By Heather Matthews – Exclusive to Lead Investing News

Current market climate

After months of investor withdrawals and plummeting profits, RAB, a major hedge funds investment firm that focuses on natural resources, has announced plans to alter its fee structure in order to keep investors.

The firm reports profit decreases of more than 48 per cent since the start of 2008. Its CEO has stepped down, and the new management will attempt to keep investors by drastically cutting their fees.

A new, locked-in investment fee structure will allow the company to regroup. “The background to the proposal includes a very weak market for early-stage natural resources and other development stocks, and poor liquidity for both the companies in which the Special Situations strategy is invested,” said an RAB spokesperson. The announcement from RAB represents a worrying trend in hedge fund for natural resource investments. Leveraged hedge funds are liquidating many commodities investments to meet financial obligations, and as a result, prices are dropping radically.

Although zinc and lead spot prices are currently stable, these business developments bode ill for commodities investments in September 2008. At present, zinc prices are up 0.06 per cent (NYSE), with a spot price of 0.7955. Lead metal spot price for September 11, 2008 is 0.8278, unchanged since September 10, 2008 (NYSE).

Market conditions affecting lead production

The current market climate is affecting lead production levels worldwide. Blue Note Mining (TSX: BN) is slashing jobs at its Canadian lead/zinc mines. Seventy jobs will be lost before the end of 2008. Blue Note is also attempting to streamline its production methods in order to cut costs.  The cutbacks to mine production at Blue Note can be traced to faltering stock quotes: from a year high of .42 cents per share, the stock has now settled at .04 cents per share (September 11, 2009, TSX).

The announcement from Blue Note comes shortly after fifty miners lost their jobs due to the scaling back of production at the Hellyer Zinc Mine in Tasmania. Experts feel that these mine closures may drive up spot prices in the long-term, as they will created demand for zinc and lead in the world market. For now, however, these mine closures are harbingers of lower spot prices for the short term. 

Canadian lead/zinc news

Breakwater Resources Limited (TSX: BWR.CA)has four zinc mines worldwide, two in Canada, one in Honduras, and one in Chile. Their focus is on the mining and development of base and precious metals. Their current stock quote on the TSX is 0/25/share, as of September 11, 2008: this is a 0.02 per cent increase over September 10 closing stock quotes.

Breakwater recently announced its decision to exercise a property conversion of two of their properties (at Caribou and Restigouche).

Acadian Mining  (TSX:ADA) has reported some good news for this fiscal quarter, with regard to zinc and lead production levels. It is certain of exceeding production goals for this month for zinc, and it feels that lead production is also at an optimum. Their current stock quote on the TSX is 0.175, a decrease of 5.41 per cent over 2 days (as of September 11, 2008). Acadian Mining is based in Halifax, Nova Scotia, and it is diversified, with open pit mining of base metals, as well as gold mining (Scotia Goldmine Project). Acadian also owns and operates a mine in Newfoundland (Tulk North), which produces base metals.  

For more information on zinc metal and lead metal news, please click on this link.

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