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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Zincox Res. | LSE:ZOX | London | Ordinary Share | GB0031124638 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.45 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMZOX
RNS Number : 9832S
ZincOx Resources PLC
21 September 2010
21 September 2010
ZincOx Resources plc
("ZincOx", "the Company" or "the Group")
Interim Results for the six months ended 30 June 2010
ZincOx Resources plc (AIM Ticker: ZOX) which specialises in the low cost
recovery of high grade zinc compounds from unconventional sources, today
announces its results for the six months ended 30 June 2010.
Highlights
· Korean Recycling Project ("KRP") intended to become the Company's first
recycling project to be put into production
* preliminary cash flow model indicates a NPV (post tax) on completion of the
two phases of KRP of US$162 million and an IRR of 21%
* currently in an advanced stage of negotiations, incorporating due diligence
work, with both potential partners and project finance providers
* awarded Foreign Investment Zone status
* rent free lease of site in final stages of negotiation
· Completed the acquisition of the Waste Oxide Recycling Facility (WORF)
processing equipment, from a subsidiary of Severstal North America for a
consideration of US$4million
· Ohio Recycling Project development suspended, and Big River Zinc impaired
· Approximately GBP42 million in cash reserves at the end of June 2010
Commenting on the interim results, Andrew Woollett, Chairman said,
"We are delighted that the provision of land has allowed us to accelerate the
Korean development which will be a flagship project for ZincOx. We are moving
forward on the financing and engineering requirements for our Korean Recycling
Project and continue to negotiate the re-financing of Jabali."
+------------------------------------------+--------------------+
| ZincOx Resources | +44 (0)1276 450100 |
| Andrew Woollett, Executive Chairman | |
+------------------------------------------+--------------------+
| Numis Securities Limited | |
| John Harrison (Nominated Adviser) | +44 (0)20 7260 |
| James Black (Corporate Broker) | 1000 |
+------------------------------------------+--------------------+
| Conduit PR | |
| Leesa Peters/Charlie Geller | +44 (0)20 7429 |
| | 6666 |
+------------------------------------------+--------------------+
For further information, please go to: www.zincox.com
Chairman's Statement
Introduction
We have recently announced our intention to accelerate the development of our
largest potential project, the Korean Recycling Project ("KRP"). The KRP will be
developed in two equal phases, each designed to treat 200,000 tonnes per annum
("tpa") steel waste for the production of 46,000 tonnes of zinc in concentrate.
When in full production the plant is intended to produce over 90,000 tpa zinc in
concentrate and as such it will have the same capacity as a medium sized zinc
mine. However in treating waste generated continuously by steel companies, the
plant will not have a finite life unlike a traditional mine. In addition to zinc
concentrate each phase is forecast to produce about 100,000 tonnes per annum of
an intermediate steel mill feed but, most importantly, it will produce no waste
representing a major advance environmentally.
The Company is engaged in detailed discussions with banks with a view to
securing an agreement to provide conventional project finance. The Company is
also currently in an advanced stage of negotiations, incorporating due diligence
work, with potential partners for the development of the KRP. It is envisaged
that any partner would support a material proportion of the total capital cost
of the project. Based on these discussions, the Board is confident that
financing for the KRP will be in place in good time to meet the previously
announced development timetable for first production at the start of 2012.
At the end of last year a settlement was negotiated with the bond-holders of our
Yemen-based Jabali Project under which the Company regained its 52% unencumbered
ownership of the project. We have been very actively pursuing various
alternatives for the replacement of the finance previously provided by the
bondholders, and discussions with several parties are ongoing. During this year,
however, development has only been proceeding at a greatly reduced rate with
activity being restricted to the preparation of foundations and other civil
engineering works. We hope to have a new financing plan in place by the year
end.
