Proactiveinvestors United Kingdom

FinnCap encouraged by news flow from ZincOx; repeats 186p target price

Thu, 09 Feb 2012 10:31:00 +0000

Broker finnCap advised investors considering buying shares in ZincOx (LON:ZOX) to move quickly as its first recycling project is “tantalisingly” close to production.

This makes the execution risk discount attributed to the group’s share price look “increasingly inappropriate”, said analyst David Buxton.

Buxton called the recent newsflow from ZincOx “encouraging”, saying shares are starting to re-rate as the company reports more progress from the first recycling project in Korea, KRP1.

KRP1 remains on track and on budget and production is still expected to kick off in March, which, said Buxton, raises fair value assessment of the company as it makes the likelihood of the go-ahead of the second recycling project, KRP2, more tangible.

At the end of January, ZincOx announced the first delivery of feedstock, a type metal powder called electric arc furnace dust (EAFD), to the newly built recycling plant in Korea. Shares have since surged from 68 pence to Wednesday’s closing price of 79 pence.

“The shares have started their rerating following encouraging progress reports and we believe there is further substantial upside to be had over the next year as profitability is achieved and with progress on the development of KRP2 and other sites around the world,” said Buxton.

Buxton said the receipt of the feedstock indicates that hot commissioning of the Rotary Hearth Furnace will occur in the coming weeks, which could serve as a catalyst for the company’s share price.

The feedstock will be processed as part of the ‘live’ commissioning of the plant, marking the final stage of the development of KRP1.

Within four to six weeks the commissioning will be complete, paving the way for the plant to begin production.

In the note, the analyst reiterated his 186 pence price target for ZincOx, which is based on long term considerations. FinnCap’s target is double the current share price.

ZincOx receives first feedstock delivery at Korean zinc recycling project

Tue, 31 Jan 2012 07:44:00 +0000

ZincOx Resources (LON:ZOX) today told investors that the first feedstock delivery has now arrived at its newly built metal recycling plant in Korea.

The feedstock, a type metal powder called electric arc furnace dust (EAFD), will be processed as part of the ‘live’ commissioning of the plant. This is the final stage of the development, Zincox said.

After around 4-6 weeks the commissioning will be complete and the plant will begin production. This is in line with the group’s targeted first quarter start. Zincox says that the development is now 95 per cent complete and it remains on budget.

"We are delighted with the progress of this project, remaining, as it does, on schedule and within the budget we set when we started the development 16 months ago, and we look forward to our first production before the end of this quarter," said chairman Andrew Woollett.

EAFD is a fine power which is a by-product left over from a steel recycling process. Zincox says that Korea has a thriving scrap steel recycling industry and due to the nature of the galvanised that’s available it can contain high concentrations of zinc – between 18 and 28 per cent.

Zincox has now signed ten-year deals with all the major Korean scrap steel recycling companies.

Through a phased development programme the KRP will initially treat 200,000 tonnes of EAFD to produce 49,000 tonnes of zinc concentrate. The process generates no waste, Zincox says. The by-product is an intermediate iron bearing product that can be sold to recycling companies

The initial development phase has a capital cost of US$110 million. Zincox expects the project to generate earnings of US$31 million, based on a zinc price of US$2,259

It is expected that the phase 2 development will begin in the second half of next year.

Singer Capital upholds ZincOx target price; says Korean recycling plant on track

Thu, 26 Jan 2012 10:51:00 +0000

Following a meeting with the management of ZincOx (LON:ZOX), Singer Capital Markets confirmed that the Korean recycling plant (KRP1) project is on track and upheld its ‘buy’ recommendation on the company.

Singer analyst Charlie Long said the plant is on time and budget for hot commissioning during this quarter, which is currently expected at the end of March.

However, Long recommended investors that want to play the commissioning phase to buy stock in February, noting that there is a possibility that hot commissioning will be brought forward if there are no delays.

Long projects the plant to produce the first batch of high grade zinc power before the end of March and achieve full capacity in the third quarter.

“In designing and building KRP1, management has demonstrated an ability to deliver,” said Long.

“We believe the commissioning and ramp-up phase will demonstrate management's technological expertise, already proven at the Skorpion project in Namibia.”

Long’s sum of the parts valuation of ZincOx of £114 million, which translates into 128 pence per share, is based on discounted cash flow models for KRP1 and KRP2. The overall valuation represents a significant upside of 110 percent to yesterday’s closing price of 64.3 pence per share.

The first project alone is worth 111 pence per share after a 25 percent discount to reflect technological risks.

The valuation of the second plant is discounted by 75 percent to reflect both technological and financing risks that could emerge if the euro zone debt crisis deteriorates.

This morning, shares in ZoncOx rose six percent to trade at 68 pence at 10:45.

