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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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RNS Number : 1441E
ZincOx Resources PLC
24 September 2008
ZincOx Resources Plc
("ZincOx", "the Company" or "the Group")
Interim Results for the six months ended 30 June 2008
ZincOx Resources plc (AIM Ticker: ZOX) today announces its results for the six months ended 30 June 2008. ZincOx specializes in the
technology to recover zinc from various unconventional feed materials including non-sulphide ore deposits and waste materials (Electric Arc
Furnace Dust "EAFD"). The Company is developing a waste recycling plant to recover zinc and iron in Ohio and a zinc mine at Jabali, in
Yemen. It is also entitled to ongoing zinc price related payments from a zinc deposit in Kazakhstan.
Highlights
* Jabali Mine - financing completed
- development underway
* Ohio Recycling Plant - financing completed
- development underway
* Strategic Alliance Agreement for waste treatment technology
* N M Rothschild appointed as financial adviser
* Board strengthened by appointment of new directors
Commenting on the interim results, Andrew Woollett, Chairman said,
"During the first six months of this year, in increasingly difficult zinc and capital markets, we completed the financing of our two
major projects, the Jabali Mine in Yemen and the Ohio Recycling Project in the USA. Even at today's zinc price, the projects should result
in positive cash flow to the Company within 18 months."
ZincOx Resources
Andrew Woollett, +44 (0)1276 450100
Executive Chairman
Numis Securities Limited
John Harrison (Nominated
Adviser) +44 (0)20 7260 1000
James Black (Corporate
Broker)
Conduit PR
Charlie Geller/Ben Way +44 (0)20 7429 6666
For further information, please go to: www.zincox.com
ZincOx Resources Plc
("ZincOx", "the Company" or "the Group")
Chairman's Statement
Recycling
The development of the Ohio Recycling Project ("ORP") is fully funded as a result of two issues of new equity, receipts from Shaimerden
and the arrangement of a short term bond. The latter is essentially a short term debt facility that has yet to be drawn down. It is the
intention to replace this with a more conventional and a much less expensive project finance package before the facility is required.
We have selected Midrex Technologies Inc, as the process technology provider and supplier of the rotary hearth furnace, one of the key
pieces of equipment for the ORP. Midrex is among the world's most respected suppliers of Direct Reduction Plants for making steel and is a
wholly owned subsidiary of Kobe Steel, Ltd. of Japan. Midrex will be providing a full process guarantee under their FASTMET® Technology for
the operation of the rotary hearth furnace as well as providing operator training and technical support on an ongoing basis.
A small pilot plant has recently been built in Belgium in which we have tested composite representative samples from the steel mills
that will be supplying the ORP. This plant has produced samples of our zinc product that can be used for test marketing purposes. As part of
the ORP, the zinc product will be upgraded by washing it at our Big River Zinc smelter, to reduce the level of halides and other impurities
that are harmful to conventional zinc smelters. Considerable progress has also been made with our washing technology and we have recently
demonstrated that the washed product should now be a premium quality high grade feed for smelters, thereby enhancing our previous revenue
expectations. This also gives us a greatly expanded market for our product.
As we move forward with the development of the project there is more certainty for the costs, revenues and schedule. This, together with
the guarantees provided by suppliers such as Midrex with support from Kobe Steel, creates a project package that will be very attractive to
lenders and makes us increasingly confident that we will be able to secure conventional project finance. Discussion regarding project
finance and due diligence is well advanced.
In addition to the supply of process technology and equipment for the ORP, we have also entered into an important strategic Alliance
Agreement with Midrex and Kobe Steel. Under this agreement we will work collaboratively together on process refinements as well as the
development of other projects in target regions. The Alliance Agreement commits ZincOx to using Midrex/Kobe's FASTMET® Technology for future
rotary hearth furnace-based EAFD treatment plants. At the same time, ZincOx will have exclusive access to this technology in the USA,
Canada, Mexico, Korea, Thailand, Malaysia and Turkey, provided ZincOx continues to order FASTMET® Plants. This agreement greatly enhances
and protects ZincOx's market position and will have far reaching consequences for the Company's strategy to roll out the ORP concept around
the world.
The Alliance Agreement is a critical building block for the Ohio Recycling Project and our global recycling strategy. It was essential
to have this agreement in place before committing to use Midrex and Kobe Steel for the ORP so that we are better able to protect our
technological advantage. Consequently we committed considerable time to detailed and complex negotiations. Unfortunately, the length of
these negotiations has led to a slight delay in entering into an equipment supply agreement with Midrex and Kobe Steel. We are now advising
the market that the completion of the ORP is rescheduled for the first half of 2010. However, we believe this to be a small price to pay for
the considerable advantage that this exclusive agreement represents.