Recycling Strategy
For some years we have believed that the rotary hearth furnace technology at the
core of our recycling strategy could be applied globally. However as the
treatment of electric arc furnace dust ("EAFD") in such equipment is not well
established and as ZincOx is a small company with limited resources, we realised
that it would not be possible to develop more than one plant in the first
instance. For various reasons we decided that the USA would make the best
location for the first plant and have been working for several years on the
development of the Ohio Recycling Project ("ORP"). Having demonstrated the
technology in Ohio, we planned to develop similar plants in other parts of the
world. It takes several years to put together the elements that enable a
recycling plant to be built and so, in order to have a pipeline of projects
ready for development, we began working on projects in Turkey, Thailand and
Korea.
Korea presents the most exciting target as it is one of the most active steel
recycling countries in the world, and therefore among the largest generators of
EAFD. For this reason, ZincOx has been working in Korea for over five years. One
of the major problems for the development of a recycling plant in Korea is that
land is very expensive and finding land suitable for recycling activities was
very challenging. In January 2009 we identified a potential plant site near
Geongjo in south east Korea. The site was located in the newly developed
Cheonbuk industrial estate and is only ten kilometres from Pohang, one of
Korea's main centres for EAFD generation. Over the last 18 months we have been
working closely with the local government, the Korean Iron and Steel Association
(KOSA) and the estate's developer to secure the necessary environmental
permitting, which was completed at the end of last year. The high cost of land
often acts as a disincentive for new foreign investment into Korea. However,
since the government is keen to attract foreign investment there is a scheme
available under which the government will purchase land with the sole intention
of renting it to foreign investors. In order to qualify for the land purchase
scheme, foreign investors must first obtain Foreign Investment Zone ("FIZ")
status. This provides the investor with several financial advantages including a
five year tax holiday. ZincOx applied for FIZ status at the end of last year
when the environmental permitting had been settled on the Cheonbuk site and it
was obtained in June of this year. The central government together with the
provincial and local governments then jointly purchased the land and presented
us with a draft lease. The terms of this free 50 year lease are broadly
acceptable although some clarification and modification is currently being
sought before the lease is executed.
Ohio Recycling Project
ORP had been our first priority, but securing long term EAFD supply contracts
with the major US steel companies has become more protracted. In view of the
rate of progress in Korea, it was decided to make this our first priority and to
suspend activities in the USA.
While work on ORP has been suspended, our work to date puts us in a position to
resume development rapidly when long term supply contracts and financing is in
place. The halide bearing zinc concentrate produced on the rotary hearth furnace
was to have been upgraded at our Big River Zinc ("BRZ") smelter, near Saint
Louis. Our strategy was then to have developed a second rotary hearth furnace in
the south of the country and the output of this, together with the Ohio plant,
would have been sufficient to have warranted the recommencement of zinc metal
production at Big River. Given the delay in starting the first rotary hearth
furnace in the USA, the production of zinc metal at Big River is unlikely within
the next five years. For this reason the Board has decided to look at the value
of Big River on a more stand-alone basis and to write down the costs incurred
accordingly. In the meantime Big River will continue to upgrade concentrates on
behalf of third parties and is currently washing material from two producers.
Korean Recycling Project
We have recently completed a basic engineering and costing exercise, the latter,
substantially the work of a very experienced Korean engineering company. We
believe the capital cost of the development can be further reduced as a result
of a value engineering exercise currently underway.
The projected capital expenditure for the project has been reduced significantly
by the use of second hand equipment. In January of this year we announced the
purchase of a steel waste recycling plant (WORF) near Detroit. The plant
included various pieces of equipment that will be used in Korea, including a
rotary hearth furnace, briquetters and mixers. The move to Korea may require the
construction of a washing plant to upgrade our zinc concentrate, although this
capital cost would be saved should potential offtakers wish to carry out the
washing process themselves.
The costing exercise has indicated a capital cost, including the washing plant,
of US$124 million for Phase I and a preliminary internal cost estimate for Phase
2 of US$146 million. The net present value (post tax) of the project at a
discount rate of 10% and zinc and pig iron prices of US$2000/t and US$350/t
respectively, is US$96 million for Phase 1 and an additional US$66 million for
Phase 2. The internal rate of return for the first and combined phases is 23%
and 21% respectively.
