Variscan Mines

Stewart Dickson

Managing Director & CEO

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Dear loyal shareholders and interested investors,

At Variscan, I believe our greatest strength lies not only in our assets but also in the trust we build with our investor community. That’s why I wanted to create 

—a regular note from me and the team, where we take you behind the scenes, share our latest thinking, and offer deeper context around our strategy and progress.

This isn’t just about reporting milestones, it’s about bringing you closer to the journey. Whether it’s thematic insights on zinc, updates on our operational plans, or reflections on the opportunities ahead, my aim is to give you a clear, candid perspective on where we’re heading, and why.

I encourage you to follow along, stay engaged, and share your thoughts with us. Your support and input are integral to what we’re building.

4th most consumed metal globally – Zinc is not only a structurally important component in construction and discretionary industries, but also a key contributor to the global energy transition

80% of zinc ore worldwide is mined underground

Positive pricing environment – firmly breached the $3,000 /tonne

Investment in new mine supply has lagged demand since the previous cycle; exploration budgets are falling globally

Inventories remain tight – global inventories for refined zinc have fallen ~85% YTD: ~1 day of demand held in LME warehouses 

Europe is one of the most important continents for refined zinc production [7].

Three (3) of the world’s largest refineries are located in Europe:

San Juan de Nieva, Spain: 520,000 mt capacity (Glencore)

Kokkola, Finland: 315,000 mt capacity (Boliden)

Budel-Dorplein, Netherlands: 300,000 mt capacity (Trafigura)

GLOBAL ZINC EXPLORATION BUDGET 2005–2024 (USD, millions)[3]

Goldman Sachs [4] forecasts a large boost to industrial metals demand from rising EU defence spending. Defence currently accounts for 2-3% of global zinc demand (same as copper, aluminium, steel), with European area military spending expected to rise from 1.9% in 2024 to 2.7% of GDP by 2027, and a large share of this rise to be spent on metals-intensive equipment. Increase in expenditure could create an additional ~90kt of zinc demand.

As always, thank you for your loyal support of Variscan, its assets and its people. 

Proven asset. Zinc focus. Ready for restart — and we’re just getting started.

Variscan Mines is uniquely positioned in Cantabria, northern Spain, to develop the country’s next zinc mine – it is a region with a proven history of zinc production, existing infrastructure, and a supportive regulatory environment.

Zinc is designated as a Critical Mineral by many governments and respected non-governmental organisations, such as the International Energy Agency and the World Economic Forum.

VAR and its projects offer the potential for local zinc supply into European markets, providing supply chain resilience and economic prosperity.

Misconception 1: "Zinc is just a boring industrial metal." 

Reality: Zinc is widely used in construction and galvanisation and it is crucial for infrastructure durability. There is no substitute for zinc in its applications. In contrast, there is substitute risk for certain copper applications from metal such as aluminium. Zinc’s importance extends beyond industrial use. Notably, Zinc is recognised as a Critical Mineral by the United States, Australian, Canadian, and the UK governments, as well as the International Energy Agency. This reflects the recognition of zinc as essential to key global economies, as well as highlights the strategic risk of supply chain disruption in the context of increasing global demand and geopolitical considerations.

Misconception 2: "Zinc demand is flat and unchanging." 

Reality: Zinc demand trends linearly, as well as rises with urbanisation and infrastructure spending — much of which requires zinc-coated steel. McKinsey estimates that a cumulative $106 trillion in investment will be necessary through to the year 2040 in order to meet the need for new and updated infrastructure [1]. Also, renewable energy production (wind and solar) and climate change resilience (coastal infrastructure) increases the need for anti-corrosive materials like zinc.

Misconception 3: "Zinc has no role in energy transition."

Reality: Zinc is part of the ongoing global energy transition, even if its role and discussions surrounding it are less visible. As an example, a 10MW offshore wind turbine can require 4 tonnes of zinc, whilst a 100MW solar panel park – enough to supply 50,000 homes – can require 240 tonnes of zinc [2]. Zinc is being used for grid-scale energy storage (especially in zinc-air and zinc-ion batteries) because it is reliably supplied, non-toxic, safer, and even cheaper than lithium for stationary storage.

Misconception 4: "There is no supply risk with zinc."

Reality: Zinc production is heavily concentrated in a small number of regions around the globe. Investment in new mine supply has lagged demand since the previous cycle, and exploration budgets have fallen for the past three consecutive years. Average zinc grades across the 12 largest new U.S. development projects have been around 5.8% Zn (the VAR-owned Novales-Udias Project is 7.6% Zn). Smelters in Europe and China have also shut down or curtailed output during energy price spikes. It is also important to remember that supply-side shocks can happen and do happen. The U.S. has the highest import reliance on zinc, of any refined base metal, standing at 75%.

Misconception 5: "Zinc isn’t investable."

Reality: Zinc is a $37Bn industry; larger than Lithium (Li), Cobalt (Co), and Uranium (U / U3O8) combined. There is also limited market exposure to pure-play zinc stocks, as zinc plays a hidden role in the profitability of diversified mining giants, and therefore Investors can gain exposure through zinc-focused mining companies such as VAR.

[1] McKinsey & Company. The Infrastructure Moment. 9 September 2025.

Base Metals’ Price Indices (rebased) 12 Month Rolling [5]

Zinc inventories vs LME price (US$/t, kt) [6]

China accounted for the largest share of global zinc production in 2024, representing ~ 33% of total production [8]. Peru was the second largest producer, representing ~11% of total production, followed by Australia representing ~ 9% of total production. Total global zinc production in 2024 was estimated at approximately 12,070 kilo tonnes.

When it comes to reserves, Australia and China hold the largest known zinc reserves worldwide. USGS estimates that Australia accounts for ~27% of global reserves, with China holding a further ~20%.

[1] McKinsey & Company. The Infrastructure Moment. 9 September 2025.
[2] International Zinc Association
[3] Center for Strategic and International Studies. Rebuilding U.S. Zinc Capacity in an Era of Global Competition. May 2025.
[4] Goldman Sachs Equity Research 29 August 2025
[5] LME, Bloomberg, Panmure Liberum Equity Research 3 Dec 2025
[6] LME, Comex, SHFE, Bloomberg, Panmure Liberum Equity Research 3 Dec 2025 
[7] International Lead and Zinc Study Group “The World Zinc Factbook 2024”
[8] USGS

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