Preliminary Announcement of Results

 

TIDMZOX 
 
RNS Number : 0692S 
ZincOx Resources PLC 
12 May 2009 
 

 
 
12 May 2009 
ZincOx Resources plc 
("ZincOx", "the Company" or "the Group") 
 
 
Preliminary Announcement of Results - Year ended 31 December 2008 
 
 
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 year ended 31 December 2008. 
 
 
 
 
Highlights 
 
 
  *  GBP4.6 million attributable profit after tax (7.05 pence per share) 
  *  Over GBP64 million in cash reserves 
  *  Jabali mine under development 
  *  Production at Jabali expected in H1 2010 
  *  Agreed long term EAFD supply agreements in Korea 
 
 
 
 
 
Commenting today, Andrew Woollett, Executive Chairman, said: 
"We are delighted to be on track to commence production at the Jabali mine 
during the first half of 2010. We also remain convinced that our innovative 
approach to zinc recycling presents a significant opportunity to produce low 
cost zinc on a sustainable basis. Having significant cash reserves means we 
remain in a strong and flexible position to progress our recycling strategy as 
the global economic environment improves". 
 
 
For more information please go to www.zincox.com or contact: 
 
 
 
 
ZincOx Resources plc             Conduit PR 
Andrew Woollett/Simon Hall Leesa Peters/Charlie Geller 
[phone]               [phone] 
[e-mail][phone] 
[e-mail] 
 
 
Numis Securities Limited 
John Harrison (Nominated Adviser) 
James Black (Corporate Broker) 
 Tel: [phone] 
 
 
  ZincOx Resources Plc 
 
 
Chairman's Statement 
 
 
 
ZincOx is in a strong financial position having approximately GBP64.5 million in 
cash, almost no liabilities and no debt at the corporate level. Furthermore, we 
remained profitable during 2008 with profits attributable to our shareholders of 
GBP4.6m (2007: GBP11.4m) or 7.05 pence per share (2007: 23.33 pence per share) 
due to the receipt of further deferred payments from the sale of the Shaimerden 
deposit, and from which we expect to generate cash during this year and next. 
 
 
During the course of the year, we made huge progress with the development of the 
Jabali Mine in Yemen and while there has been some slippage in timing it remains 
within budget and we look forward to it being in production within one year. 
 
 
As a result of the economic uncertainty following the collapse in metal prices 
in the autumn, it was decided to delay the development of our first waste 
recycling facility in Ohio. However, having raised approximately $72 million 
intended for the equity portion of this project in the first half of 2008, we 
remain in a strong position to press ahead with the development when project 
finance markets improve and such finance is again available on attractive terms. 
 
 
We remain convinced that our innovative approach to recycling has the potential 
to enable us to become a significant low cost producer of zinc on a sustainable 
basis. Whilst the global financial crisis has closed some doors in terms of 
immediate financing, it will, however, inevitably lead to new opportunities and 
our strong cash position gives us the flexibility to embrace these new 
opportunities as they arise. 
 
 
Shaimerden 
We continue to receive deferred payments in relation to the sale of the 
Shaimerden zinc oxide deposit in Kazakhstan. We received $15.7 million in 
January of 2009 in respect of production in 2008.  Under the terms of the sale 
agreement further payments are due relating to 60,000 tonnes of zinc in January 
2010 and a final smaller payment relating to 9,826 tonnes in January 2011. 
 
 
Jabali 
In February 2008 we completed the financing for the development of the Jabali 
Mine.  The equity for this financing was provided by the 2007 Shaimerden 
deferred payment together with funds already in our treasury without recourse to 
shareholders. The balance of the US$216 million development cost was covered by 
equity from Ansan Wifks (48%), our partner in the Jabali project, and the 
issuance of an imaginative project bond which raised US$120 million. The novelty 
of this unique zinc price related bond structure was recognised at the 2008 
Mining Journal awards by ZincOx winning the Outstanding Achievement Award for 
Project Finance. 
 
 
The development work at Jabali is progressing well. In February 2009 we were 
able to hold a foundation stone laying ceremony attended by the Yemeni Prime 
Minister. Our progress with the development is cementing a strong relationship 
with the Government of Yemen and our relations with various local tribal groups 
have also improved. We have a good working relationship under which we are 
maximising the employment of people from the local area. The site levelling is 
complete and the laying of the foundations is expected imminently. All of the 
major processing equipment has been ordered and some is already manufactured and 
awaiting transportation to site. 
 
 
As a result of delays caused by restricted access to the site during the middle 
of 2008, first production is now expected in the first quarter of 2010. Over the 
past few years new mining developments have almost invariably run over budget, 
sometimes spectacularly so; our development team, however, has used the delay to 
seek keener pricing on various items and the project remains within budget. 
 