ZincOx transformation not in the price, says broker

Thu, 15 Dec 2011 15:39:00 +0000

ZincOx‘s (LON:ZOX) transition from developer to zinc concentrate producer should see the shares re-rate significantly in the next 6 months, according to broker Singer Capital.

ZincOx commissions its first recycling plant in March 2012 and when it does it will become a zinc concentrate producer without the inherent risks of mining, the broker said.

It has a target price of 128p, largely based on the value of the first plant, Korean Recycling Plant 1.

The low cost zinc grade feed the plant will process is waste material derived from Korean steel producers and should be available in perpetuity.

Because of that, the company’s shares can rated on an earnings multiple argues Singer.

On one plant and the current US$2,000 zinc price, the shares trade on a 2013 EV/EBITDA of 4.5, a rating that should fall further as production increases.

The long term investment case is also very attractive adds Singer. If ZincOx can demonstrate its technology successfully in Korea, there is the possible of more plants around the world and for underlying earnings to exceed US$100m within 5 years.

ZincOx is an “electric arc furnace dust” recycling business, says the broker.

Electric arc furnace dust (EAFD) is the waste material produced by melting galvanised ferrous scrap in electric arc furnaces (EAF) and is classified as hazardous waste due to the arsenic, mercury, lead and cadmium content.

But is also contains zinc (c.20%) and iron (c.25%) and is a high quality zinc pre-concentrate for an EAFD recycler like ZincOx.

If it can obtain a well priced long term supply of EAFD and has the correct technology, the company has a defensive high margin zinc business, concludes Singer.

Shares were little changed today at 53.45p.

ZincOx: City welcomes £6.25 million placing

Fri, 11 Nov 2011 11:58:00 +0000

The placing allows ZincOx to fund the initial development costs of the second phase of its waste recovery plant in South Korea. Brokers Peel Hunt and FinnCap have set target prices for the firm’s shares of 134 pence and 185 pence respectively

ZincOx raises £6.25 million in placing

Fri, 11 Nov 2011 07:25:00 +0000

Zinc recycling specialist ZincOx Resources (LON:ZOX) this morning announced a placing to raise £6.25 million. The firm will be using the cash raised to fund the initial development costs of the second phase of its waste recovery plant in South Korea, as well as to advance a roll out of its technology to the US, Turkey and Thailand.

Some 11.2 million new shares are being placed at 56 pence each in order to raise the funds.

ZincOx’s Korean recycling plant is intended to produce more than 90,000 tons per annum of zinc in concentrate when in full production – the same capacity as a medium-to-large zinc mine.

The plant is designed to treat 400,000 tons per annum of dust from electric arc furnaces – which are widely used in steelmaking. Sampling projects during the past four years have found that the weighted average grade of this dust is 23 percent zinc and 26 percent iron.

Korea currently generates around 380,000 tons of electric arc furnace dust but this is estimated to rise to 400,000 tons during the next few years.

"I am delighted to announce this placing which will provide the cornerstone for the company's full development of the Korean Recycling Plant and help to accelerate the roll-out of similar plants elsewhere in the world,” said Andrew Woollett, ZincOx’s executive chairman. “It is particularly pleasing that investors are willing to provide funds in such difficult markets and I am pleased to welcome new institutional shareholders.”

ZincOx Resources starts commissioning Korean zinc recycling plant

Tue, 08 Nov 2011 10:57:00 +0000

ZincOx Resources (LON:ZOX) told investors that it has now begun commissioning its zinc recycling plant in South Korea.

The recycling plant is on schedule to begin the first phase of production in the first quarter of next year. After that the plant will ramp up production over a six month period.

Through commissioning the company will test the mechanical equipment in the plant.

"I am very encouraged to report on the start of the commissioning activities which represent the final chapter of our development activities for first production phase, and we look forward to starting production on schedule in the first quarter of next year,” said chairman Andrew Woollett.

The project was budgeted at US$110 million including US$8 million for working capital. Zincox said that it has spent and committed just over US$94 million on construction. The project is expected to be completed slightly under budget, it added.

All the plant’s major equipment has been installed except the hot briquetting section. All the buildings are nearing completion.

Additionally it said the preparations for production are also on track.

ZincOx has now filled the senior management positions and it said that roughly half of the plant operators have been recruited. Training is expected to start shortly. The production offices are now fully operational and management personnel have moved in.

Peel Hunt initiates ZincOx with "buy" rating; says current share price ignores potential

Tue, 18 Oct 2011 10:40:00 +0100

Peel Hunt said the current share price of ZincOx (LON:ZOX) is nearly equal to its cash balance, ignoring both the potential of its Korean Recycling Project (KRP) and the company’s long term prospects.

Peel Hunt analyst Andrew Shepherd-Barron currently rates the zinc recovery specialist as a "buy" and values it at 134 pence per share, compared to yesterday’s closing level of 54 pence.

