|ZincOx (LON:ZOX) Suspended – MOU signed with Korea Zinc on joint design and development of new recycling plant in Vietnam
ZincOx is looking to remerge from the ‘ashes’ or should we say the ‘Electric Arc Furnace Dust’ to develop a new recycling plant in Vietnam.
The press release is short on technical details on the project but does tell us that it’s a 51:49 joint venture in favour of Korea Zinc and that the ‘Definitive Development Study’ is expected to cost about $2.5m. If this cost rises to >$3m then ZincOx’s interest will be diluted proportionately though ZincOx will be able to buy back its interest to 49% in the following six months.
The new Vietnam recycling plant will be based on ZincOx’s developed Rotary Hearth Furnace technology and with capacity to treat 100,000tpa of EAFD. We guess this could result in 30,000t of high quality zinc oxide (80% zn) production worth around twice as much as zinc concentrate plus some by-product iron.
This should lead to a significant increase in sales for a relatively modest increase in overall operating cost leading to a substantial uplift in margin, value and profit compared with the last plant built. We believe the ZincOx plant built in Korea is now working well and enjoying the benefits of the significant uplift in zinc prices since Korea Zinc took control of 91.3% of the plant as part of a financial restructuring during the prolonged commissioning process.
ZincOx shares were suspended on 28th October and must requote within six months to avert delisting.
Debt: ZincOx is carrying £3.78m of corporate loan notes with interest accruing at 10%pa from 1st August 2016 and are due for repayment in January 2018.
Assets: ZincOx retains an 8.7% interest in the Korea Recycling Plant which it designed and built. Very sadly extended plant commissioning combined with prevailing low zinc prices allowed Korea Zinc to take control and majority ownership of the plant just ahead of a recent and sustained rise in Zinc prices.
The value of Zincox’s stake in Korean Zinc Recycling Plant should now be substantially more than the last implied value of $6.3m.
ZincOx also owns what is described as a valuable plot of industrial land in Turkey.
Conclusion: It’s good to see ZincOx re-emerge from losing control of its Korea Zinc Plant. It is interesting to note that Korea Zinc are still working as cooperating partners with the ZincOx team. Korea Zinc must respect the skill and knowhow of the ZincOx team and must also need to utilise these skills to advance with their next EAFD project.|
|Spot price for Zinc now nearly $2,700 per ton. What could of been when it comes to ZOX, too small and under funded to with stand a short term drop in the Zinc price to $1,450 per ton.
Dominic Frisby - Today we turn our attention to a metal which often passes without notice.
It isn’t glamorous like gold or silver, nor is it rare like platinum or rhodium.
It isn’t controversial like uranium, strategic like tungsten or cobalt, nor even widely talked about like iron or copper.
But it has, quietly, had a stellar 2016. It’s currently up almost 60%.
Today we’re talking zinc…
Zinc is in short supply:
Having started 2016 at just over 70c per pound, the zinc price currently stands at $1.17 a pound.
All of the usual factors have been driving the price. Firstly, there’s a lack of supply. China is the world’s top producer, contributing some 37% of global supply last year. However, last year it shut down some 26 lead and zinc mines for environmental reasons.
In addition, Australia’s Century mine and Ireland’s Lisheen mine, which between them produced about 5% of the global supply of zinc, have shut down due to depletion. Meanwhile, Glencore Xstrata’s Perseverance and Brunswick mines also recently closed.
As the zinc supply has dwindled, so the price has risen – and there’s nothing like a rising price to bring in more buyers.
After iron, aluminium and copper, zinc is the fourth most used metal in the world. (Although be aware that in some years this title falls to titanium). Annual zinc demand stands at 13.4 million tonnes.
Per year, it is a $34bn market. To put that number in some kind of perspective, silver is about an $18bn market and platinum just $8bn. Copper meanwhile, is closer to $150bn.
What is zinc used for?
The main uses for zinc are as follows.
Galvanising: this is the most important use for zinc, accounting for about 50% of annual demand. Iron and steel are coated in zinc to prevent rust. Galvanised steel is one of the strongest construction materials there is. It’s used to make the frames of large buildings, bridges, beams, piping, roofs, staircases – you name it.
Batteries: the world’s first battery – invented by Alessandro Volta in 1799 – used zinc as an anode. Zinc is still used in all kinds of batteries, from cheap to expensive: zinc-air (such as in hearing aids); silver-zinc (used in the aerospace industry); zinc-bromine (for energy storage); and plain old alkaline batteries – such as the AAs I have in my computer’s mouse.
Solder: zinc, lead and tin alloy is used to join electrical components and pipes.
Nickel-silver: this is actually zinc, copper and nickel, and is used in keys, zips, silverware and musical instruments (brass requires zinc).
Almost half of annual zinc demand comes from China, which is still building buildings and bridges, despite its economic slowdown. And if Donald Trump’s proposed infrastructure splurge comes to fruition, you can expect US zinc demand to grow considerably in the coming years. Zinc is a beneficiary of government infrastructure spending.
How to buy zinc:
The simplest way to invest in zinc is to buy one of the zinc exchange-traded funds (ETF Securities offers a London-listed one under the convenient ticker ZINC) or to buy it via a spread bet. All the usual risk warnings apply (particularly to the spread betting).
Alternatively, you can go down the individual company route. BHP Billiton (LSE: BLT) is the world’s largest producer – although, of course, it produces many other commodities as well, so it is not a pure zinc play. I like BHP and, like zinc, it is in a strong uptrend. At 1,326p it has more than doubled from its lows of below 600p at the start of the year.