 
The core mining team has been recruited and the initial training of operators is 
completed. Mining commenced in February 2009 and is building up in line with 
the revised schedule. During the remainder of 2009, mining will concentrate on 
the removal of waste and the stockpiling of ore ahead of plant commissioning at 
the end of 2009. 
 
 
Recycling 
At the start of 2008, having successfully completed the Jabali financing, our 
attention turned to funding the development of the Ohio Recycling Project 
("ORP") through a combination of equity and a high yield bond. The equity 
component was to have come from existing cash resources, new equity and the 
remaining anticipated deferred payments from the Shaimerden mine. The bond was 
structured as a facility on which interest was paid at half the rate until it 
was drawn down, with draw down occurring only after most of the equity had been 
spent. Having raised the requisite new equity and secured the bond facility, we 
started to plan the detailed engineering required for the construction of the 
plant. 
 
 
Following the sharp acceleration of the fall of the zinc price in October, we 
could no longer rely on the Shaimerden deferred payments for January 2009 and 
2010 being sufficient to complete our financing for the ORP as had been 
anticipated earlier in the year. Given the considerable global economic 
uncertainty, our existing substantial commitments at Jabali and our belief that 
equity markets would remain closed for a significant period of time, it was with 
some reluctance that we decided to postpone the development of the ORP. 
 
 
The marked fall in the zinc price significantly reduces the amount of 
traditional project finance debt that the project can support; furthermore 
project finance would require a substantial hedging programme that would tie the 
project to zinc prices that many analysts believe to be unsustainably low. 
 
 
The development of our first recycling project remains a priority for the 
Company, and we continue to discuss the possibility of a joint venture with 
various zinc companies and the consideration of the use of second hand equipment 
to reduce the capital cost. 
 
 
In view of the shortfall in development finance, and our general reluctance to 
proceed with a development of this scale during these uncertain times, we 
decided to cancel most of the bond facility put in place for the development of 
the ORP. This helped us to recoup most of the costs associated with the setting 
up of the facility. 
 
 
While the credit crunch has certainly slowed down our immediate development 
plans for the ORP, we are continuing to work towards our ambition of a ZincOx 
facility in every major steel recycling region of the world. I am delighted to 
report, therefore, our entry into long term EAFD supply agreements with all the 
significant Korean Electric Arc Furnace operators in April 2009; these include 
some of the world's largest steel companies. 
 
 
Refining 
The Company's wholly owned Big River Zinc smelter in the USA has remained on 
care and maintenance throughout the year.  With the development plans for the 
ORP on hold for the time being, so too are the redevelopment plans for Big River 
Zinc. While the redevelopment decision is awaited, other activities are being 
carried out at Big River including the toll washing of zinc oxide concentrates 
and the storage of sulphuric acid for third parties. 
 
 
Corporate 
The zinc price roughly halved over the course of the 2008, and during October 
the fall was its most severe and dramatic. Demand for zinc has plummeted, which 
is hardly surprising given the collapse in several markets that are key for zinc 
usage, such as the galvanising of steel sheet for new cars. Unlike the case in 
previous downturns, the zinc industry has reacted rapidly and decisively to 
potential oversupply and many producers have announced cutbacks or even 
temporary or permanent mine closures. One of the reasons for these closures is 
the difficulty, in the current credit environment, in maintaining a loss making 
operation by corporate borrowing, as has been possible in previous downturns. As 
I write today, the rise in zinc stocks seems to have stopped and the price 
recovered slightly. In spite of this, many producers are still losing money and 
it is difficult to tell whether anything like a normal, albeit reduced, market 
has resumed. 
 
 
Early in 2008 we recognised that the development of the ORP and the Jabali Mine 
required additional management skills and experience to that which we had needed 
previously. Therefore in the first half of the year there was a considerable 
restructuring of the management of the Company and this was reflected in board 
changes. Peter Wynter Bee took over as Managing Director and two new executive 
directors with responsibility for Project Development, Simon Mulholland, and 
Production Operations, Jacques Dewalens, were appointed. In addition, three new 
non-executive directors joined the board, each of whom has considerable 
international experience in the management of high growth companies. The 
experience of these directors has been of considerable support and assistance to 
me during the exceptional times experienced over the past six months. 
 
 
In May 2009, Guy Lafferty, representing our largest single shareholder, Hoegh 
Capital Partners, agreed to join the board and at the same time John Thompson, 
representing Teck, advised us that he will not be seeking re-election at the 
2009 AGM. 
 