We continue to pursue our strategy to replicate the ORP concept elsewhere in the world. In Thailand the environmental permit for the
rotary hearth furnace has been obtained and the second phase of the environmental permitting, for the melting furnace, is now underway.
During the summer, the Company entered into a very significant memorandum of understanding (MOU) with the Korean Iron and Steel Association,
KOSA. Under the MOU, KOSA will provide assistance and coordination with Korean steel mills with the objective of obtaining long term EAFD
supply agreements. In Turkey we have been frustrated by the uncertainty of land use zoning within the industrial estate where our project
site is located. This has been created by indecision at the local government level. While we believe this will be satisfactorily resolved,
the timing remains uncertain. In the meantime, and in light of the very poor market conditions, we are engaging in discussions with
potential joint venture partners for this project so that we will be in a position to advance it as soon as the zoning issues are resolved.
Refining
Big River Zinc smelter (Illinois) is a 100,000 tonnes per annum electrolytic zinc refinery. The site, where appropriate permits are
already in place, is being prepared for a new washing plant. This facility will upgrade the zinc concentrate ("HZO") produced from the ORP
and other recycling projects in order to create a saleable concentrate. Indeed the plant has recently begun to upgrade small amounts of zinc
bearing materials by washing for third parties on a toll basis in its existing small washing plant.
As mentioned above, the ORP's product can be washed in a way that significantly increases the chemical quality of the product. It will
now be possible, therefore, to recover zinc at Big River without the requirement for solvent extraction thereby giving significant capital
cost savings. Various options for the restart of the refinery are being considered including the use of HZO together with conventional zinc
sulphide concentrate purchased on the open market. This approach would enable the refinery to be restarted without the development of a
second EAFD treatment operation and which could, therefore, significantly accelerate Big River's redevelopment.
Mining
The Shaimerden open pit, in Kazakhstan, suffered a flood in March this year and production was suspended for about two months as the
water was pumped out. As our deferred payment has a minimum deemed production rate of 40,000 tonnes of zinc, our payment for this year would
have been due on this amount whether the pit was operating or not. Meaningful production only resumed in July, and in August the mine
produced 95,000 tonnes of ore containing about 21,000 tonnes of zinc.
The Jabali project, in Yemen, is progressing steadily and over the past four months, in spite of a very tight employment market, we have
begun to secure key personnel for the production operations. Most of the major processing equipment has been ordered, the mining fleet is
being commissioned and mining operations will commence before the end of this year. However, we have been frustrated by a dispute between
one of the tribes that own land through which our access road passes and the road building contractor. This resulted in a suspension of road
construction work. The Yemen government have been working to assist in the resolution of this, and in addition we have recently engaged a
negotiator experienced in tribal matters and we are hopeful that the issues will be settled in the near future. In the meantime road
building activities have resumed. The completion of the access road is an important milestone for project development and as a result of the
disruption to its construction we now believe the final completion of the project may slip into the first quarter of 2010, although our project team continues to make efforts to mitigate this
disruption.
Corporate
In view of the considerable financial and other responsibilities that have arisen from the project developments, we have recently
appointed N.M.Rothschild as financial advisers to the Company. N.M. Rothschild is among the most respected advisers in the natural resources
and mineral processing industry.
The development of ORP and the Jabali Mine are the Company's first priority and the Board has recognised that their execution requires a
very different set of management skills and experience to that which we have needed previously. Therefore in the first half of the year
there was a considerable restructuring of the management of the company and this has also been reflected in Board changes. Peter Wynter Bee
has taken over as Managing Director and two new executive directors with responsibility for Project Development, Simon Mulholland, and
Production Operations, Jacques Dewalens, have been appointed. In addition, the Board has been joined by three new non-executive directors,
each of whom has considerable international experience in the management of high growth companies.
We are fortunate to have the funding secured for both of our major projects which, even at today's zinc price, should result in positive
cash flow to the Company within 18 months. During the current market turmoil, the management will continue to stay firmly focused on these
project developments and I believe that this progress will lead to a revaluation as the markets recover.