Jabali
While the refinancing options are being explored, only limited work on site is
being undertaken. In order to minimise the time for construction following
refinancing, construction of the foundations is continuing with the pouring of
concrete and the preparation of storage areas and the site construction camp.
A further US$115 million is required to complete the project which will take 19
months following the re-financing. Negotiations to find the best solution for a
re-financing are continuing with a number of interested parties. All options for
Jabali, ranging from an outright sale to traditional project finance, are still
under consideration.
Shaimerden
2010 will be the last period for which the Company will receive deferred
payments in respect of the sale of the Shaimerden deposit in 2003. This year the
payment will be with respect to 9,826 tonnes of zinc. The average price of zinc
through to the end of August this year was US$2,099 per tonne. If the price was
to stay at this level for the rest of the year the payment in January 2011 would
be US$3 million.
Financial Results
The Group loss after tax attributable to the shareholders of the parent company
was GBP23.3m for the period (June 2009: GBP10.5m, December 2009: GBP2.6m). The
result for the period includes a foreign exchange gain of GBP0.8m (June 2009:
GBP8.4m loss, December 2009: GBP5.9m loss), arising through the retranslation of
significant US dollar balances held. The other key items in the half year are
impairment charges for Jabali and certain assets held in the USA.
Following the decision to accelerate the Korean development and suspend the
Company's activities in the USA, the Board has conducted an impairment review
for the half year on the Group's American assets. We had considered BRZ to be
ideally suited to the modification for the production of zinc metal from
concentrate supplied by two new American recycling plants. The decision to
suspend the ORP development has pushed the potential use of BRZ as a zinc
electro-refinery well into the future so much so, that the Board decided to look
at BRZ on a stand-alone basis at the half year for the purposes of the
impairment review. The Board have decided that it would be prudent to reduce the
value of this asset to reflect its use primarily as a washing facility.
Although progress on the financing of Jabali continues, development of the
project has only proceeded at a reduced rate leading the Board to review and
update the cashflows used for impairment in December 2009. This has given rise
to a further impairment at June 2010.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Group have not changed from
those stated in the Annual Report 2009 except that since the first recycling
project is now planned for Korea, the risks relating to the Ohio project have
been replaced by risks relating to financing and developing the KRP.
Outlook
In the immediate future, the Company's main focus is the development of the
Korean project. Over the next month we will begin to award detailed engineering
contracts, procurement will commence before the year end and site works early in
the New Year. Construction will take place through 2011 with first production
expected early in 2012.
We have a clear way forward for the Company in Korea and I am looking forward to
keeping shareholders informed of our progress with this exciting project over
the next year.
Andrew Woollett
Executive Chairman
21 September 2010
Forward Looking Statements
The Chairman's Statement contains discussion of future operations and financial
performance by use of various forward-looking words such as "anticipates,"
"estimates," "expects," "projects," "intends," "plans," "believes" and terms of
similar substance. These forward-looking statements are based on management's
current expectations and beliefs about future events but as with any projection
or forecast, they are inherently susceptible to uncertainty and changes in
circumstances which could cause the Group's actual activities and results to
differ materially from those contained in the forward-looking statements.