ZincOx is currently halfway through building its first waste recovery plant in South Korea, which will be followed by a second plant in the same location.

The plant uses an existing technology that has been optimised for zinc recovery and is designed to process 200,000 tonnes per year of the furnace dust, which will make it the largest Electric Arc Furnace Dust (EAFD) recycling facility in Asia.

The first plant is set to start generating cash soon after its anticipated completion in the first quarter of 2012.

Shepherd-Barron called the project a highly attractive investment as it has an internal return rate (IRR) of 28 percent for the first plant with the IRR for the two plants combined expected to be at the same level, subject to financing.

According to Shepherd-Barron’s estimates, an equity investment of US$60 million can create value of US$184 million from these two plants alone.

Peel Hunt’s estimates used a long-term zinc price assumption of US$2,250 per tonne with a US$100 change impacting the project’s net present value (NPV) by 17 pence per share.

The current share price stands at a large discount to Shepherd-Barron’s sum-of-the-parts (SOTP) fair value estimate for ZincOx of 134 pence. This could increase within a year as the analyst expects ZincOx to address the project’s technology, commissioning and financing risks within a year.

If those risks are negated, Shepherd-Barron’s valuation of ZincOx will go up to 175 pence.

Furthermore, Shepherd-Barron said his fair value estimate assigns no value to subsequent projects, three of which are already serious prospects.

“This opportunity to create even more value long-term is highly attractive,” said Shepherd-Barron.

ZincOx chief says the company is on budget and on schedule to deliver production in Feb 2012

Fri, 14 Oct 2011 13:29:00 +0100

Andrew Woollett, Exec Chairman of ZincOx (LON:ZOX), tells Proactive Investors that after an intense building programme this year the company is on target to deliver production in Q1 2012. Andrew also talks about the drop in the price of zinc. Jeremy Naylor

ZincOx Resources chairman buys more shares

Tue, 27 Sep 2011 12:57:00 +0100

Zinc recovery specialist ZincOx Resources (LON:ZOX) announced late this morning that members of the family of its executive chairman, Andrew Woollett, had purchased 26,112 shares in the firm at 25 pence each. Following the transaction, Woollett has a beneficial interest in more than 2.3 million shares – representing 2.96 per cent of the company’s issued share capital.

Yesterday ZincOx reported its interim results, saying that the commissioning of its Korean recycling plant is expected to be completed by the end of this year with production starting in Q1 2012.

ZincOx’s Korean recycling plant is intended to produce more than 90,000 tons per annum of zinc in concentrate when in full production – the same capacity as a medium-to-large zinc mine.

Korea currently generates around 380,000 tons of electric arc furnace dust but this is estimated to rise to 400,000 tons during the next few years.

Yesterday, ZincOx said that it made a loss before tax during the six months to the end of June of £3.6 million – much reduced on its H1 2010 loss of £25.5 million.

ZincOx Resources: Analysts hail firm's progress at Korean Recycling Project

Mon, 26 Sep 2011 13:16:00 +0100

Ambrian analyst Nick Mellor says that ZincOx's recycling plant is one of the few fully financed projects of its kind in the world today and gives the company a 'buy' rating with a 134 pence price target.

ZincOx Resources looking forward to production from KRP in first quarter of 2012

Mon, 26 Sep 2011 07:39:00 +0100

ZincOx Resources (LON:ZOX) released its half year results today, saying that commissioning of its Korean Recycling Plant is expected before the end of the year with production in the first quarter of 2012.

Ramp - up to full production for the project, which remains on schedule and budget, is expected to take around six months.

"The first phase of the project (KRP1) will demonstrate the attractiveness of the process, not only for the expansion in the second phase of the Korean facility, but also for further plants worldwide," said chairman Andrew Woollett.

The project is designed to process 200,000 tonnes per year of Electric Arc Furnace Dust (EAFD), which will make it the largest EAFD recycling facility in Asia.

The development of the second phase (KRP2), expected in the middle of next year, will see a further 200,000 tonnes processed per year, which will make the firm the third largest recycler of the material in the world.

When in full production both phases will produce 92,000 tonnes of zinc per annum in a high grade concentrate.

The company's loss before tax for the six months to June 30, 2011 was lessened to £3.6 million compared to £25.5 million in the same period in 2010.

Cash and cash equivalents at the period end stood at £26.9 million, compared to £42.3 million in the previous year.

Highlights of the first half included the beginning of the plant's construction, development loans from Korea Zinc partially drawn down and a general manager and finance manager appointed.

"We are in discussions with banks for a debt facility that would be available once KRP1 is in steady state operation. This facility would enable us to repay the loans from Korea Zinc and provide additional finance for the development of KRP2," said the firm

"The quantum of this facility is unlikely to be sufficient to cover the full cost of the development of KRP2 and we are reviewing other financing options for the outstanding amount. However we believe this could be provided by a company interested in purchasing our zinc product, in much the same way as Korea Zinc provided loans against an offtake commitment for KRP1."