 
I would like to thank Mike Foster for his very hard work for the Company over 
the past ten years, latterly as Managing Director, and particularly for his 
perseverance and determination, without which I do not believe the Jabali 
project would now be under development. I would also like to thank Peter Fry for 
his contribution as finance director and subsequently as a non-executive 
director and Peter Beck for his work as a non-executive director. Both served 
from the time the Company was admitted to AIM until their retirement at the 2008 
AGM.  I would also like to thank John Thompson for his contribution to the 
Company, especially in respect of our evaluation of new technologies. 
 
 
Indeed I would like to thank all our staff and employees for their outstanding 
contribution over the past year. It has been a year of both achievement and 
frustration. When the world economy begins to recover from the current turmoil, 
I am confident that we have the projects, the people and the resources not 
simply to weather the storm but to be extremely well placed to benefit rapidly 
from the opportunities that will have been created by these exceptional economic 
conditions. 
 
 
 
 
 
 
Andrew Woollett 
Chairman 
11 May 2009 
 
 
 
REVIEW OF OPERATIONS 
 
 
Zinc Mining 
Some years ago ZincOx undertook a global review of non-sulphide zinc deposits. 
However all the known deposits have been investigated and are either too small 
or owned by organisations that are not seeking partners or for which the 
commercial terms of acquisition or partnership are not attractive. ZincOx will 
continue to examine opportunities for non-sulphide zinc deposits as and when 
they arise. ZincOx has interests in two deposits, Shaimerden, in Kazakhstan and 
Jabali, in Yemen. 
 
 
Jabali Zinc Mine - Yemen 
The exploitation and development rights to the Jabali zinc deposit are owned by 
Jabal Salab Company (Yemen) Limited ("Jabal Salab"), in which ZincOx holds a 52% 
interest. The balance of 48% is held by Ansan Wikfs Investments Limited. 
 
 
The Jabali deposit contains a mineable reserve of 8.7 million tonnes of ore at 
an average grade of 9.2% zinc. The deposit will be mined at the rate of 800,000 
tonnes per annum by open pit with a strip ratio of 2:1.  Ore will be crushed and 
calcined prior to milling and leaching using ammonia based solutions. Following 
purification, zinc carbonate will be precipitated and calcined for the 
production of 70,000 tonnes per annum of very high quality zinc oxide (>79% 
zinc). The zinc oxide will be bagged and shipped in part to customers in the 
paint and ceramics industries.  The balance will be shipped to Jabali's Rubber 
Grade Plant ("RGP") to be constructed in Belgium where it will be further milled 
to produce a high quality product required by the rubber industry. Originally 
the RGP had been planned for Yemen but with the rigorous requirements for 
ongoing quality assurance inspections by the potential customers based in 
Europe, its location is now planned for Belgium. 
 
 
The Government of Yemen is extremely supportive of the Jabali project. It is the 
first large scale mining project to be developed in Yemen and the Government 
recognises that mining is a way of diversifying away from its dependence on the 
oil sector. Jabal Salab has a 20-year Exploitation Agreement with the Ministry 
of Oil and Minerals that sets out all the terms and conditions for development 
of the deposit. The Contract has been approved by the Yemen parliament and 
ratified as law by the President. 
 
 
The project costs of US$216 million were financed as to US$96m by ZincOx and its 
partners, Ansan, with the balance being provided as a limited recourse bond 
package to Jabal Salab. This included equity and limited financial security 
guarantees from the shareholders and a $120 million loan facility provided by a 
group of emerging market specialist hedge funds. 
 
 
The term of the bond is six years with an interest rate of 11.5% and a three 
year grace period on principal repayments. In addition, the facility carries an 
additional coupon linked to the zinc price (the Zinc Price Related Payment 
Obligation or "ZIPPO") which is calculated at US$0.16 for each dollar that the 
average annual international zinc price is above US$1,300 per tonne on every 
tonne of zinc sold by Jabal Salab over a period of 12 years from close of the 
financing. The ZIPPO notes are tradable instruments and are believed to be the 
first such instruments to be launched for a metal related transaction and the 
first Yemen project bond. 
 
 
Even before the funding was finalised, several long lead time items had been 
ordered. Having completed the funding of the project in February 2008, the 
project development started in earnest with the construction of the road from 
the tarred highway to site. During the middle of the year there were a number of 
incidents involving local tribes and the contractors that required activities to 
be suspended. These issues were resolved in the autumn. The delay caused by 
these initial tribal issues means that commissioning and the start of production 
has been slightly delayed. Commissioning is planned for the end of 2009 and the 
start of production in the first quarter of 2010. 
 
 
Mining commenced in February 2009 and will initially be concentrating on the 
removal of waste and the stock piling of ore in anticipation of the plant 
commissioning at the end of the year. The foundations are in the process of 
being laid prior to the erection of buildings and installation of equipment. 
Most of the process equipment is either being manufactured or is ready for 
shipment. 
 
