Update

 

TIDMZOX 
 
RNS Number : 6660L 
ZincOx Resources PLC 
15 January 2009 
 

ZincOx Resources Plc 
("ZincOx" or "the Company") 
 
 
GBP10 million Shaimerden Payment expected by the end of January 
 
 
ZincOx, which specialises in the recovery of zinc and zinc products from 
unconventional sources, today provides an update on progress with its various 
activities and is pleased to announce that it is due to receive US$15,703,785 
(about GBP10 million) before the end of January 2009 as part of the deferred 
payments from the sale of its Shaimerden zinc deposit. 
 
 
Shaimerden Mine 
In 2003 the Company sold its zinc deposit at Shaimerden in Kazakhstan. The terms 
of this disposal required additional deferred payments to ZincOx on the first 
200,000 tons of eligible zinc (expected to be spread over the period 2008 to 
2011), related to zinc prices pertaining at the time. 
 
 
A total of 523,759 tonnes of ore containing 118,118 tonnes of eligible zinc were 
mined from Shaimerden in 2008.  In order to ensure that the payments were spread 
over a number of years, the amount of eligible zinc mined is limited in any one 
year to a maximum of 60,000 tonnes. During the period of eligible zinc mining in 
2008, the zinc price averaged US$1,902 per tonne, resulting in the Company being 
due a deferred payment amounting to US$15,703,785 (about GBP10 million). 
 
 
Jabali Deposit 
Development at Jabali is proceeding within budget and all the major pieces of 
process equipment have been ordered. The access road to site is now open, 
accommodation for the mining staff and for the construction team is in place and 
terracing of the main process plant area is underway. Recruitment of key mining 
staff is ongoing and all the senior positions have now been filled. The mining 
equipment is on site and training has started.  The first production is 
scheduled for the first quarter of 2010. 
 
 
Recycling 
Last year zinc started at a price of US$2,240 per tonne and ended the year at 
half the value: US$1,120 per tonne. Some other metals fared even worse. The fall 
in price was particularly marked in the latter half of the year. The 
considerable uncertainty in the international economic outlook has led the Board 
to reconsider the timing of the development programme for the Ohio Recycling 
Project. Furthermore the directors need to be absolutely confident that the 
Company has sufficient funds to develop fully the operation before committing to 
purchase large capital items. 
 
 
Unfortunately, the fall in the zinc price has resulted in a drop in the value of 
receipts the Company can expect from Shaimerden, especially next year (2010). As 
these were an essential component of the full development financing for the Ohio 
plant, the Board is investigating alternative means of making up this shortfall. 
 
 
 
Over the past few months discussions with banks with a view to providing the 
Company with traditional project finance have progressed. While the terms under 
discussion are more onerous than would have been the case a year ago, there are 
signs that some banks are making funds available for quality projects. 
 
 
In parallel with the Board's discussions with the banks, the directors 
are looking at a number of other options including talking to potential joint 
venture partners for the Ohio Recycling Project.  Management would aim to raise 
sufficient capital from a minority partner in the project that, when taken 
together with the Company's existing cash resources and the debt facility 
arranged last year, would be sufficient to develop the project. Even at today's 
metal prices the project would still enjoy a significant operating margin. 
 
 
Our engineers are using the delay in development caused by the economic 
uncertainty to obtain the best possible price for engineering services, 
equipment supply and fabrication.  This will put us in an even stronger position 
once the funding issues are resolved. Some low cost long lead time items are 
also being ordered in order that the delay caused by financing is minimised. 
 
 
Outlook 
Following the receipt of the Shaimerden payment, expected before the end of this 
month, ZincOx will have almost US$92.5 million in cash. The Company is therefore 
in a remarkably strong position compared to many of its peers in the junior 
mining sector and is well equipped to ride out the current very challenging 
economic environment. 
 
 
For more information please contact: 
 
 
Andrew Woollett, ZincOx Resources plc 
 Tel: [phone] 
 
 
John Harrison (Nominated Adviser) 
James Black (Corporate Broker) 
Numis Securities 
Tel: [phone] 
 
 
Charlie Geller, Conduit PR 
Tel (Direct) : [phone] 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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