Europe’s Hidden Zinc Opportunity: Why Variscan Mines Could Be the Next Base Metals Rerate

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1. Executive Summary

Industrial materials are quietly entering a multi-year bull cycle underpinned by global reindustrialisation, infrastructure renewal, and the energy transition. Copper and lithium dominate headlines whilst gold and silver have already bolted. Yet zinc, the unsung workhorse of modern industry, is building a powerful technical and structural base for a sustained price revaluation.
In this context, Variscan Mines (ASX: VAR) sits at the intersection of multiple emerging trends.

1.Europe’s strategic drive for domestic resource security.

2.Spain’s revitalised mining sector.

3.Secular commodities bull-run.

Variscan Mines boast a brownfield high-grade zinc asset poised for restart. With a series of near-term catalysts, a strategic investor in commodity trading house Square, and a valuation multiple times below peers, Variscan represents a compelling and asymmetrical opportunity.

2. The Global Industrial Materials Supercycle

After a decade of underinvestment in mining capacity, the world is entering a new phase of resource scarcity. Western economies are reshoring manufacturing, rebuilding infrastructure, and investing heavily in energy transition projects; all of which demand enormous volumes of steel, copper, zinc, and other industrial metals.

Governments are again behaving as the primary capital allocators, deploying stimulus into physical industry. From grid hardening and EV infrastructure right through to housing and clean energy. Against this backdrop, the global mining pipeline has thinned at an alarming rate. Projects take longer to permit and cost more to build. This structural mismatch between constrained supply and accelerating demand is the hallmark of a secular bull cycle, and the charts confirm the story.

XMJ – Put in a 5-year bull flag, ran into the support of a major uptrend starting back in 2016, reversed sharply and broke through a 2 year downtrend on its way to a new all time high.

Other broader commodity indices show a clear bottoming out and return to an uptrend. We can refer back to the 2000’s as the last example when the perfect storm hit. In my opinion, the first move in the current cycle looks more impulsive than the first move of the prior cycle (implying the current cycle could be much more enduring and magnified). Of course, these are only showing gains of a few hundred percent over a decade but consider that for the broad commodity index (inclusive of all commodities) to advance 300% over a decade, logic tells us there would have to be some serious outperformers in that basket. Gold and silver have bolted. Copper is usually the next cab off the rank. Energy generally has it’s time in the sun. And then you have industrial metals.

For investors, the shift is profound: industrial metals are no longer cyclical, they’re strategic and a huge part of sovereign objectives. Exposure to quality assets in stable jurisdictions is the next frontier for capital rotation.

3. Zinc: The Quiet Achiever of the Base Metals Complex

Zinc rarely gets the spotlight, but it’s indispensable to the modern economy. Over half of global zinc consumption goes into galvanised steel, the corrosion-resistant backbone of buildings, vehicles, transmission towers, and renewable energy structures.

3.1 The Fundamentals

Global zinc inventories have fallen to critical levels. Many high-cost smelters are struggling with feedstock shortages, and supply remains heavily concentrated in politically volatile regions like China and Peru. Meanwhile, demand is resilient, particularly in Asia and Europe’s decarbonisation programs.

3.2 The Technical Setup

Zinc’s futures chart tells the story: a 15-year rising parallel channel with each cycle forming a higher low. The metal has just rebounded from another such trough, setting up a bullish turn that could see it test the top of the channel; a level that, if broken, would mark a multi-decade breakout and a fresh all-time high.

Long-Term Weekly Chart:

·For the Elliott Wave enthusiasts this looks like a “triple 1-2” over a 15 year period.

·6 Successful retests of resistance as support, with a liquidity grab down to the bottom of the channel.

Weekly Chart Zoomed-in:

·Hit the top of the channel then put in a correction. Corrective move ‘double bottomed’ at key support/bottom of channel with bullish divergence.

·Put in bearish divergence and then retraced to the fib. 618 and has bounced from there off hidden bullish divergence.

·It has already broken the 2 year downtrend resistance and is about turn bullish again with a break of recent previous high imminent.

·3,700 confirms resumption of uptrend and move back to top of channel.

·4,400 confirms breakout to all-time high.

·6,000 is a breakout of the top of the parallel channel and confirms the move from a 15 year accumulation into a parabolic public participation phase, likely to be a multi-year impulse.