 
Shaimerden Zinc Mine - Kazakhstan 
ZincOx sold its interest in the Shaimerden zinc oxide deposit to Kazzinc, a 
large local zinc producer owned by Glencore AG, in 2003. It retained an interest 
through on-going deferred payments based on a formula linked to the zinc price. 
The deferred payments which are based on the first 200,000 tonnes of zinc 
contained in ore that are mined from the deposit are paid to ZincOx at the rate 
of $0.2375 per tonne for every dollar that the LME zinc price is above $800 per 
tonne. They are made regardless of whether or not the deposit is being mined, 
and based on a deemed minimum and maximum amounts of 40,000 and 60,000 tonnes of 
contained zinc in ore, respectively. Payments may be suspended if there is a 
discrepancy of over 25% between the zinc predicted by the geological model at 
the date of the sale and the actual zinc mined. 
 
 
The open pit suffered a flood in March 2008 and production was suspended for 
about two months as the water was pumped out. Production picked up in the latter 
half of the year and a total of 523,759 tonnes of ore containing 118,118 tonnes 
of eligible zinc was mined. In January 2009, ZincOx received its third deferred 
payment amounting to US$15.7million representing 60,000 tonnes of zinc mined 
during 2008. 
 
 
To date ZincOx has received deferred payments in respect of 130,174 tonnes 
leaving payments due for the balance of 69,826 tonnes which will be payable in 
January 2010 and 2011. 
 
 
Zinc Recycling 
ZincOx has recognised the potential to apply its metallurgical knowledge and 
experience to the recovery of zinc from waste and secondary materials.While 
there are opportunities in secondary materials such materials tend to be 
relatively expensive and so do not fall within our strategy of developing low 
cost operations. Waste materials tend only to be available in small tonnages and 
logistics and transport often become more important than metallurgical 
expertise. The most notable exception to this generalisation is Electric Arc 
Furnace Dust ("EAFD"), a material generated by the recycling of steel scrap. 
 
 
ZincOx has investigated several methods of recovering the zinc from EAFD and has 
concluded that a rotary hearth furnace producing a zinc concentrate combined 
with a dedicated melter to recover pig iron represents the lowest cost and most 
environmentally attractive treatment route. The zinc concentrate may be further 
upgraded by washing to produce a premium grade smelter feed. The only other 
product is an inert slag that can be used as building aggregate. 
 
 
ZincOx intends to establish a network of plants to treat EAFD around the world. 
Further details of the Company's recycling strategy are set out on its website 
(www.zincox.com). 
 
 
In June 2008 the Company raised US$72 million and a US$48 million bond facility, 
which together with existing cash resources and the anticipated receipts from 
Shaimerden was sufficient to develop our first recycling plant, the ORP in the 
USA, and expand washing operations at the Company's Big River Zinc facility. 
However following the collapse of the zinc price in October 2008 development 
plans have been put on hold until markets improve. 
 
Ohio Recycling Plant - USA 
The Ohio Recycling Project (ORP) together with the washing plant at Big River 
Zinc (BRZ) has a development cost currently estimated to be US$179 million, 
including working capital and contingency. The Company is actively considering 
using second hand equipment to reduce the capital cost and is also reviewing the 
possibility of a joint venture with various zinc companies. 
 
 
Generation of EAFD in North America is normally in excess of one million tonnes 
per annum. The ORP is designed to treat 200,000 tonnes per year of EAFD 
containing an average grade of about 20-24% zinc. ORP is designed to produce 
annually 47,000 tonnes of zinc contained in a crude zinc oxide concentrate, 
56,000 tonnes of pig iron and 48,000 tonnes of slag. The zinc concentrate will 
be transported to Big River Zinc (BRZ) for final upgrading and the pig iron can 
be sold back to the steel industry. 
 
 
In November 2007, a seven hectare plant site was purchased at Delta, in 
Fulton County, north-west Ohio and in March 2008 the last of the environmental 
and other permits was granted. The project has been awarded certain grants and 
tax incentives. The strategically located site is well positioned for rail and 
road transportation networks as well as having good access to power, water and 
gas. 
 
 
Aliaga Recycling Plant - Turkey 
Turkey is the world's largest importer of scrap iron and steel generating over 
250,000 tonnes per annum of EAFD. ZincOx plans to build an EAFD treatment 
facility replicating ORP at the Heavy Industrial Zone at Aliaga, on Turkey's 
western seaboard (the Aliaga Recycling Plant or ARP).  Development plans for the 
ARP are pending progress with the development of the ORP. 
 
