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UPDATE - ZincOx Resources agrees loan extension with Korea Zinc

Published: 00:29 04 Sep 2014 AEST

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Zinc recycling specialist ZincOx Resources (LON:ZOX) has agreed a loan extension as it continues to ramp up to full production at its flagship plant in Korea.

The repayment date of the development loan of US$15 million from offtake partner Korea Zinc will now fall in February 2016 - an extension of  a year.

This should allow the plant to generate enough cash for this loan to be paid off in full by this date, ZincOx said.

In return, ZincOx will increase the overall volume of zinc oxide supplied to Korea Zinc to 840,000 tonnes, an increase of 70,000 tonnes- extending the life of the offtake agreement by about one year.

The firm noted the zinc price had risen over 21% in the last year and continued to strengthen this year.

Market commentators for base metals still talk of the zinc gap due to mine closures, it added.

The company said it remained committed to achieving full production in the fourth quarter of 2014, which will be well timed for the strengthening zinc price.

Broker FinnCap welcomed the update: "The extension should allow KRP to generate enough cash for the loan to be repaid in full from internal sources," it said.

"The planned maintenance closure in August has been completed and KRP has restarted production, targeting full production for Q4. The zinc price at $2375 has risen over 20% over the last year.

"Our forecasts remain under review until the group achieves a three-month period of predictable and replicable profitability. Today’s announcement is good news, removing a significant financial hurdle for the time being."

Shares eased 1.04% to 11.875p.

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