ZincOx Resources plc
Consolidated Interim Income Statement for the period ended 30 June 2010
+----------------------------+-------+-----------+-----------+-----------+
| | | 6 months | 6 months | Year |
| | | to 30 | to | ended |
| | | June 2010 | 30 June | 31 |
| | | unaudited | 2009 | December |
| | | | unaudited | 2009 |
| | | | | audited |
+----------------------------+-------+-----------+-----------+-----------+
| |Notes | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+-------+-----------+-----------+-----------+
| Revenue | | 921 | 345 | 1,183 |
| Cost of sales | | (498) | (340) | (1,007) |
| | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| Gross profit | | 423 | 5 | 176 |
| | | | | |
| Administrative expenses | | (2,617) | (2,891) | (5,524) |
| Foreign exchange | | 753 | (8,401) | (5,942) |
| gain/(loss) | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| Total administrative costs | | (1,864) | (11,292) | (11,466) |
+----------------------------+-------+-----------+-----------+-----------+
| Underlying operating loss | | (1,441) | (11,287) | (11,290) |
| Other gains and losses | 4 | 284 | 590 | 29,598 |
| Impairment provisions | 3 | (24,444) | (186) | (18,280) |
| | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| Operating (loss)/profit | | (25,601) | (10,883) | 28 |
| Finance income | | 69 | 197 | 259 |
| Finance costs | | (3) | (161) | (250) |
| | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| (Loss)/profit before tax | | (25,535) | (10,847) | 37 |
| Tax | | (33) | (34) | (1,999) |
| | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| | | | | |
| Loss for the period | | (25,568) | (10,881) | (1,962) |
+----------------------------+-------+-----------+-----------+-----------+
| | | | | |
| Attributable to: | | | | |
| Equity holders of the | | (23,309) | (10,543) | (2,633) |
| parent | | (2,259) | (338) | 671 |
| Minority interest | | | | |
| | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| | | | | |
| | | (25,568) | (10,881) | (1,962) |
+----------------------------+-------+-----------+-----------+-----------+
| | | | | |
| Basic loss per share | 5 | (29.94p) | (13.58p) | (3.39p) |
| Diluted loss per share | 5 | (29.94p) | (13.58p) | (3.39p) |
+----------------------------+-------+-----------+-----------+-----------+
ZincOx Resources plc
Consolidated Interim Statement of Comprehensive Income
for the period ended 30 June 2010
+----------------------------+-----+-----------+-----------+-----------+
| | | 6 months | 6 months | Year |
| | | to 30 | to | ended |
| | | June 2010 | 30 June | 31 |
| | | unaudited | 2009 | December |
| | | | unaudited | 2009 |
| | | | | audited |
+----------------------------+-----+-----------+-----------+-----------+
| | | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+-----+-----------+-----------+-----------+
| Loss for the period | | (25,568) | (10,881) | (1,962) |
| | | | | |
| Other comprehensive | | | | |
| Income/(expense) | | | | |
| Exchange differences on | | 6,460 | (9,221) | (6,422) |
| translating foreign | | | | |
| operations | | | | |
| | | | | |
+----------------------------+-----+-----------+-----------+-----------+
| Total comprehensive | | (19,108) | (20,102) | (8,384) |
| expense | | | | |
| for the period | | | | |
+----------------------------+-----+-----------+-----------+-----------+
| | | | | |
| Attributable to: | | | | |
| Equity holders of the | | (18,696) | (17,066) | (7,066) |
| parent | | (412) | (3,036) | (1,318) |
| Minority interest | | | | |
| | | | | |
+----------------------------+-----+-----------+-----------+-----------+
| | | (19,108) | (20,102) | (8,384) |
| | | | | |
+----------------------------+-----+-----------+-----------+-----------+
ZincOx Resources plc
Consolidated Interim Balance Sheet at 30 June 2010
+---------------------------+-------+-----------+-------------------+-----------+
| |Notes | 30 June | 30 June | 31 |
| | | 2010 | 2009 | December |
| | | unaudited | unaudited | 2009 |
| | | | | audited |
+---------------------------+-------+-----------+-------------------+-----------+
| | | GBP'000 | GBP'000 | GBP'000 |
+---------------------------+-------+-----------+-------------------+-----------+
| ASSETS | | | | |
| Non-Current Assets | | | | |
| Intangible assets | | 17,077 | 19,388 | 20,708 |
| Property, plant and | | 94,969 | 81,489 | 97,835 |
| equipment | | 240 | 219 | 227 |
| Trade and other | | | | |
| receivables | | | | |
+---------------------------+-------+-----------+-------------------+-----------+