 
Korea 
Korea has one of the world's largest steel recycling industries.  ZincOx has 
been working in Korea for over four years and in June 2008 the Company entered 
into a Memorandum of Understanding with KOSA, the association representing the 
steel industry in Korea, by which KOSA would assist ZincOx in obtaining EAFD 
supply commitments from various steel companies. In April 2009 this led to 
ZincOx entering into exclusive EAFD Supply Agreements with all Korea's 
significant EAF operators: Hyundai Steel, Dongkuk Steel, Daehan Steel, YK Steel, 
Dongbu Steel, Hwanyoung Steel, Korean Iron and Steel Company, SeAH Besteel and 
Posco Specialty Steel. Together these companies generate approximately 380,000 
tonnes per annum of EAFD with a zinc grade of about 22%. 
 
 
Over the past 12 months a comprehensive sampling programme of the EAFD generated 
by each steel mill has been undertaken and analysis is well underway. The 
results will be used to generate representative samples for pilot testing. The 
pilot results will enable process optimisation ahead of basic engineering. The 
engineering will allow equipment selection and the estimation of capital 
development cost. These tasks will contribute to a detailed feasibility study 
that will provide the basis for project financing. 
 
 
In parallel with these activities, negotiation for the acquisition of a suitable 
plant site needs to be concluded and the requisite development and operating 
permits obtained. Development is expected to commence within the next two years. 
 
 
Thailand 
Several South East Asian countries have important steel recycling industries 
that generate significant EAFD. Thailand is particularly well situated for the 
development of a regional EAFD recycling plant of about 200,000 tonnes per 
annum, of which about half could be provided domestically. 
 
 
Until recently ZincOx had EAFD Supply Agreement options with all the significant 
EAFD generators in Thailand.Due to the delay in timing for the ORP, some of 
these agreements have been allowed to lapse. However ZincOx retains a close 
relationship with the Thai mills. 
 
 
A suitable plant site has been identified on which environmental permitting for 
the rotary hearth furnace has been obtained. 
 
 
Zinc Refining 
The zinc concentrate produced by the recycling operations in rotary hearth 
furnaces may be washed to produce a premium grade concentrate. Zinc metal could 
be produced from this concentrate by a simple flowsheet and at lower cost than 
for conventional plants.The Company is investigating the development of 
refineries based on this simpler flowsheet. 
 
 
The Big River Zinc refinery can be cheaply modified to have this simple 
flowsheet but due to expensive labour and energy, operating costs will not be 
particularly low. In line with the strategy to develop a network of EAFD 
recycling plants around the world, there will eventually need to be a matching 
capacity for zinc metal production. Since expected production of zinc in 
concentrate will be well above the capacity at BRZ and given its distance 
to Korea and Thailand, a Far Eastern refinery concept is being developed at 
Bintulu, in Malaysia. 
 
 
Big River Zinc Refinery - USA 
BRZ is a 100,000 tonnes per annum zinc smelter close to St Louis, in central 
USA. The plant is on care and maintenance, pending its redevelopment initially 
as a washing and upgrading facility for the concentrate to be produced from ORP, 
but ultimately for the production of zinc from this concentrate. 
 
 
Due to the delay in the development of the ORP, the site will shortly be used to 
wash zinc oxide concentrate produced by other parties and for the storage of 
acid. The BRZ staff have been largely redeployed in the ORP development. 
 
 
Bintulu Project, Sarawak, Malaysia 
Electrical power is a very significant component in the cost of zinc metal 
production. In order to achieve the lowest possible cost of production, zinc 
metal production should be undertaken at locations where power is inexpensive. 
 
 
The Malaysian government has established a new industrial zone at Bintulu in the 
state of Sarawak on the north-west corner of the island of Borneo. This 
site should benefit from its proximity to an ambitious multiple phase hydro 
electric generation scheme. Companies in the industrial zone should enjoy low 
cost long term electrical power contracts. In February 2008, ZincOx entered into 
a Memorandum of Understanding with the Bintulu Development Authority for the 
development of a 300,000 tonnes per annum zinc smelter. Negotiations on the 
timetable for the development of the project and a framework power agreement 
have commenced. 
 
 
FINANCIAL REVIEW 
 
 
Results 
The Group profit after tax attributable to shareholders of the parent company 
was GBP4.6m compared to GBP11.4m last year. The administrative costs in the year 
of GBP1.6m (2007: GBP5.6m) include an unrealised foreign exchange gain of 
GBP7.9m as a result of the significant US dollar balances being held as cash at 
the year end and due to the significant movement in the US dollar exchange rate 
in the second half of 2008. 
 
The key items within other gains and losses include deferred consideration in 
respect of Shaimerden of GBP13.6m (2007: GBP19.9m) and a fair value loss 
relating to the ZIPPO derivative liability of GBP1.3m (2007: nil). The 
Shaimerden gain has been grossed up for withholding tax deducted at source. 
 