ZincOx added that while most of its staff was concentrating on KRP, it was continuing to pursue projects elsewhere in the world so that, on demonstrating the technology in Korea, it "will be able to begin to apply it in other countries before the end of 2013, and thereby achieve the rapid expansion and growth that shareholders would like to see".

ZincOx Resources provides distinct buying opportunity, says finnCap

Thu, 22 Sep 2011 11:03:00 +0100

Broker finnCap said today that at current levels, shares in ZincOx (LON:ZOX) provide a distinct buying opportunity as the group is currently on the brink of completing a transformational recycling project in Korea.

In today’s research note, finnCap analyst David Buxton said ZincOx’ proximity to large scale industrial processing of zinc bearing waste should be recognized by the market, leading to a re-rating of the group.

Buxton’s current fair-value price target of 186 pence represents a significant premium to the stock’s yesterday’s closing price of 61.25 pence, which values the company at £46 million.

The Korea Recycling Plant-1 (KRP1) project, which is currently on track to complete in the first quarter of 2012, costing US$110 million, is expected to quickly achieve profitability once production begins.

KRP2 is set to go into production in the second half of 2013, doubling the capacity on site.

According to finnCap’s estimates, KRP1 has the capacity to generate revenues of US$78.6 million and earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$30.3 million. KRP2 has an expected revenue rate of US$69.5 million and earnings of US$22.8 million.

In terms of financing, KRP1 is fully funded through a mix of cash and loans from Korea Zinc, which signed a loan and offtake agreement worth US$50 million with ZincOx last December.

While ZincOx is yet to secure funding for KRP2, which has a similar capital cost, finnCap noted that the project becomes bankable once KRP1 can demonstrate profitability.

“This should move the group from rather expensive interest rates gained on KRP1 to much more vanilla interest rates and funding arrangements,” concluded Buxton.

Once production starts, finnCap expects to see a re-rating of shares in ZincOx, which would then “move up progressively” as operational milestones are announced.

Buxton explained that the current market value of ZincOx is depressed by the recent market weakness and factor in significant execution risk, which he said was unfair at the advanced stage of project development.

The analyst added that “not only is ZincOx at a discount to near-term earnings but also, as a scalable model, the group has further expansion potential that is currently given no value by the market.”

Andrew Woollett, Executive Chairman of ZincOx talks to Proactive Investors

Fri, 09 Sep 2011 08:51:00 +0100

Andrew Woollett, Executive Chairman of ZincOx (LON:ZOX), talks about being on budget and on schedule, the economics of zinc recycling, feed being produced for as long as the world recycles scrap, financing phase two without new equity, $30 million a year of EBITDA rising to $53 million a year.

ZinCox Resources' Korean Recycling Plant is hailed by broker finnCap

Tue, 19 Jul 2011 13:37:00 +0100

Once it is on stream, ZincOx Resources' (LON:ZOX) Korean Recycling Plant (KRP) should quickly produce a profit, says broker finnCap.

ZincOx wants to become the largest zinc recycler in the world and a major producer.

The KRP will treat tons of dust from electric arc furnaces used in steelmaking and is intended to produce more than 90,000 tons per annum of zinc concentrate at full production – the same as a medium-to-large zinc mine.

Analyst David Buxton said the first phase of the project was on schedule and on budget to be completed in the first quarter of next year. In addition, the capital cost of phase two has recently been lowered US$46mln to US$100mln.

"The KRP is expected to be a blue print for several other such projects throughout the world, indicating a scalable business model," he said.

"We believe that the fair value of Korea phases 1 and 2 justify a substantially higher valuation than the current share price, and the potential for several additional projects points to a valuation several times the current level."

The company's share price is currently 70.75 pence. Broker finnCap rates the stock a "buy" in a note called: "Moving from concept to industrial process".

Buxton said that following phase 1 completion and production starting in Q1 next year, and the completion of phase two in July 2013, the combined EBITDA is expected to be US$53 million per year, on a capital cost of $209 million.

"Long-term agreements for the supply of inputs have been signed, with customer off-take agreements also secured, greatly reducing profit volatility and risk," he said.

"The shares remain at a 61 percent discount to the net present value of phases one and two of the Korean plant," he said, adding that effectively investors get any subsequent plants elsewhere in
the world for free..!

Around half of the world EAFD (Electric Arc Furnace Dust) goes to landfill and currently all Korean EAFD goes to landfill. This is increasingly regulated and expensive, therefore recycling these streams is both environmentally as well as economically attractive for steel makers, said finnCap.

