ZincOx

Status: British company listed on the AIM market in London (Trading symbol: ZOX).

Objective: To become a major zinc recycling company.

Niche: Specialising in novel treatment processes.

Strategy: Developing major waste recycling operations.

Overview:

ZincOx ‘s principal business is recycling EAFD, a hazardous waste generated by the recycling of steel scrap. Its long term objective is to operate a network of recycling plants covering each of the major steel recycling regions of the world.

ZincOx has carried out eight years of research and development to find the best way of processing EAFD. It will use an existing technology that has been optimized for the recovery of zinc. The ZincOx’s approach is energy efficient and with very high metal recovery into two products without the generation of any waste, as such the process it represents a technically, economically and environmentally superior solution to the problem of EAFD

The plants will produce:

- A high grade (Zn: 58-62%) zinc concentrate (HZO) suitable for sale to zinc smelters.

- A low quality (Fe: 50-58%) intermediate iron product (ZHBI) suitable for sale back to the scrap recyclers that supply the EAFD.

The Company’s first recycling plant (KRP) is under development in Korea where the company has 10 year EAFD supply agreements covering approximately 400,000 tonnes per annum. It is being developed in two equal phases. Phase 1 development commenced in November 2010 and it is scheduled for production in the first quarter of 2012. The Phase 1 development is estimated to cost US$110 million and has been fully financed by equity (55%) and debt (45%). The phase 1 development is expected to produce about 76,000 tpa of HZO and 95,000 tpa ZHBI. Assuming a zinc price of US$2,250 per tonne, a pig iron price of US$ 450 per tonne and on the fully financed basis Phase 1 has a post tax net present value (20 years and 10% discount) of US$97 million and it is expected to generate about US$29 million per annum of EBITDA.

The development of Phase 2 will commence shortly after Phase 1 has been commissioned. It will be financed by a combination of bank debt, offtake finance and equity to be provided either by ZincOx or by the introduction of a partner into the project. Based on the assumptions above but including a washing plant to upgrade the zinc product and on a purely equity basis, Phase 2 is estimated to cost US$146 million and have an NPV of US$96 million.

Having demonstrated every aspect of the project in Phase 1 of the KRP, the company intends rolling out this technology in other parts of the world, and considerable progress has been made in Thailand, Turkey and the USA.

It is ZincOx’s ambition to become the largest recycler of EAFD and therefore zinc in the world.

In addition to the company’s recycling business it owns the Big River Zinc smelter in the USA and a 52% share of the Jabali mine, in Yemen. The Big River Zinc smelter is on care and maintenance but upgrading of recycled materials is being undertaken on behalf of third parties. Development of the Jabali mine commenced in 2008 but site work has been substantially cut back since the withdrawal of debt finance provided by a group of hedge funds in October 2009. The refinancing of the development is under discussion with a number of interested parties.

Mining

Jabali Project, Yemen

The Jabali zinc carbonate deposit lies in mountainous desert terrain about 110 km east of Sana’a, the capital of Yemen.  The deposit contains a mineable reserve of 8.7 million tonnes of ore at an average grade of 9.2% zinc.

Jabali is the first large scale mining project to be developed in Yemen. The Government of Yemen is extremely supportive of the Jabali project as it recognises that mining is a way of diversifying away from its dependence on the oil sector. Jabal Salab has a 20-year Exploitation Agreement with the Ministry of Oil and Minerals that sets out all the terms and conditions for development of the deposit and which has been approved by the Yemen parliament and ratified as law by the President. [READ MORE]

Recycling

The variable nature of primary zinc oxide deposits has required the evaluation and modification of numerous metallurgical techniques. These methods have enabled ZincOx to consider the recovery of zinc a very broad spectrum of materials including industrial wastes. Most of these wastes are generated in small quantities that are insufficiently large to be of commercial interest. The one notable exception is electric arc furnace dust (EAFD): a waste generated by the recycling of steel. [READ MORE]