 
The board has decided to write certain of the development assets down by GBP5m 
to reflect the realisable value of those assets at the end of the year. Due to 
the unusually high nature of this charge it has been separately disclosed in 
arriving at the Group's operating profit. 
 
 
Liquidity and funding 
The cash funds of the Group at 31 December 2008 were GBP64.5m compared with 
GBP12.6m at the end of 2007. These cash funds were held in a range of currencies 
but principally US dollars ($56.8 million) and sterling currencies (GBP24.6 
million). The US dollar balance includes an amount of $15.5m which the Company 
was required to place in cash backed letters of credit for the benefit of Jabal 
Salab at the completion of the financing for the mine in February 2008. The 
remaining available cash balances leave the Group in a very strong position in 
these difficult times. 
The mechanics of the Jabal Salab financing has given rise to the disclosure of 
"restricted cash" in the consolidated balance sheet. The cash for Jabal Salab is 
restricted to the extent that it can only be spent on the Jabali project and is 
held in escrow by an agent on behalf of the lenders. The restricted cash is 
split into current and non-current based on the drawdown of funds required to 
satisfy the projected cash payments to be made. 
 
 
 
 
FORWARD LOOKING STATEMENTS 
The Chairman's Statement, the Review of Operations and the Financial Review all 
contain 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 INCOME STATEMENT 
FOR THE YEAR ENDED 31 DECEMBER 2008 
 
 
+-------------------------------------+------------------+----------------+ 
|                                     |      Year ended  |     Year ended | 
|                                     | 31 December 2008 |    31 December | 
|                                     |          GBP'000 |           2007 | 
|                                     |                  |        GBP'000 | 
+-------------------------------------+------------------+----------------+ 
| Revenue                             |              262 |              - | 
| Cost of sales                       |            (296) |              - | 
+-------------------------------------+------------------+----------------+ 
| Gross loss                          |             (34) |              - | 
|                                     |                  |                | 
+-------------------------------------+------------------+----------------+ 
| Administrative expenses             |          (1,647) |        (5,604) | 
+-------------------------------------+------------------+----------------+ 
| Underlying Operating Loss           |          (1,681) |        (5,604) | 
| Other gains and losses              |           12,246 |         20,016 | 
| Impairment charge write-down        |          (5,040) |            (3) | 
| Operating Profit / (Loss)           |            5,525 |         14,409 | 
| Finance income                      |            1,517 |          1,085 | 
| Finance costs                       |            (642) |           (37) | 
| Share of losses of associate        |                - |             25 | 
|                                     |                  |                | 
+-------------------------------------+------------------+----------------+ 
| Profit before tax                   |            6,400 |         15,482 | 
| Taxation                            |          (2,782) |        (4,096) | 
+-------------------------------------+------------------+----------------+ 
| Net Profit                          |            3,618 |         11,386 | 
|                                     |                  |                | 
+-------------------------------------+------------------+----------------+ 
| Attributable to:                    |            4,659 |         11,460 | 
| Equity holders of the parent        |          (1,041) |           (74) | 
| Minority interest                   |                  |                | 
+-------------------------------------+------------------+----------------+ 
|                                     |            3,618 |         11,386 | 
|                                     |                  |                | 
+-------------------------------------+------------------+----------------+ 
| Basic earnings per ordinary share   |            7.05p |         23.33p | 
| Diluted earnings per ordinary share |            6.98p |         22.37p | 
+-------------------------------------+------------------+----------------+ 
 
 
ZINCOX RESOURCES PLC 
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE 
FOR THE YEAR ENDED 31 DECEMBER 2008 
 
 
 
 
+--------------------------------+-----------------+-----------------+ 
|                                |     Year ended  |      Year Ended | 
|                                |     31 December |     31 December | 
|                                |            2008 |            2007 | 
|                                |         GBP'000 |         GBP'000 | 
|                                |                 |                 | 
+--------------------------------+-----------------+-----------------+ 
| Currency translation           |          14,071 |            (55) | 
| differences                    |           4,659 |          11,460 | 
| Profit for the financial year  |                 |                 | 
+--------------------------------+-----------------+-----------------+ 
| Total recognised income and    |          18,730 |          11,405 | 
| expense for the year           |                 |                 | 
|                                |                 |                 | 
+--------------------------------+-----------------+-----------------+ 
 