UPDATE: ZincOx slashes costs of constructing Korean plant

Thu, 30 Jun 2011 10:08:00 +0100

Broker view

News that ZincOx Resources (LON:ZOX) had cut its project budget estimate for its Korean recycling plant was well received by City analysts this morning.

ZincOx said a revised project budget for the full development of its Korean recycling plant showed costs for phase two of the project have been reduced by 32 percent.

Ambrian Partners described the news as “very encouraging”, adding: “The costs for phase two are dramatically lower than originally projected and the impact of this news, when run through our model, increases our target price from 112 pence to 134 pence.”

Another broker, Fairfax, said: “It has taken a long time but it is good to see ZincOx on track to start its first recycling operation early next year with prospects improving all the time for the second phase of project.”

Following a detailed review of the development expenditure required for phase two, the estimated costs for the second stage of the Korean recycling plant are now US$100 million – some US$46 million less than the previous estimate.

“The experience we have gained by having the actual costs of developing KRP 1, has helped us to make a very accurate estimate of the cost of developing KRP 2, and resulted in a substantial reduction compared to our previous estimate,” said Andrew Woollett, ZincOx’s chairman. “This more accurate estimate has enabled us to start serious discussions with potential lenders for the development of KRP 2.”

Phase one of the plant is fully funded and approximately half way through development. It remains within its budget of US$110 million and is on schedule to begin production in the first quarter of next year.

During phase one ZincOx has found that zinc smelters are interested in obtaining unwashed zinc oxide concentrate, which means the company does not need to wash the product itself and it can save US$18 million on capital expenditure for a washing plant in phase two. Other savings are due to the design of various parts of phase one being sized for the expanded operation, the use of actual Korean costs rather than costs derived from the US and the decision to make phase two an exact copy of phase one (so reducing engineering costs).

ZincOx’s Korean recycling plant is intended to produce more than 90,000 tons per annum of zinc in concentrate when it full production – the same capacity as a medium-to-large zinc mine.

Korea currently generates around 380,000 tons of electric arc furnace dust but this is estimated to rise to 400,000 tons during the next few years.

Ambrian is maintaining its ‘buy’ recommendation, with a target price of 134 pence per share. At 10:07am, ZincOx’s shares were unchanged at 69.5 pence each.

ZincOx slashes costs of constructing Korean plant

Thu, 30 Jun 2011 07:36:00 +0100

Zinc recovery firm ZincOx Resources (LON:ZOX) has announced a revised project budget for the full development of its Korean recycling plant that show costs for phase two of the project have been reduced by 32 percent.

ZincOx’s Korean recycling plant is intended to produce more than 90,000 tons per annum of zinc in concentrate when it full production – the same capacity as a medium-to-large zinc mine.

Korea currently generates around 380,000 tons of electric arc furnace dust but this is estimated to rise to 400,000 tons during the next few years.

ZincOx’s shares edge up after it declares Korean recycling plant “on budget and on schedule”

Tue, 21 Jun 2011 10:52:00 +0100

ZincOx's giant Korean zinc recycling plant is on schedule to be completed early next year. Consequently, analysts believe the business will become profitable during 2012

ZincOx’s Korean recycling plant “on budget and schedule” for Q1 2012

Tue, 21 Jun 2011 08:16:00 +0100

Zinc recovery specialist ZincOx Resources (LON:ZOX) said its Korean recycling plant remains on budget and schedule for completion in the first quarter of next year.

The company has, so far, committed US$76 million to the project. But it also revealed today that the contingency provided within the total budget for the development will be used to cover an increase in costs of US$1.3 million due to exchange rate movements.

Meanwhile, the first drawdown – amounting to US$12 million – of the US$50 million loan package agreed with Korea Zinc at the end of April has now been made.

ZincOx’s Korean recycling plant is intended to produce more than 90,000 tons per annum of zinc in concentrate when it full production – the same capacity as a medium-to-large zine mine.

Progress at the site is proceeding “very satisfactorily”, according to ZincOx. The firm said that the civil works and foundations for the plant are 85 percent complete, while the installation of equipment is scheduled to commence before the end of this month.

A rotary hearth furnace is being refurbished in the US and is being shipped to Korea in three batches. The first batch has already arrived and erection is scheduled to begin in July. The construction of non-process buildings in nearing completion, while the building of the plant’s process buildings is well underway, added ZincOx.

“We have now tied down almost three quarters of our costs and are very encouraged to be on time and budget with the start of commissioning remaining, as planned, for the first quarter of 2012,” said Andrew Woollett, ZincOx’s chairman.

ZincOx Resources story gaining traction with investors as shares enjoy strong rally

Wed, 08 Jun 2011 09:36:00 +0100

The ZincOx Resources story finally seems to be gaining some traction with investors as the recycling firm gears up for first zinc production in the early part of next year. At 62 pence, the stock is in territory last seen two years ago.