| | | 112,286 | 101,096 | 118,770 |
| | | | | |
+---------------------------+-------+-----------+-------------------+-----------+
| Current Assets | | | | |
| Inventories | | 433 | 567 | 420 |
| Trade and other | | 2,291 | 1,852 | 10,732 |
| receivables | 2 | - | 58,016 | 169 |
| Restricted cash | | 42,302 | 64,085 | 46,929 |
| Cash and cash equivalents | | | | |
+---------------------------+-------+-----------+-------------------+-----------+
| | | 45,026 | 124,520 | 58,250 |
| | | | | |
| TOTAL ASSETS | | 157,312 | 225,616 | 177,020 |
| | | | | |
+---------------------------+-------+-----------+-------------------+-----------+
| LIABILITIES | | | | |
| Current Liabilities | | | | |
| Bank loans and overdraft | | - | (17) | - |
| Trade and other payables | | (12,384) | (9,581) | (15,075) |
| Current portion of long | | - | (68) | - |
| term borrowings | | | | |
+---------------------------+-------+-----------+-------------------+-----------+
| | | (12,384) | (9,666) | (15,075) |
| | | | | |
+---------------------------+-------+-----------+-------------------+-----------+
| Non-current Liabilities | | | | |
| Other long term | | (650) | (79,230) | (632) |
| liabilities | | | | |
+---------------------------+-------+-----------+-------------------+-----------+
| | | (650) | (79,230) | (632) |
| | | | (88,896) | |
| TOTAL LIABILITIES | | (13,034) | | (15,707) |
+---------------------------+-------+-----------+-------------------+-----------+
| | | | | |
| NET ASSETS | | 144,278 | 136,720 | 161,313 |
+---------------------------+-------+-----------+-------------------+-----------+
| | | | | |
| EQUITY | | | 19,431 | |
| Share capital | | 19,465 | 85,336 | 19,465 |
| Share premium | | 85,336 | 6,765 | 85,336 |
| Profit and loss Account | | (8,191) | 7,386 | 15,083 |
| Translation reserve | | 14,089 | | 9,476 |
+---------------------------+-------+-----------+-------------------+-----------+
| Equity attributable to | | | | |
| equity holders of the | | 110,699 | 118,918 | 129,360 |
| parent | | | 17,802 | |
| | | 33,579 | | 31,953 |
| Minority interest | | | | |
+---------------------------+-------+-----------+-------------------+-----------+
| | | | | |
| TOTAL EQUITY | | 144,278 | 136,720 | 161,313 |
| | | | | |
+---------------------------+-------+-----------+-------------------+-----------+
ZincOx Resources plc
Consolidated Interim Cash Flow Statement for the period ended 30 June 2010
+---------------------------------+-----------+-----------+-----------+
| | 6 months | 6 months | Year |
| | to | to | ended |
| | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | unaudited | unaudited | 2009 |
| | | | audited |
+---------------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------+-----------+-----------+-----------+
| | | | |
| (Loss)/profit before taxation | (25,535) | (10,847) | 37 |
| | | | |
| Adjustments for: | | | |
| Depreciation and amortisation | 652 | 726 | 1,185 |
| Foreign exchange gain/(loss) | 1,205 | (1,199) | 2,250 |
| Interest received | (69) | (197) | (259) |
| Interest expense | 3 | 161 | 250 |
| Impairment of intangible assets | 6,524 | 186 | 701 |
| | 17,920 | - | 17,579 |
| Impairment of tangible assets | 9 | - | 2 |
| Tangible assets written off | 35 | 255 | 663 |
| Share based payments | (2,304) | 555 | 5,458 |
| (Decrease)/increase in trade | 271 | 425 | (718) |
| and other payables | (13) | 104 | 251 |
| Decrease/(increase) in trade | (33) | - | (1,999) |
| and other receivables | (284) | (590) | (29,598) |
| (Increase)/decrease in | | | |
| inventories | | | |
| Foreign tax at source | | | |
| Other gains | | | |
+---------------------------------+-----------+-----------+-----------+
| Cash utilised from operations | (1,619) | (10,421) | (4,198) |
| Interest paid | (3) | (161) | (250) |
+---------------------------------+-----------+-----------+-----------+
| Net cash flow from operating | (1,622) | (10,582) | (4,448) |
| activities | | | |
+---------------------------------+-----------+-----------+-----------+
| | | | |
| Investing activities | | | |
| Net proceeds from disposal of | 8,077 | 11,407 | 10,846 |
| assets | 8 | - | - |
| Proceeds from disposal of | (2,348) | (1,712) | (3,096) |
| subsidiary | (11,018) | (27,321) | (59,567) |
| Purchase of intangible assets | 69 | 197 | 259 |
| Purchases of property, plant | | | |
| and equipment | | | |
| Interest received | | | |
+---------------------------------+-----------+-----------+-----------+
