First concentrate production from MMG Ltd.'s Dugald River zinc project in Queensland, Australia, is now expected later this year, instead of the first half of 2018 as originally planned, as project construction advances ahead of schedule, CEO Jian Jiao said during an Aug. 23 call with analysts and investors.

"The project is perfectly timed to meet a growing supply-demand gap, with zinc prices breaking through US$3,000 per tonne or US$1.40 per pound in recent days," Jiao said. The company swung to a first-half profit of US$113.7 million from a year-ago loss of US$93 million.

The company expects CapEx for developing the project to be at the lower end of the guidance range of US$600 million to US$620 million.

Jiao noted that the company's next growth target is the successful delivery of Dugald River zinc-lead-silver development, which will provide the company with important exposure to zinc at a time of tightening supply.

CapEx for the group in 2017 is estimated at about US$850 million, which includes about US$330 million for Dugald River.

The Dugald River zinc mine is expected to partially replace lost output from MMG's Century mine, which was decommissioned in late 2015. Dugald River will have an annual output of about 170,000 tonnes of zinc in concentrate, plus byproducts, according to the company's website.

On the supply side, the company sees copper and zinc supply demand gaps widening from 2019 onward due to labor, political rate decline and the general investment in the sector.

Jiao expects a U.S. and European market recovery, as well as greater Chinese consumption, to underpin the local copper and zinc demand fundamentals as China's One Belt, One Road initiative has a major infrastructure focus.