ZincOx Resources sees Korean recycling plant production start in 10 months

Tue, 10 May 2011 10:02:00 +0100

ZincOx Resources PLC (LON:ZOX) said development of the Korean recycling project (KRP) is financed, well underway and remains on budget and schedule to achieve first production ten months from now.

The comment came alongside full-year results for the period to end-December 2010, which served as a reminder of how far the company has progressed recently.

Zincox posted a £111 million operating loss, compared with a small profit in 2009. The company was hit by £114 million worth of impairments linked to the ill-fated Ohio recycling plant and a delay in refinancing the planned Jabali zinc project in Jemen, which is on ice due to the political situation in the country and the wider region.

However, since taking the decision to progress KRP as its flagship project, the fortunes of the group have taken a turn for the better. Zincox has government support, financing in place and work is moving at a good pace.

At the end of last month, the company formally completed an off-take agreement with Korea Zinc, which will take all of the group’s production from the first phase of its recycling plant in the country. Korea Zinc is also providing development loans amounting to US$50 million.

Pricing of the zinc under the 10-year agreement will be based on the international formula for valuing concentrates, though ZincOx will also receive a fee for removing fluorides and chlorides from the finished product.

The revolutionary recycling plant is due for completion in the first quarter of next year, and will cost US$110 million to build.

Rainwater drainage and sewerage, fencing, lighting and construction offices have been installed at the KRP. Foundations for non-process buildings are finished and foundations for process building are underway and all deep piling work has been completed.

The refurbishment of equipment in the US, including the rotary hearth furnace, is well underway and the first batch is ready for shipment and should be available on site for the start of installation in July, Zincox said in the latest stateement.

Ambrian Capital issued a note today on Zincox, reiterating its ‘buy’ recommendation and a price target of 104 pence, which puts an upside of just over 100 percent on the group’s current share price of around 51 pence.

Analyst Nick Mellor said: “ZincOx has ended its year extremely positively. The company’s Korean Recycling Project is now fully financed, having finalised the terms of the loan with Korea Zinc, with both parties having signed off on the agreement two weeks ago.”

“Not much was made of this by the market at time, but this was a key milestone and goes a long way to de-risking the project’s development, not to mention demonstrating support for the technology by a major zinc producer.”

Mellor called Jabali’s write-down prudent given the lack of any finite visibility on stability in the MENA region in general. “It is certainly worth pointing out that Yemen has a functioning democratic constitution in place (a situation quite different to somewhere like Egypt), and so whilst we await timing on when its current leader might step down, we do not anticipate turmoil ensuing post that event.”

“We have not removed the nominal value for Jabali from our valuation (US$19m) because we do not foresee the company losing control of the asset and, therefore, we believe that value for it will be realisable — at some point.”

“With macro drivers and sentiment volatile in the equities market for existing metals producers this year, we think the case for buying a development story that is (now) fully financed for its first phase of production in one year’s time is highly compelling. The case becomes stronger still when one considers that the market is currently only valuing the stock at a fraction of fair value once into production,” Mellor concluded.

He believes the next milestone in the project’s development will be the installation of the major processing hardware at site from July this year.

Full steam ahead for ZincOx as it formalises Korea off-take agreement

Thu, 28 Apr 2011 08:17:00 +0100

ZincOx Resources this morning revealed it has formally completed an off-take agreement with Korea Zinc, which will take all of the group’s production from the first phase of its recycling plant in the country. It sets the seal on what promises to be a busy and productive year.

ZincOx says Korean Recycling plant making excellent progress

Mon, 14 Mar 2011 12:26:00 +0000

ZincOx Resources PLC (LON:ZOX) said it is making excellent progress with its first recycling plant near Pohang in Korea, dubbed the Korea Recycling project (KRP).

Following the recent completion of the site construction offices, the last weekend saw the groundbreaking ceremony at the site which was attended by the governor of Gyeongsangbuk-do Province, the mayor of the city of Geongju and the deputy chairman of KOSA (The Iron and Steel Association of Korea).

The procurement phase of the development is well underway and the project remains on budget and on schedule for completion in the first quarter of 2012 with the second phase scheduled for completion before the end of 2013.

The dismantling and removal of the rotary hearth furnace and other equipment purchased in the USA was completed in December 2010.

All of this plant is now being refurbished by the original manufacturers and will be shipped to Korea in May. Infrastructural development at the site will be undertaken over the coming six weeks and the construction of foundations will commence in April.

Chairman Andrew Woollett said: “The speed at which we have been able to implement our plans over the past six months has only been possible due to the wonderful support we have had from KOSA and the Korean government at local, provincial and national levels."

ZincOx is focused on recovering zinc from electric arc furnace dust (EAFD), a hazardous material with a high zinc content, approximately 22 percent.