| Net cash used in investing | (5,212) | (17,429) | (51,558) |
| activities | | | |
+---------------------------------+-----------+-----------+-----------+
| | | | |
| Financing activities | | | |
| Release of restricted cash | 169 | 27,584 | 91,810 |
| Repayment of borrowings | - | - | (66,972) |
| Net proceeds from cancellation | - | - | 1,135 |
| of bond | 2,038 | - | 12,433 |
| Minority interest investment | - | 37 | 71 |
| Net proceeds from issue of | | | |
| ordinary shares | | | |
+---------------------------------+-----------+-----------+-----------+
| Net cash received from | 2,207 | 27,621 | 38,477 |
| financing activities | | | |
+---------------------------------+-----------+-----------+-----------+
| | | | |
| Net decrease in cash and cash | (4,627) | (390) | (17,529) |
| equivalents | 46,929 | 64,458 | 64,458 |
| Cash and cash equivalents at | | | |
| start of period | | | |
+---------------------------------+-----------+-----------+-----------+
| | | | |
| Cash and cash equivalents at | 42,302 | 64,068 | 46,929 |
| end of period | | | |
+---------------------------------+-----------+-----------+-----------+
ZincOx Resources plc
Consolidated Statement of Changes in Shareholders' Equity at 30 June 2010
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| | Share | Share | Translation | Retained | Total | Minority | Total |
| | capital | premium | reserve | earnings | | interest | equity |
| | GBP'000s | GBP'000s | GBP'000s | GBP'000s | GBP'000s | GBP'000s | GBP'000s |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| | | | | | | | |
| Balance at 1 January 2009 | 19,394 | 85,336 | 13,909 | 17,053 | 135,692 | 20,838 | 156,530 |
| Share based payments | - | - | - | 255 | 255 | - | 255 |
| Issue of share capital | 37 | - | - | - | 37 | - | 37 |
| Capital increase from minority interest | - | - | - | - | - | - | - |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| Transactions with owners | 37 | - | - | 255 | 292 | - | 292 |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| Loss for the period | - | - | - | (10,543) | (10,543) | (338) | (10,881) |
| Other comprehensive expense | | | | | | | |
| Exchange differences on translating | - | - | (6,523) | - | (6,523) | (2,698) | (9,221) |
| foreign operations | | | | | | | |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| Total comprehensive expense for the | - | - | (6,523) | (10,543) | (17,066) | (3,036) | (20,102) |
| period | | | | | | | |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| Balance at 30 June 2009 - unaudited | 19,431 | 85,336 | 7,386 | 6,765 | 118,918 | 17,802 | 136,720 |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| Share based payments | - | - | - | 408 | 408 | - | 408 |
| Issue of share capital | 34 | - | - | - | 34 | - | 34 |
| Capital increase from minority interest | - | - | - | - | - | 12,433 | 12,433 |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| Transactions with owners | 34 | - | - | 408 | 442 | 12,433 | 12,875 |
| Profit for the period | - | - | - | 7,910 | 7,910 | 1,009 | 8,919 |
| Other comprehensive income | | | | | | | |
| Exchange differences on translating | - | - | 2,090 | - | 2,090 | 709 | 2,799 |
| foreign operations | | | | | | | |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| Total comprehensive income for the | - | - | 2,090 | 7,910 | 10,000 | 1,718 | 11,718 |
| period | | | | | | | |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| Balance at 31 December 2009 - audited | 19,465 | 85,336 | 9,476 | 15,083 | 129,360 | 31,953 | 161,313 |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| Share based payments | - | - | - | 35 | 35 | - | 35 |
| Issue of share capital | - | - | - | - | - | - | - |
| Capital increase from minority interest | - | - | - | - | - | 2,038 | 2,038 |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| Transactions with owners | - | - | - | 35 | 35 | 2,038 | 2,073 |
| Loss for the period | - | - | - | (23,309) | (23,309) | (2,259) | (25,568) |
| Other comprehensive income | | | | | | | |
| Exchange differences on translating | - | - | 4,613 | - | 4,613 | 1,847 | 6,460 |
| foreign operations | | | | | | | |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| Total comprehensive income/(expense) | - | - | 4,613 | (23,309) | (18,696) | (412) | (19,108) |
| for the period | | | | | | | |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
| At 30 June 2010 - unaudited | 19,465 | 85,336 | 14,089 | (8,191) | 110,699 | 33,579 | 144,278 |