 
ZINCOX RESOURCES PLC 
CONSOLIDATED BALANCE SHEET 
FOR YEAR ENDED 31 DECEMBER 2008 
 
+--------------------------+----------------------+-----------------------+ 
|                          |          Year Ended  |           Year Ended  | 
|                          |     31 December 2008 |      31 December 2007 | 
|                          |              GBP'000 |               GBP'000 | 
+--------------------------+----------------------+-----------------------+ 
| ASSETS                   |               19,458 |                17,706 | 
| Non-Current Assets       |               62,559 |                22,031 | 
| Intangible assets        |               10,350 |                     - | 
| Property, plant and      |                      |                       | 
| equipment                |                      |                       | 
| Restricted cash          |                      |                       | 
|                          |                      |                       | 
+--------------------------+----------------------+-----------------------+ 
|                          |               92,367 |                39,737 | 
+--------------------------+----------------------+-----------------------+ 
| Current Assets           |                  671 |                   973 | 
| Inventories              |               14,043 |                18,449 | 
| Trade and other          |               81,629 |                     - | 
| receivables              |               64,458 |                12,646 | 
| Restricted cash          |                      |                       | 
| Cash and cash            |                      |                       | 
| equivalents              |                      |                       | 
|                          |                      |                       | 
+--------------------------+----------------------+-----------------------+ 
|                          |              160,801 |                32,068 | 
+--------------------------+----------------------+-----------------------+ 
| TOTAL ASSETS             |              253,168 |                71,805 | 
+--------------------------+----------------------+-----------------------+ 
| LIABILITIES              |                    - |                 (534) | 
| Current Liabilities      |              (9,687) |               (5,034) | 
| Bank loans and overdraft |                      |                       | 
| Trade and other payables |                      |                       | 
|                          |                      |                       | 
+--------------------------+----------------------+-----------------------+ 
|                          |              (9,687) |               (5,568) | 
+--------------------------+----------------------+-----------------------+ 
| Non-Current Liabilities  |             (86,951) |                 (581) | 
| Other long term          |                      |                       | 
| liabilities              |                      |                       | 
|                          |                      |                       | 
+--------------------------+----------------------+-----------------------+ 
|                          |             (86,951) |                 (581) | 
|                          |                      |                       | 
+--------------------------+----------------------+-----------------------+ 
| TOTAL LIABILITIES        |             (96,638) |               (6,149) | 
+--------------------------+----------------------+-----------------------+ 
| NET ASSETS               |              156,530 |                65,656 | 
+--------------------------+----------------------+-----------------------+ 
| EQUITY                   |               19,394 |                12,244 | 
| Share capital            |               85,336 |                37,422 | 
| Share premium            |               17,053 |                11,364 | 
| Retained earnings        |               13,909 |                 (162) | 
| Foreign currency reserve |                      |                       | 
|                          |                      |                       | 
+--------------------------+----------------------+-----------------------+ 
| Equity attributable to   |              135,692 |                60,868 | 
| equity holders of the    |               20,838 |                 4,788 | 
| parent                   |                      |                       | 
| Minority interest        |                      |                       | 
|                          |                      |                       | 
+--------------------------+----------------------+-----------------------+ 
| TOTAL EQUITY             |              156,530 |                65,656 | 
+--------------------------+----------------------+-----------------------+ 
 
