ZincOx Resources PLC Update (6538W)

TIDMZOX

RNS Number : 6538W

ZincOx Resources PLC

11 November 2014

11 November 2014

ZincOx Resources plc

("ZincOx" or the "Company")

Korean Recycling Plant Update

and Strategic Partner Sought For Future Projects

ZincOx Resources plc ("ZincOx") is pleased to announce continued improvement in the performance of its Korean Recycling Plant ("KRP").

The month of October saw record improvements in many key operating areas:

   -     14,979 tonnes of EAFD treated, 8% higher than the previous record 

- 3,475 tonnes of zinc in concentrate produced, 2% higher than the previous best which had been achieved when the zinc grade of EAFD was significantly higher

   -     91% zinc recovery 

Availability continues to improve and unit operating costs are moving towards long term targets. These improvements enabled KRP to generate a positive underlying EBITDA(1) of US$700,000 for October at plant level which covered, for the first time, the Company's monthly interest payments and corporate overhead costs at Group level.

Notwithstanding the improved performance of the plant, at the beginning of November, following the discovery of an area of elevated temperature on the outer flue area due to a loss of refractory, it was necessary to suspend feeding in order to repair the refractory. This hot spot was the result of an air injector being blocked causing penetration of air behind the refractory. Having identified the problem, such blockages can be avoided in the future.

An inspection and report on the refractory has been undertaken by an independent specialist who is satisfied with its general condition although he has made certain repair recommendations which are being implemented so as to improve reliability and avoid further unforeseen stoppages.

The current repairs are expected to last about two weeks and following the restart, the ramp-up will continue with the objective of reaching full production in the first quarter of 2015. These repairs will leave the Company with lower cash reserves than it would normally operate with, but following the restart and with continued good performance through the remainder of November and December, cash reserves should be restored to a more normal level.

Now that KRP's rotary hearth furnace is approaching full production, the Company is beginning to accelerate the planning to rollout the technology to other Asian countries. These are based on a strategy to add value to both the zinc concentrate and iron product. New recycling plants will include equipment designed to take advantage of the special characteristics of these intermediate materials for the production of more valuable industrial products that will significantly enhance the overall economic returns.

Given the substantial cost of building new projects, the Company has commenced a search for supportive long term capital providers (through debt and equity) and strategic partners to fund the future rollouts.

Commenting on the announcement;

Andrew Woollett, ZincOx's Chief Executive Officer said "Since recovery was stabilised above 90% in the summer, we have been concentrating our efforts on greater throughput; this has risen dramatically in October and we expect this progress to continue over the next few months. The impact of this increase has enabled us to cover monthly interest charges and corporate costs and we look forward to building on this cashflow as we reach full production."

For further information please contact:

 
 
 ZincOx Resources plc                             Tel: [phone] 
 Andrew Woollett, Chief Executive Officer 
 
   Peel Hunt LLP (Nominated Adviser and Joint     Tel: [phone] 
   Broker) 
 Richard Kauffer 
  Daniel Harris 
 finnCap Limited (Joint Broker)                 Tel: [phone] 
  Matthew Robinson 
  Joanna Weaving 
 Tavistock Communications (Financial PR)        Tel: [phone] 
  Simon Hudson 
  Nuala Gallagher 
 

1 Earnings before interest, tax, depreciation and amortisation (adjusted to exclude foreign exchange gains and losses)

This information is provided by RNS

The company news service from the London Stock Exchange

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