+-----------------------------------------+----------+----------+-------------+----------+----------+----------+----------+
Notes to the Consolidated Financial Interim Statements
1. Basis of preparation
These interim condensed consolidated financial statements are the unaudited
Consolidated Financial Statements of ZincOx Resources plc, for the six months
ended 30 June 2010. They have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the EU and the Companies
Act 2006, applicable to companies reporting under IFRS. They do not include all
of the information required in annual financial statements in accordance with
IFRS, and should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 December 2009.
These interim financial statements were approved by the Board on 15 September
2010. The financial information set out in this interim report does not
constitute statutory accounts as defined in Section 434 of the Companies Act
2006. The Group's statutory financial statements for the year ended 31 December
2009, prepared under IFRS, have been filed with the Registrar of Companies. The
auditor's report on those financial statements was unqualified and did not
contain statements under Section 498(2) or Section 498(3) of the Companies Act
2006.
These financial statements have been prepared under the historical cost
convention and the consolidated financial statements incorporate the financial
statements of the Company and its subsidiary companies.
The financial information for the six months ended 30 June 2010 and 30 June 2009
is unaudited.
2. Significant Accounting Policies
The accounting policies and presentation followed in the
preparation of this interim report have been consistently applied to all periods
in these financial statements and are the same as those applied by the Group in
the preparation of its Annual Report for the year ended 31 December 2009.
The term 'Restricted Cash' is used to describe certain borrowings that are
specific in nature to the construction of specific qualifying assets and any
cash balances as a result of those borrowings are carried as restricted cash.
The restricted cash is excluded from cash and cash equivalents.
3. Critical Accounting Estimates and Judgments
The Group performs an assessment of the recoverability of assets to see whether
any of the exploration projects have suffered impairment. This assessment is
dependent on the future viability of the relevant products and processes and the
methodology followed in order to assess the recoverable amount of an individual
cash generating project is to run a cash flow model over 20 years or the life of
mine, whichever is shorter, and with appropriate assumptions for zinc price,
operating and capital development costs.
The Group also performs impairment tests on assets under the course of
development by estimating the value in use of the cash-generating project to
which it has been allocated. This value in use is estimated by discounting
future cashflows. It should be noted that the zinc price and the discount rate
have the most significant impact on the value in use calculations.
Jabali
Since the lenders withdrew their support for the Yemen, the Directors have
considered the various options for the project and have commenced discussions
with a number of parties to secure the appropriate funding. The Directors remain
confident that they will secure the appropriate funding to enable the project to
proceed and of the commercial viability of the project. However, as of this
date, such funding has not been secured and therefore there is a possibility
that the project cannot proceed and that ultimately the project and its related
assets may have to be sold to a third party. These conditions indicate the
existence of a material uncertainty which may cast significant doubt on the
carrying value of the assets relating to the Jabali project. The financial
statements do not include any adjustments that would result if the Group was
unable to secure the appropriate financing for the project to continue.
Other than identifying further costs as a result of extended
financing delays, there has been no change in the underlying assumptions for
calculating the net present value of future cashflows of the project. The basis
of the risk adjusted discount rate continues to be 16.75% and the zinc price at
a level of $2,000. As a result of the net present value calculation, an
impairment provision of $7m (GBP4.6m) against property, plant and equipment has
been made at June 2010 (June 2009: nil, December 2009: $28m (GBP17.6m)).
