rose to 26 cents by January 2021 and is now at 18 cents.
These fluctuations represent a 23% overall gain over the past 12 months, but that’s 20% down against the basic materials sector.
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Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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