3.3 Why Zinc Deserves More Attention

Unlike copper, zinc is not saturated by speculative flows, meaning its upside moves are typically sharper. As galvanised steel demand accelerates under decarbonisation and infrastructure programs, zinc’s importance in protecting steel structures from corrosion makes it a critical enabler of the energy transition, even if it doesn’t carry the “battery metal” label.

In other words, Zinc gets a bad rap. It doesn’t get as much coverage and certainly doesn’t have the same sex appeal. This could soon change.

4. Europe’s Strategic Metals Imperative

Europe’s industrial base is being reshaped by two powerful trends: energy transition investment and supply chain sovereignty. The EU’s CriticalRaw Materials Act (CRMA) aims to secure 10–15% of its strategic material supply domestically. Carbon border taxes are pushing industry toward local, low-emission supply chains.

For decades, Europe outsourced mining due to environmental politics. That policy is now reversing. Mining is returning as a strategic industry, with government and capital markets aligned to support near-market projects.

This is where opportunity is born. The shift that’s currently underway remains underappreciated by global investors. Few realise that permitting timelines for brownfield European mines are now often shorter than in parts of Australia or North America — provided projects emphasise ESG, recycling, and community engagement.

Zinc sits squarely within this new paradigm: essential for renewables, steel, and housing, yet largely imported. Europe’s dependence on external zinc supply creates the perfect tailwind for domestic aspiring producers like Variscan.

5. Spain: The Misunderstood Mining Jurisdiction

Spain’s mining reputation suffers from legacy perceptions such as bureaucratic red tape, environmental pushback, and inconsistent policy. But the reality is far different. Even I was guilty of pre-judging. Admittedly, when I heard of Variscan Mines, my first reaction was – “Spain!? I thoughteveryone there was too busy having siestas to build mines.”

Regions like Cantabria and Andalucía are very pro-mining, rich in geological history, and actively seeking to revitalise brownfield assets that can create employment and attract capital. Spain’s infrastructure density, ports, power, roads etc. give it a natural advantage. The country’s fiscal regime is stable, and crucially, no state royalties apply to mining production, giving operators flexibility to monetise future output through innovative financing mechanisms like streaming and offtake prepayments.

Moreover, Spain’s proximity to Europe’s largest smelters and galvanising industries creates one of the shortest mine-to-market distances in the developed world (Glencore’s smelter is the largest in the world and sits just 80km’s up the road from Variscan’s project). The gap between perception and reality is therefore a source of valuation asymmetry: Spain’s risk discount is unwarranted, and investors attuned to this can position themselves ahead of the curve.

6. Variscan Mines (ASX: VAR): Building a European ZincPowerhouse from the Ground Up

6.1 Asset Overview

Variscan owns the Novales-Udias Zinc Project in Cantabria, northern Spain, a region that once hosted one of the richest zinc mines in Europe. Novales-Udias is a historic, high-grade underground zinc-lead operation. The mine has extensive existing infrastructure, including declines, shafts, and nearby processing facilities, with over 7.5km’s of underground workings and development. All that value already in and on the ground translates to lower capex and better economics for the upcoming study.

Over the past couple of years, they’ve been steadily assembling one of Europe’s most strategically positioned zinc portfolios. The project has already begun to validate its geological potential and strategic intent through a string of measured, value-building steps that demonstrate both resource quality and operational foresight.

Their Maiden Mineral Resource Estimate delivered a JORC resource of 1.1 Mt @ 9.0% Zn and 1.2% Pb in 2023. A year later they increased that by 3.1x and saw a significant proportion of tonnes upgraded into the Measured category for the first time.

In December 2024, the company announced a major resource upgrade.

·3.4 million tonnes @ 7.6% Zn and 0.9% Pb (cut-off 2% Zn+Pb)

This is a remarkable outcome for a company still in its early stages of redevelopment and highlights the richness of the mineralized system. The fact that such a result was achieved from only the first major MRE update reinforces both the quality of the orebody and the reliability of the geological model underpinning it. This should provide a degree of comfort to anyone assessing the investment opportunity from the perspective of exploration success upside. It makes them the happy owner of the second highest-grade Zinc deposit on the ASX!

However, unlike some early exploration strategists, Variscan are not sitting on their laurels and placing all their eggs in the ‘resource expansion’ bucket, praying to be taken out. They are studiously employing a measured two-track strategy which is particularly noteworthy:

1.Cashflow/Pathway to Production: The company is presently advancing a mine restart study focused solely on the San José Mine which contains 1.7 Mt @ 8.6% Zn and 1.43% Pb with the objective of establishing near-term production and cash flow. They aim to be in production by 2027/2028.