Recycling
Since the year end the cash generating unit for impairment testing of
the recycling assets has been reviewed in light of the scenario where Korea will
be the first recycling project rather than the USA. As a result, the net present
values of future cashflows of US held assets have been valued on a stand-alone
basis. The resulting impairments which are reflected in these accounts are $20m
(GBP13.3m) against property, plant and equipment and $9.8m (GBP6.5m) against
intangible assets have been made at June 2010 (June 2009 and December 2009:
nil).
4. Other Gains and Losses
+---------------------------------+-----------+-----------+-----------+
| | 6 | 6 | Year |
| | months | months | ended |
| | to 30 | to 30 | 31 |
| | June | June | December |
| | 2010 | 2009 | 2009 |
| | unaudited | unaudited | audited |
+---------------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------+-----------+-----------+-----------+
| Deferred consideration on | - | - | 9,702 |
| disposal of subsidiary | - | 29 | - |
| Fair value movement in | - | - | 19,250 |
| derivative liability | - | 561 | 561 |
| Gain on cancellation of Jabali | - | - | 85 |
| loan | 292 | - | - |
| Ohio Bond redemption | (8) | - | - |
| Gain on intangible previously | | | |
| impaired | | | |
| Profit on disposal of property, | | | |
| plant and equipment | | | |
| Loss on disposal of subsidiary | | | |
+---------------------------------+-----------+-----------+-----------+
| Total | 284 | 590 | 29,598 |
+---------------------------------+-----------+-----------+-----------+
The loss on disposal of subsidiary relates to the sale of ZincOx Anadolu Metal
on the 7 June 2010.
5. Loss per Ordinary Share
+---------------------------------+------------+------------+------------+
| | 6 | 6 | Year |
| | months | months | ended |
| | to 30 | to 30 | 31 |
| | June | June | December |
| | 2010 | 2009 | 2009 |
| | unaudited | unaudited | audited |
+---------------------------------+------------+------------+------------+
| | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------+------------+------------+------------+
| Basic and diluted loss per | | | |
| share | (23,309) | (10,543) | (2,633) |
| Net loss | 77,860,620 | 77,662,713 | 77,700,741 |
| Weighted average number of | (29.94p) | (13.58p) | (3.39p) |
| shares | | | |
| Basic and diluted loss per | | | |
| share amount in pence | | | |
+---------------------------------+------------+------------+------------+
6. Further copies of this statement
Copies of this statement are available for download from the Company's website
at www.zincox.com or on request from the Company Secretary, ZincOx Resources
plc, Knightway House, Park Street, Bagshot, Surrey GU19 5AQ.
Company Information:
Directors & Officers of the Company:
A C Woollett Executive Chairman
P F Wynter Bee Managing Director
S C Hall Finance Director
J Z J Dewalens Technical & Production Director
S P Mulholland Project Development Director
J L Hewitt Non-Executive Deputy Chairman
R G Beddows Non-Executive Director
J J Saville Non-Executive Director
G E A Masson Non-Executive Director
G D Lafferty Non-Executive Director
I M Halliwell Company Secretary
Registered Number 3800208
Registered Office Knightway House
Park Street
Bagshot
Surrey GU19 5AQ
Telephone 01276 450100
Facsimile 01276 850281
Website www.zincox.com
Advisers:
Nominated Adviser Numis Securities Limited
and Broker The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
Financial Advisers N M Rothschild & Sons Ltd
New Court
St Swithin's Lane
London EC4P 4DU
Bankers HSBC Bank plc
26 Broad Street
Reading RG1 2BU
Auditors Grant Thornton (UK) LLP
Grant Thornton House
Melton Street
London NW1 2EP
Solicitors Eversheds LLP
One Wood Street
London EC2V 7WS
Registrars Capita Registrars
The Registry
34 Beckenham Road
Beckenham BR3 4TU
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUQABUPUGWU
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