According to the company, around 7 million tonnes of EAFD is produced globally per year, with over a third emanating from Asia, and about half going to landfill.

The company has modified an existing process, increasing the amount and quality of zinc concentrate that is recovered from EAFD, whilst also recovering a saleable iron product. This technology represents a considerable leap forward both economically and environmentally.

The first plant is being built in Korea, where long term supply agreements for EAFD have been agreed and the company benefits from Foreign Investment Zone status, providing 5 years rent and tax free status.

The KRP will be developed in two equal phases, with the first phase due to be commissioned in Q1 2012 the second Phase in 2013. Phase 1 is scheduled to produce 46,000 tonnes per annum of zinc in an oxide concentrate containing 58 percent zinc.

No more false starts, says Woollett as ZincOx gears up for a transformational year

Fri, 11 Feb 2011 09:45:00 +0000

Chairman Andrew Woollett admits there have been false starts. However, he puts a compelling case for the landmark ZincOx recycling project in Korea, which could utterly transform the company and its prospects.

Andrew Woollett of ZincOx sees the gap closing between current share price and real value

Fri, 28 Jan 2011 10:41:00 +0000

Andrew Woollett, Chairman of ZincOx says the company is now focussed on becoming one of the worlds largest zinc recycling companies. Andrew also says that with the announcement of the financing of its Korea Zinc project now in place the gap between the share price and the real value of the company will close.

Highly compelling ZincOx has extremely low valuation - Ambrian Capital

Thu, 13 Jan 2011 14:45:00 +0000

ZincOx (LON:ZOX) presents is an almost unique investment opportunity and its current share price is at a discount to its cash-in-the-bank, according to research by City broker Ambrian Capital.

This morning ZincOx told investors that it has received the final US$3.17 million payment from the sale of the Shaimerden zinc deposit in Kazakhstan.

In response to the news Peter Davey, metals and mining analyst at Ambrian, highlighted that ZincOx now has US$69.2 million - about £43.7 million - in cash. Crucially with a market cap of just £39 million no value is being attributed for either the group’s Korean zinc recycling project or any of its other assets.

The analyst emphasised the group’s investment proposition.

“ZincOx is a fully-fledged, pre-production play on the zinc market, and also represents a recycling story - something that is almost unique in the equity market,” Davey said in a note to clients.

“Its extremely low market valuation puts a fully financed development story (into production 1Q12) at a lower value than most low-grade gold exploration projects on AIM.

“The investment opportunity is highly compelling in our view; therefore, we maintain our BUY recommendation and target price of 104 pence.”

The Korean Recycling Plant (KRP) is expected to treat 200,000 tonnes per annum of steel waste dust (EAFD) in its first phase.

From this it will produce approximately 70,000 tonnes of zinc concentrate - grading 58 percent zinc – as well as 95,000 tonnes of an intermediate iron product each year. In phase 2 the KRP’s capacity will double.

Based on this financing and current zinc and pig iron prices, KRP Phase 1 has a post tax net present value of approximately US$97 million, an internal rate of return of about 30% and is expected to generate project earnings before interest, taxes, depreciation and amortisation (EBITDA) of about US$29 million per annum.

The first phase of the KRP is already financed.

The analyst also highlighted that ZincOx has demonstrated its ability to realise value-adding deals.

"(The Shaimerden deal) serves as a reminder of the value-adding transactions management has executed in the past.

“We would not be surprised by further similar value-adding deals with any remaining ‘non-core’ assets in the company’s portfolio.”

ZincOx receives final US$3.2 mln under Shaimerden zinc deposit sale agreement

Thu, 13 Jan 2011 08:01:00 +0000

ZincOx (LON:ZOX) has received the final deferred payment of US$3.17 million as stipulated under the agreement for the disposal of the Shaimerden zinc deposit in Kazakhstan.

The sum equates to £2.1 million.

This payment represents the final 9,826 tonnes of the 200,000 tonnes of zinc covered by the agreement. The amount reflects the average zinc price for 2010, which was US$2,159 per tonne.

The payment will be made available for working capital as the company continues to develop its recycling project in South Korea.

The group is a zinc miner and recycling specialist.

Last month it signed a letter of intent with the Korea Zinc Company, securing loans of up to US$50 million to develop a recycling plant there.

The loans will also be used for an off-take agreement to purchase the unwashed zinc concentrate for the first phase of the plant.

ZincOx appoints KPMG accountant as new non-exec to replace retiring Jeff Hewitt

Mon, 10 Jan 2011 08:34:00 +0000

ZincOx Resources (LON:ZOX) revealed this morning it has appointed Gautam Dalal as a non-executive director.

He replaces Jeff Hewitt as chairman of the audit committee, who is retiring as a non-exec and deputy chairman of the company.