2.Exploration and Resource Growth: Having already demonstrated the potential of the existing ground, they’re expanding their footprint to at Novales-Udias, targeting multiple high-grade zones that remain underexplored despite historic production and known mineralization.

a.Not content with increasing their Spanish footprint, they are going one step further expanding their European footprint. The company’s proposed acquisition of zinc assets in Ireland positions it to evolve into a continental-scale player.

This dual approach effectively balances de-risking and growth and cranks up the degree of leverage to any exploration success, ensuring the company can transition from developer to producer while still expanding its resource base for the next phase of scale. Of course, nothing is guaranteed, but if you are going to back a winner, it always helps if that winner is aggressively positioning themselves to capture the absolute maximum value from that upside. And that’s what Variscan are doing. It’s aggressive, acquisitive, methodical, and holistic.

Collectively, these elements paint a picture of a company with both discipline and ambition. Variscan is executing a coherent plan that aligns with macro trends in European resource independence and the global zinc supply dynamic.

Which brings us to where we are today: For all the groundwork, things haven’t happened overnight, and the share price has lagged. Opinions flying around suggest that it is a case of Spain being an unknown, many investors just aren’t used to hearing about opportunities in this part of the world and there are not many prior examples to get the speculators excited. In a market where ‘attention’ is currency, Variscan is potentially struggling to compete with companies who are attracting bids by just putting the words ‘gold’ ‘silver’ or ‘antimony’ in their headlines. But companies don’t fly under the radar forever and eventually the weight of opportunity overrides lack of awareness. Variscan finally appear to be at the inflection point where a flurry of key potential re-rating catalysts are about to drop, and these represent critical data that the market needs in order to start applying some numbers and valuation calculations to Variscan’s assets.

6.2 Upcoming Milestones

This quarter will see a sequence of value-defining catalysts:

• Design and engineering plans for the new plant.
• Udias drilling results expanding the resource footprint.
• Updated MRE (Mineral Resource Estimate).
• Metallurgical testing to validate recoveries.
• Restart study outlining economic viability. This will be focused on the 1.7mt @ 8.6% resource of the San Jose Mine within the wider

Collectively, these form the foundation for a development decision, and more importantly, they allow analysts and investors to start modelling cash flow scenarios.

6.3 The Funding Challenge and Opportunity

The restart is going to require a capex amount that will be a huge saving compared to a greenfield project, but which could still be large enough to represent a challenge for a $7m market cap company.

The particulars of this opportunity give rise to multiple financing pathways:

• Spain provides the advantage of not taking a royalty which means Variscan can sell one instead. This would be a percentage of future revenue to a financier, in return for upfront capital that would go towards the Capex.
• A prepayment from offtake partners (See 6.4 for why this is a realistic option).
• Sell a stream on the lead by-product. The zinc/lead combo means they can monetise the future lead production by committing that by-product to a financier. Variscan would guarantee the lead to a metal streaming company or trading house at a fixed discounted price across the life of the project. In return they would pay an upfront amount towards capex.

Each mechanism is realistic and non-dilutive. Success in any of them could provide both the capital and the credibility needed for institutional re-rating. The more likely scenario is one of the above combined with a debt/equity combo for the remaining portion. That would provide a boost of confidence to the market and further de-risk the project.

6.4 Strategic Advantage: The Square Partnership

We want to look for signs that things are realistic and blue sky scenarios are credible. Square Trading, a commodity trading house and VAR’s 23% shareholder, is not a passive investor. They are both a strategic off-take negotiator and a capital markets partner, giving Variscan rare commercial depth for a junior.

It is not uncommon for trading houses to be contracted to manage offtake negotiations, but what is unique is that 23% shareholding that Square Trading have taken in Variscan. This is a huge sign of validation: it suggests that Variscan’s ore quality and scale potential meet commercial standards. For investors, this also mitigates counterparty risk and signals institutional endorsement. It confirms they are aligned with the interests of the shareholders and lends weight to the idea that they will be fighting for the best deal possible.

Their expertise and experience also go a long way to de-risk the overall success of the project because they are exactly the type of partner who would have the requisite skills to secure potential financing by way of offtake pre-payments (as referred to in 6.3).

In summary:

·Square describes itself as a “unique company with involvement in all raw-material supply chain from exploration, mining, sales to marketing and trading.”

