ZincOx Resources (LON:ZOX) has brought in US$6.3mln through a loan to complete the ramp-up of the first phase of its Korean recycling plant KRP1.
The firm finished building the first phase of the project in April last year and said the funds will help to achieve full production and may also be used to progress the next stage: KRP2.
Both phases have been designed to treat 400,000 tonnes of electronic arc furnace dust (EAFD) per year.
Executive chairman Andrew Woollett said the loan would help ZincOx to overcome the problems that have held back throughput this year.
"We can now move forward to full production and complete the transition from development to full operation," he told investors.
The money has been raised through issuing loan notes, which are repayable in two years at an interest rate of 10% a year.
For each one pound advanced, subscribers are being issued with 2.25 warrants to subscribe for new ZincOx shares exercisable at any time within four years of their issue at an exercise price of 40p a share - a premium of 154% to the closing mid-market share price of 15.75p on August 8.
Peter Wynter Bee, consultant to ZincOx, said: "It was a question of finding a method of making sure we had funds so we could complete the ramp-up without diluting shareholders. That's really been the driver behind it."
Output at KRP1 has increased over the past six months and full production is expected towards the year end. This is scheduled to treat 175,000 tonnes of EAFD rising to full capacity (200,000 tonnes of EAFD per annum) during the second year.
At that level, even with the current zinc price, "you start making good money," said Wynter Bee.
In June this year, the firm told its AGM that the plant had suffered stoppages and reduced throughput due to problems with the heat exchangers, leading to reduced production of zinc concentrate.
ZincOx said throughput was at about 83% of target and will continue to be increased steadily over the next few months.
Charles Long, analyst at Sanlam Securities said: "ZincOx has secured some much needed financing that will hopefully take it to full and profitable production.
"Although there remains a risk that KRP1 will continue to have hiccups and need more funding to achieve commercial production, most of the major issues should have been worked through by now and this could be an interesting entry point for investors."
Meanwhile, finnCap said: "The loan note should provide some sense of relief on the group’s short-term funding, which had been under pressure due to the extended period of losses at KRP1."
The loan is secured against the shares in ZincOx Anadolu Çinko SVTAS, the firm's wholly owned Turkish subsidiary, which owns the freehold to land held in Turkey.
Woollett and non-exec director Gautam Dalal are subscribing to the loan to the tune of £975,000 and £500,000, respectively.
ZincOx is pioneering a new technology that produces zinc concentrate using an innovative process to recycle waste generated by the recycling of scrap iron.
Shares rose 10.61% to stand at 18.25p.