 
ZINCOX RESOURCES PLC CONSOLIDATED CASH FLOW STATEMENT 
FOR YEAR ENDED 31 DECEMBER 2008 
 
+--------------+----------+----------+ 
|              |       31 |       31 | 
|              | December | December | 
|              |     2008 |     2007 | 
|              |  GBP'000 |  GBP'000 | 
+--------------+----------+----------+ 
| Profit       |    6,400 |   15,482 | 
| before       |    1,318 |      920 | 
| taxation     |    4,102 |     (55) | 
| Adjustments  |  (1,517) |  (1,085) | 
| for:         |      642 |       37 | 
| Depreciation |    5,040 |        3 | 
| and          |      125 |        - | 
| amortisation |    1,030 |      979 | 
| Foreign      |    5,002 |    4,099 | 
| exchange     |  (1,045) |    (154) | 
| gain /(loss) |      302 |       47 | 
| Interest     |  (2,782) |  (4,006) | 
| received     |        - |     (25) | 
| Interest     |  (9,464) | (16,013) | 
| expense      |          |          | 
| Impairment   |          |          | 
| of           |          |          | 
| intangible   |          |          | 
| assets       |          |          | 
| Tangible     |          |          | 
| assets       |          |          | 
| written off  |          |          | 
| Share based  |          |          | 
| payments     |          |          | 
| Increase in  |          |          | 
| trade and    |          |          | 
| other        |          |          | 
| payables     |          |          | 
| Increase in  |          |          | 
| trade and    |          |          | 
| other        |          |          | 
| receivables  |          |          | 
| Decrease in  |          |          | 
| inventories  |          |          | 
| Foreign tax  |          |          | 
| at source    |          |          | 
| Share of     |          |          | 
| losses of    |          |          | 
| associate    |          |          | 
| Other gains  |          |          | 
| and losses   |          |          | 
|              |          |          | 
+--------------+----------+----------+ 
| Cash         |    9,153 |      229 | 
| generated    |    (642) |     (37) | 
| from         |          |          | 
| operations   |          |          | 
| Interest     |          |          | 
| paid         |          |          | 
|              |          |          | 
+--------------+----------+----------+ 
| Net          |    8,511 |      192 | 
| cash         |          |          | 
| flow         |          |          | 
| from         |          |          | 
| operating    |          |          | 
| activities   |          |          | 
|              |          |          | 
+--------------+----------+----------+ 
| Investing    |  (3,786) |  (7,293) | 
| activities   | (35,009) | (13,998) | 
| Purchase     |    1,517 |    1,085 | 
| of           |          |          | 
| intangible   |          |          | 
| assets       |          |          | 
| Purchases    |          |          | 
| of           |          |          | 
| property,    |          |          | 
| plant and    |          |          | 
| equipment    |          |          | 
| Interest     |          |          | 
| received     |          |          | 
|              |          |          | 
+--------------+----------+----------+ 
| Net          | (37,278) | (20,206) | 
| cash         |          |          | 
| used         |          |          | 
| in           |          |          | 
| investing    |          |          | 
| activities   |          |          | 
|              |          |          | 
+--------------+----------+----------+ 
| Financing    |   95,861 |        - | 
| activities   | (95,861) |        - | 
| Borrowings   |    3,882 |        - | 
| Restriction  |    6,157 |    8,634 | 
| of           |   16,010 |      316 | 
| borrowings   |   55,064 |        - | 
| Release of   |          |          | 
| restricted   |          |          | 
| cash         |          |          | 
| Minority     |          |          | 
| interest     |          |          | 
| investment   |          |          | 
| Net          |          |          | 
| proceeds     |          |          | 
| from         |          |          | 
| disposal of  |          |          | 
| assets       |          |          | 
| Net          |          |          | 
| proceeds     |          |          | 
| from issue   |          |          | 
| of ordinary  |          |          | 
| shares       |          |          | 
|              |          |          | 
+--------------+----------+----------+ 
| Net          |   81,113 |    8,950 | 
| cash         |          |          | 
| received     |          |          | 
| from         |          |          | 
| financing    |          |          | 
| activities   |          |          | 
|              |          |          | 
+--------------+----------+----------+ 
| Net          |   52,346 | (11,064) | 
| increase     |   12,112 |   23,176 | 
| /            |          |          | 
| (decrease)   |          |          | 
| in cash      |          |          | 
| and cash     |          |          | 
| equivalents  |          |          | 
| Cash and     |          |          | 
| cash         |          |          | 
| equivalents  |          |          | 
| at start of  |          |          | 
| year         |          |          | 
|              |          |          | 
+--------------+----------+----------+ 
| Cash         |   64,458 |   12,112 | 
| and          |          |          | 
| cash         |          |          | 
| equivalents  |          |          | 
| at end of    |          |          | 
| year         |          |          | 
|              |          |          | 
+--------------+----------+----------+ 
 
 
 
 
Notes: 
 
1.       Preparation of non-statutory accounts 
 
 
The financial information set out in this preliminary announcement does not 
constitute statutory accounts as defined in section 240 of the Companies Act 
1985. 
The consolidated balance sheet at 31 December 2008, the consolidated income 
statement, consolidated cash flow statement, statement of total recognised gains 
and losses, and associated notes for the year then ended have been extracted 
from the Group's 2008 statutory financial statements upon which the auditors' 
opinion is unqualified. 
2.       Earnings per Share 
 
 
The calculation of the earnings per share is based on the profit attributable to 
ordinary shareholders of GBP4,659,000 (2007: GBP11,460,000) divided by the 
weighted average number of shares in issue during the year of 66,121,684 (2007: 
48,801,664). 
 
 
The calculation of the diluted earnings per share is based on the profit 
attributable to ordinary shareholders of GBP4,659,000 (2007: GBP11,460,000) 
divided by the weighted average number of shares in issue as varied by the 
dilutive effect of the share options in issue during the year totalling 
66,743,304 (2007: 50,906,836). 
 
3.       Impairment Write-offs 
 
 
As a result of impairment reviews performed on certain projects at the year end, 
impairment write downs have been made on the carrying value of deferred 
development costs in relation to the projects in Turkey GBP3.8m and various 
other projects GBP1.2m. All deferred development costs written off in the year 
are included in the income statement in arriving at operating profit. 
 
 
4.       Preliminary statement 
 
 
Copies of the Annual Report will be sent to shareholders shortly and will be 
available from the Company at Knightway House, Park Street, Bagshot, Surrey GU19 
5AQ and Numis Securities Limited, but in the meantime the full financial 
statements may be viewed on the Company's website www.zincox.com. 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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