• Square Trading Singapore Pte Ltd (a subsidiary of Square) entered into an exclusive marketing agreement with Variscan Mines for zinc and lead concentrate from the Novales-Udías and Guajaraz projects in Spain.
• Under that agreement:
  • Square obtains marketing rights to all zinc/lead from those projects.
  • Square will assist Variscan with offtake-customer introductions and help arrange financing for the projects (so they can deliver product to customers) as part of the agreement.
• Square’s board and management have significant experience in mining/joining exploration and marketing projects — e.g., Staffan Ever (Executive Chair) with 25+ years in mining.

• Having Square as both marketing partner and shareholder/backer adds commercial credibility to Variscan’s restart ambitions.
• It strengthens the argument that Variscan has a real offtake/marketing solution in place ahead of production, which reduces execution risk.
• Square’s ability to assist with financing is also a positive, given Variscan’s need to raise capital for a plant rebuild.
• For investors, it means the risk of being “explorer without leverage to market” is lower/mitigated.

6.5 Expansion and Continental Ambition

Variscan’s option to acquire the Irish zinc assets through an earn-in arrangement positions it to become a pan-European zinc player. Ireland is a proven zinc province hosting world-class deposits (e.g., Navan, Lisheen). These assets give Variscan optionality, exploration upside and potential JV leverage, expanding its relevance beyond a single mine.

7. The Valuation Disconnect

Variscan’s enterprise value of ~$5 million versus peers like Develop Global ($1.6b EV) and Polymetals ($170m EV) highlights the disconnect.

Even after adjusting for scale, stage, and jurisdiction, Variscan’s EV per tonne of contained zinc (~A$19/t) is more than 7x cheaper than comparable companies.

If the restart study validates the economics and funding path, a re-rating toward even a conservative A$100 – 150/t multiple would imply a 3 – 5x valuation uplift from current levels, before considering exploration or Irish expansion upside.

	Metric	Variscan Mines (VAR)	Develop Global Ltd	Polymetals Resources
1	EV (AUD)	$4.9m	$1,670.2m	$170.5m
2	Contained Zn (t)	257,141	783,952 (Sulphur Springs only)	1,299,100
3	Tonnes Resource	3,378,580 (7.6% Zn avg)	13,799,000 (5.7% Zn avg)	16,300,000 (8.0% Zn avg)
4	Grade (Zn%)	7.6% (high-grade)	5.7% (Sulphur Springs, DFS)	8.0% (Endeavor, MRS)
5	EV/tonne Zn (A$/t)	18.9	385.8	131.2
6	Project Stage	Resource/Scoping, restart	DFS, advanced development	Mining Restart Study (MRS)
7	Jurisdiction	Spain (brownfield, support)	Australia (Pilbara)	Australia (NSW, known asset)
8	Infrastructure	Existing mine, near smelter	Pilbara resource region	Established mine, extensive
9	CAPEX Need/Advantage	Low CAPEX restart, sunk capex	High CAPEX, new development	Restart leverages past capex
10	Strategic Alignment	Square (offtake), gov support	Large developer, mining group	Known ownership, mining group
11	Resource Upside	Large undrilled zones, open	Large resource, DFS expansions	Very large resource, expansion
12	Other Quality Factors	67% M+I, brownfield, high grade	DFS/MP, substantial scale	MRS stage, largest contained Zn

8. The Road to Re-Rating

The next six months could mark a pivotal inflection. As each technical and economic milestone lands, Variscan’s risk discount narrows.

With a tight register (Top 20 holding ~75%), liquidity is thin, meaning that once institutional or retail awareness arrives, price action could move quickly.

Each milestone from metallurgical results to the restart study acts as a step on the rerating ladder.

If funding visibility follows, Variscan could transition from a speculative explorer to a near-term producer, the point at which markets typically assign exponential value.

9. Conclusion: A Contrarian Opportunity in the Heart ofEurope

Variscan sits in the sweet spot of the new industrial cycle:

• A brownfield, high-grade European zinc project.
• A pro-mining jurisdiction misunderstood by markets.
• A strategic investor with the ability to finance and market production.
• Multiple near-term catalysts with transformative potential.

Zinc is turning technically bullish. Europe needs domestic supply. Spain offers the jurisdictional leverage. Variscan has the asset, partner, and potentially the timing is about to be just right.

For investors seeking real assets with asymmetric upside, this is precisely the kind of forgotten story that later becomes obvious in hindsight. While everyone talks about the lithium turnaround, uranimoon and copper, don’t forget to put some zinc across your nose… just a whisper should be enough.