Andrew Woollett
Chairman
Consolidated Interim Income Statement
6 months to 30 June 2008 6 months to Year ended
unaudited 30 June 2007 31 December
unaudited 2007
Note audited
£'000 £'000 £'000
Revenue - - -
Cost of sales - - -
Gross Profit / (Loss) - - -
Administrative Expenses (4,813) (3,308) (5,607)
Underlying Operating Loss (4,813) (3,308) (5,607)
Finance Income 618 609 1,085
Finance Costs (4) (18) (37)
Share of losses of Associate - 6 25
Other gains and losses (1,240) 52 20,016
3
(Loss) / Profit before tax (5,439) (2,659) 15,482
Taxation (27) (6) (4,096)
Net (Loss) / Profit (5,466) (2,665) 11,386
Attributable to:
Equity holders of the parent
Minority Interest (4,853) (2,657) 11,460
(613) (8) (74)
(5,466) (2,665) 11,386
Basic (loss) / earnings per 4 (8.63)p (5.47)p 23.33p
Ordinary Share 4 (8.63)p (5.47)p 22.37p
Diluted (loss) / earnings per
Ordinary Share
Consolidated Interim Statement of Recognised Income and Expense
6 months to 30 June 2008 6 months to Year ended
unaudited 30 June 2007 31 December
unaudited 2007
audited
£'000 £'000 £'000
Currency translation 246 (94) (162)
differences (5,466) (2,665) 11,386
(Loss) / Profit for the
financial period
Total recognised income and (5,220) (2,759) 11,224
expense for the period
Consolidated Interim Balance Sheet
6 months to 30 June 2008 6 months to Year ended
unaudited 30 June 2007 31 December
unaudited 2007
audited
£'000 £'000 £'000
ASSETS
Non-Current Assets
Intangible Assets
Property, plant and equipment 18,902 14,982 17,706
Restricted cash 33,646 9,690 22,031
Other financial assets 26,527 - -
254 255 -
79,329 24,927 39,737
Current Assets
Inventories 971 980 973
Trade and other receivables 2,763 2,770 18,449
Restricted cash 51,782 - -
Cash and cash equivalents 27,128 25,091 12,646
82,644 28,841 32,068
Total Assets 161,973 53,768 71,805
LIABILITIES
Current Liabilities
Bank loans and overdraft
Trade and other payables (12) (193) (534)
(7,125) (2,805) (5,034)
(7,137) (2,998) (5,568)
Non-current Liabilities
Other long term liabilities (63,456) (681) (581)
TOTAL LIABILITIES (70,593) (3,679) (6,149)
NET ASSETS 91,380 50,089 65,656
EQUITY
Share capital 14,194 12,222 12,244
Share premium 54,853 37,398 37,422
Retained earnings 6,986 (3,186) 11,364
Foreign currency reserve 84 (201) (162)
Equity attributable to equity
holders of the parent 76,117 46,233 60,868
Minority interest 15,263 3,856 4,788
TOTAL EQUITY 91,380 50,089 65,656
Consolidated Interim Cash Flow Statement
6 months to 6 months to Year ended
30 June 30 June 2007 31 December
2008 unaudited 2007
unaudited audited
£'000 £'000 £'000
(Loss)/Profit before taxation (5,439) (2,659) 15,482
Adjustments for:
Depreciation
Foreign exchange gain/(loss) 498 431 920
Interest received 246 (94) (55)
Interest expense (618) (609) (1,085)
Intangible assets written off 4 18 37
Share based payments 273 - 3
(Decrease)/Increase in trade and 475 480 979
other payables 3, 051 2,114 4,099
(Increase) in trade and other (1,436) (1,598) (154)
receivables 2 40 47
Decrease in inventories - - (4,006)
Foreign tax at source 1,240 (58) (16,013)
Other gains and losses
Cash generated from operations (1,704) (1,935) 229
Interest paid (4) (18) (37)
Net cash flow from operating (1,708) (1,953) 192
activities
Investing activities
Purchase of intangible assets (1,502) (4,475) (7,293)
Purchases of property, plant and (12,235) (1,412) (13,998)
equipment 618 609 1,085
Interest received
Net cash used in investing (13,119) (5,278) (20,206)
activities
Financing activities
Borrowings
Proceeds from disposal of assets 61,645 - -
Minority Interest Investment 16,026 8,683 8,634
Net proceeds from issue of ordinary 11,088 - -
shares 19,381 270 316
Restriction of borrowed cash (78,309) - -
Net cash received from financing 29,831 8,953 8,950
activities
Net increase in cash and cash 15,004 1,722 (11,064)
equivalents 12,112 23,176 23,176
Cash and cash equivalents at start
of period
Cash and cash equivalents at end of 27,116 24,898 12,112
period
Notes to the CONSOLIDATED FINANCIAL 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 2008. They have been prepared in accordance with International Financial Reporting Standards ("IFRS") as
adopted by the EU and the Companies Act 1985, applicable to companies reporting under IFRS.
These interim financial statements were approved by the board on 23 September 2008. The financial information for the year ended 31
December 2007 set out in this interim report does not comprise the group's statutory accounts as defined in Section 240 of the Companies Act
1985. The Group's statutory financial statements for the year ended 31 December 2007, 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 a statement under Section
237(2) of the Companies Act 1985.
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 2008 and 30 June 2007 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 2007.