A purer play might be Griffin Mining (LSE: GFM), which owns just under 90% of an operating zinc-gold mine about 300 miles north-west of Beijing. However, while I’m mentioning the company, that does not constitute a recommendation – if you’re keen on the theme, then it’s one to do your own further research on. Otherwise I’d stick with one of the bigger players.|
|Today's RNS gives hope. May ZOX fly again like Phoenix!|
|Thanks etarip for the explanation.
So I guess there is hope however slight if the Vietnamese project can get the go ahead.|
|AIM Rule 15:
Rule 15 (fundamental changes of business) has been amended in relation to an AIM company which becomes a cash shell following a fundamental disposal. The previous Rule 15 provided that an AIM company which became a cash shell following a fundamental disposal was deemed to be an investing company. This meant that the AIM company had to obtain shareholder approval for the disposal and its proposed investing policy, following which it would then have 12 months to either implement the investing policy or make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14. If the AIM company did neither within the prescribed period, trading in its shares were suspended.
According to the Exchange, the purpose of this rule is to enable AIM companies, where appropriate, to continue to access the benefits of the market following a fundamental disposal. However, the previous Rule 15 resulted in some companies remaining on the market with limited cash balances which were insufficient to enable meaningful investments or facilitate the functioning of a fair and orderly market in that company’s securities.
Rule 15 has therefore been amended to provide that an AIM company that becomes a cash shell following a fundamental disposal will no longer automatically be treated as an investing company but will instead be regarded as an AIM Rule 15 cash shell. Within six months of becoming an AIM Rule 15 cash shell, the AIM company must make an acquisition or acquisitions which constitute a reverse takeover under Rule 14. For the purposes of this rule only, becoming an investing company pursuant to Rule 8 (including the associated raising of funds as specified in Rule 8) will be treated as a reverse takeover and the provisions of Rule 14 will apply, including the requirement to publish an admission document. If an AIM Rule 15 cash shell does not complete a reverse takeover within six months as required, the Exchange will suspend trading in that company’s securities.
Where an AIM Rule 15 cash shell does not intend or wish to undertake a reverse takeover in accordance with Rule 15, the Exchange expects it to obtain shareholder approval to cancel its admission to AIM in accordance with Rule 41 and to consider how best to return any remaining funds to shareholders.
A new definition of “AIM Rule 15 cash shell” has been added to the Glossary terms accordingly.
Changes to the AIM Note for Investing Companies
As a result of the above changes to the AIM Rules, consequential changes have been made to paragraph 5.2 of the AIM Note for Investing Companies, including adding a confirmation that cash funds resulting from a fundamental disposal under Rule 15 will usually be considered independent for the purposes of satisfying the equity fundraising requirements under Rule 8.
This means six months to go to find a deal otherwise they get struck off permanently.|
|Zox is getting cuddled|
|Very small gamble on this some before tick up, some after.|
|Yesterday the zinc price touched $2,300, for what it is worth when it comes to ZOX.|
|It seems to me after these two big Buy´s all the other trades for the rest of the day were also Buy´s so if nothing else has brought a little confidence back into ZOX.|
|Looking better was several pence no too long ago let's hope the bod pull that rabbit out|
|mally - I think approximately 3.4% of shares in issue.
Current major share holders in ZOX
SR Global Fund LP: .........17.53%
Harold N McCawley:...........8.67%
Charles Stanley Group Plc:...7.29%
|sinificant amount still for a 1mill mcap this could really fly on good news|
|It seems to me they were two trades at slightly different prices and they both seem as Buy´s to me.
Saying that the total value for the 7M shares is less than £40,000.|
|are you talking about the 3.5M roll over?
no stake for sure
almost - same amount, same time, same price|
|Well someone's bought 2 lots of 3.5mill|
|Maybe mm´s pushing up the price a little to suck in the small PI´s being swayed by their emotions that ZOX will still go higher.|
|someones taken a stake maybe director buy worth a punt|
|I have e-mailed Andrew Wollett, requesting more information and asking what is exactly happening and how unhappy I am with the BOD. I am still waiting a reply.|
|I think the management have served us PI´s very badly, very badly indeed.
A few months back they said when delisted from AIM, no problem will still be able to trade ZOX on the ISDX market, now saying this too will also no longer be the case.
Korean Zinc got the plant in Korea at a real snip, when the Zinc price was as its lowest, now the price of Zinc is nearly $900 (65%) higher then it was a little over 8 months ago when they snapped up 90% of the plant.
The way the RNS reads about the loan note being due in January, it reads as though ZOX will have to sell their remaining stake in the Zinc plant to pay it off.
I spent over a year looking a ZOX before investing, every report I read said it was a good long term investment, with all their innovative new technologies.|
|Just got out at 0.36. Yet another loss on AIM!|
|This had so much potential but wasted by poor management|
|I've been reading reports that the price of Zinc is predicted to continue to rise to around the $2,500 level up from the current $2,280.
The price of Zinc is up around $50 per ton over the past couple of days alone.|
|Price of Zinc well over $2,200 per ton and still rising.
On all levels the Zinc recycling plant in S.Korea is now profitable with the just under 10% still owned by ZOX maybe providing them with a little income.|
|Zinc price still rising, now $2,150 per ton and still ZOX share price remains static???|