Dalal is a Chartered Accountant with over 30 years of experience with KPMG, where he was responsible for the development of its business in India and managed several major industrial clients.

ZincOx said the composition of the board will be reviewed once the future of the Jabali zinc project in the Yemen is "more clearly defined". Until that review Rod Beddows will be acting as deputy chairman, the company confirmed.

Chairman Andrew Woollett said: "I would like to thank Jeff Hewitt for his hard work over the past two years and contribution to setting a clear priority for recycling in Asia.

"I would also like to take this opportunity to welcome Gautam Dalal to the board and we look forward to drawing on his broad financial and regional experience."

The group is a zinc miner and recycling specialist.

Last month it signed a letter of intent with the Korea Zinc Company, securing loans of up to US$50 million to develop a recycling plant there.

The loans will also be used for an off-take agreement to purchase the unwashed zinc concentrate for the first phase of the plant.

ZincOx set to move forward with Korean Recycling Plant project after securing $50m loan

Mon, 13 Dec 2010 08:49:00 +0000

ZincOx (LON:ZOX) has signed a letter of intent (LOI) with Korea Zinc Co, securing loans of up to US$50 million to develop the South Korean Recycling Plant (KRP).

The loans will also be used for an off-take agreement to purchase the unwashed zinc concentrate produced from Phase 1 of the KRP development.

These financing arrangements will enable ZincOx to realise more cash from the project in the early years.

The news was met with a very positive response as shares in the company rallied 9% in early deals.

Once finalised, the loans, together with the existing cash within the business, will allow ZincOx to move forward with the construction of Phase 1 of the KRP.

The company intends to achieve first production in the first quarter of 2012.

Under the terms of the LOI, Korea Zinc will be providing two loans, the off-take loan and a development facility.

The off-take Loan is for US$35 million and will bear interest at 5% per annum over LIBOR.

The development facility is for US$15 million at a 15% fixed interest per annum.

The KRP will treat 200,000 tonnes per annum of steel waste dust (EAFD) in Phase 1 and produce approximately 70,000 tonnes of zinc concentrate with a grade of 58% zinc and 95,000 tonnes per annum of an intermediate iron product.

Capacity will then double under Phase 2 which will be developed following the commissioning of Phase 1.

Financing for Phase 2 will be put in place in due course, ZincOx said.

ZincOx noted that its interest in KPR has not been diluted as a result of the financing agreements.

“The offtake and financing package represents a very attractive structure that enables the project to release more cash in the early years than would be possible using normal project finance," said executive chairman ZincOx Andrew Woollett.

“Following our entry into a long term lease over the KRP site last week, we are now able to press forward with the development without delay and are focused on achieving first production in Q1 2012 with a ramp up to full production within six months,” he added.

ZincOx secures 50 year lease for Korean Recycling Project

Tue, 07 Dec 2010 09:29:00 +0000

ZincOx (LON:ZOX) Korean Recycling Project (KRP) is beginning to gain momentum as the company has now secured a 50 year lease for the project.

The lease provides for a minimum rent-free period of five years if that ZincOx completes the development of Phase 1 of the KRP within two years and the development of Phase 2 within four years.

ZincOx expects to wrap up the development within this timetable.

Under certain conditions ZincOx will also be eligible for rent-free status beyond five years.

“The development of the KRP is beginning to gain significant momentum, and at the same time we are making good progress with our financing plans,” said executive chairman of ZincOx Andrew Woollett.

ZincOx expects to have offtake arrangements in place prior to commencement of construction of Phase 1 of the plant for the zinc oxide concentrate and for zinc hot briquetted iron (ZHBI), which could also be sold into the scrap spot market.

The KRP site covers 9.26 hectares within the Cheonbuk General Industrial Complex, which is already environmentally permitted.

The project is conveniently located just 10 kilometres (km) west of Pohang, which is one of South Korea's major steel producing centres, and will supply approximately 20 percent of KRP's feed requirements.

In addition to that, Pohang will host potential customers for KRP's ZHBI.

The KRP Site is also located close to the main Seoul-Busan motorway providing excellent road access for the transport of electric arc furnace dust from steel mills elsewhere in South Korea.

ZincOx has 10 year supply contracts for 400,000 tonnes of electric arc furnace dust (EAFD) per annum.

ZincOx's phased development plan foresees the treatment of 200,000 tonnes of EAFD in Phase 1 to produce approximately 60,000tpa zinc oxide concentrate at 73 percent zinc and approximately 95,000 tonnes per annum of ZHBI.

In Phase 2 ZincOx plans to treat a further 200,000 tonnes of EAFD and produce annually a total of approximately 120,000 tonnes of zinc oxide concentrate and approximately 190,000 tonnes of ZHBI.

ZincOx expects the first production of zinc concentrate from the KRP in Q1 2012.