In addition to those policies applied at 31 December 2007 the following policies reflect further policies which have been applied in
these interim accounts and will be carried forward to 31 December 2008 year end accounts.
Borrowing Costs
Borrowing costs directly attributable to the construction or production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use. Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are reflected in the profit and loss in the period in which they are incurred.
Derivative financial instrument
Derivatives embedded in other financial instruments are treated as separate derivatives when their risks and characteristics are not
closely related to those of the host contracts with gains and losses reported in the income statement.
Restricted Cash
Certain borrowings 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 equivalent.
3. Other Gains and Losses
6 months to 30 June 6 months to 30 June 2007 Year ended
2008 unaudited unaudited 31 December
2007
audited
£'000 £'000 £'000
Deferred consideration on - - 19,942
disposal of subsidiary
Profit / Loss on disposal of
property, plant and equipment 16 52 77
Loss on disposal of intangible - - (3)
assets (15) - -
Loss on disposal of investment (1241) - -
Derivative movement
(1,240) 52 20,016
The derivative movement in other gains and losses for the period relates to the bond finance for the Jabali project in Yemen. This
relates to a financing charge which is linked to the future zinc price once production has commenced. It has been treated as a derivative
and in addition to the value attributed to this at the date of the financing it will be fair valued at each future balance sheet date. The
movement on the derivative liability is part of the financing and thus not recorded as part of operating activity, but shown in the income
statement as other gains and losses.
The borrowings on which the finance relate to are shown in Other long term liabilities.
4. (Loss) / Earnings per Ordinary Share
6 months to 30 June 6 months to 30 June 2007 Year ended
2008 unaudited unaudited 31 December
2007
audited
£'000 £'000 £'000
Basic (Loss)/Earnings per
share (4,853) (2,665) 11,386
Net (Loss) / Profit 56,262,432 48,712,286 48,801,664
Weighted average number of (8.63)p (5.47p) 23.33p
shares
Basic (Loss)/Earnings per
share amount in pence
Diluted (Loss)/Earnings per
share (4,853) (2,665) 11,386
Net (Loss) / Profit 56,262,432 48,712,286 50,906,836
Weighted average number of (8.63)p (5.47p) 23.37p
shares
Diluted (Loss)/Earnings per
share amount in pence
5. Reconciliation of Movement in Shareholders' Equity
Share capital Share premium Foreign currency Retained earnings Minority interest Total
reserve
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2007-restated 12,105 37,245 (107) (1,001) (47) 48,195
Loss for the period - - - (2,665) - (2,
Issue of share capital 117 153 - - - 665)
Exchange differences on 270
translating foreign operations
Share based payments - - (94) - -
Minority interest - - - 480 - (94)
- - - - 3,903 480
3,903
At 30 June 2007 - unaudited 12,222 37,398 (201) (3,186) 3,856 50,089
Profit for the period - - - 14,051 - 14,051
Issue of share capital 22 24 - - - 46
Exchange differences on
translating foreign operations
Share based payments - - 39 - - 39
Minority interest - equity - - - 499 - 499
- - - - 932 932
At 31 December 2007 -
audited 12,244 37,422 (162) 11,364 4,788 65,656
Loss for the period - - - (4,853) - (4,
Issue of share capital 1,950 17,431 - - - 853)
Exchange differences on 19,381
translating foreign operations
Share based payments - - 246 - -
Minority interest - - - 475 - 246
- - - - 10,475 475
10,475
At 30 June 2008 - unaudited 14,194 54,853 84 6,986 15,263 91,380
6. Further copies of this statement
Copies of this statement are being sent to shareholders. Further copies are available on request from The Company Secretary, ZincOx
Resources plc, Knightway House, Park Street, Bagshot, Surrey GU19 5AQ.
7. Events after the Balance sheet date
Since the balance sheet date, on 11 July 2008 the Company raised £36.4m before expenses, through the placing of 20,801,311 shares.
On 25 July 2008, the Company entered into a $48m bond facility, allowing the Company to draw down $48m at any point over the next 3
years. As a result of this facility, warrants to subscribe for 3m shares at £1.75 per share valid for 3 years were issued to the providers
of the bond facility. If this facility is drawn down then further warrants would require to be issued.
Company Information:
Directors:
A C Woollett Chairman
P F Wynter Bee Managing Director
S C Hall Finance Director
S P Mulholland Project Development Director
J Z J Dewalens Technical & Production 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
J F H Thompson Non-Executive Director
D W Paxford Secretary
Registered Number 3800208
Registered Office Knightway House
Park Street
Bagshot
Surrey GU19 5AQ
Telephone 01276 450100
Facsimile 01276 850015
Web site 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
Berkshire 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
Kent BR3 4TU
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