USA - Ohio Recycling Project

The development of the Ohio Recycling Project (ORP) is currently on hold pending the development of the Korean Recycling Plant. ORP is planned to treat 200,000 tonnes per year of electric arc furnace dust (EAFD) containing an average grade of about 24% zinc. ORP will produce 70,000 tonnes per annum of a lead bearing zinc oxide concentrate (68% zinc), together with 56,000 tonnes per annum of pig iron and 55,000 tonnes per annum by-product slag. [READ MORE]

Korea Recycling Plant
Korea has one of the world's largest steel recycling industries. ZincOx has been working in Korea for over five years and in June 2008 the company entered into a Memorandum of Understanding with KOSA, the association representing the steel industry in Korea, by which KOSA would assist ZincOx in obtaining EAFD supply commitments from various steel companies and in finding a suitable plant site. In April 2009 this led to ZincOx entering into exclusive EAFD Supply Agreements with all Korea’s significant EAF operators: Hyundai Steel, Dongkuk Steel, Daehan Steel, YK Steel, Dongbu Steel, Hwanyoung Steel, Korean Iron and Steel Company, SeAH Besteel and Posco Specialty Steel. Together these companies generate approximately 380,000 tonnes per annum of EAFD with a zinc grade of about 22%. [READ MORE]

Turkey - Aliaga Recycling Plant
The Aliaga Recycling Project is one of a number of plants  planned around the world.  There is no schedule currently set for its development.  The project will comprise a rotary hearth furnace and a submerged arc electric melter with the potential for an integrated upgrading facility. It is planned to treat 200,000 tonnes per year of electric arc furnace dust (EAFD) containing an average grade of about 24% zinc. ARP has the potential to produce 47,000 tonnes per annum of a lead bearing zinc oxide concentrate, together with 56,000 tonnes per annum of pig iron and 48,000 tonnes per annum by-product slag. [READ MORE]

Thailand - Chonburi Recycling Plant
The Chonburi Recycling Plant  is one of a number of plants  planned around the world.  There is no schedule currently set for its development.  The project will comprise a rotary hearth furnace and a submerged arc electric melter. Two sites are being considered in the Chonburi Industrial Estate. The Chonburi Industrial Estate which is host to three electric arc furnaces, lies 30 km inland at the heart of the Thai steel industry. Concentrate upgrading may be undertaken at a coastal location and a number of potential sites are being considered for this. [READ MORE]

Refining

Refining operations provide the opportunity to add value to the concentrates produced by mining and recycling. Due to the very high quality of the concentrate produced by the recycling operations, the production of metal, compared to conventional zinc smelters, can be significantly simplified. Furthermore, after the removal of zinc by dissolution, the high purity of the concentrate results in a leach residue that is so high in lead that it can be sold as a concentrate, or further converted into saleable lead chemicals. [READ MORE]

BRZ, Illinois, USA

Big River Zinc (BRZ) is an electrolytic zinc refinery located 3 km south east of St Louis. BRZ was built in 1929 to service the production of concentrate from what was then one of the most prolific zinc mining areas in the USA.  The plant has been modified and expanded many times so that it had become the second largest zinc smelter in the USA (100,000 tonnes per annum).  [READ MORE]

Similajau Project, Sarawak, Malaysia

(This project was formerly named Bintulu but was re-named Similajau to more accurately reflect the specific location of the project.)

The Similajau industrial area is located on the northern coast of the island of Borneo in the Malaysian province of Sarawak. Offshore Sarawak there are substantial reserves of natural gas. The government of Malaysia has designated Similajau as an area for industrial development, the responsibility for which has been delegated to the Bintulu Development Authority (BDA).

The Similajau area is the host to a number of new industrial projects strategically located near to the Sustainable Corridor Of Renewable Energy (SCORE). SCORE is based on a major new multi-phase hydroelectric generating scheme, with the potential to produce over 20,000 MW of electricity. The first phase, the Bakun Hydroelectric power project, will be fully implemented by the end of 2010 and will generate 2,400 megawatts of electricity. This is more than half the currently installed capacity of the whole of Malaysia. [READ MORE]

Front Row (L-R): Rod Beddows, Andrew Woollett, , Simon Hall,

Back Row (L-R): Gautam Dalal, Jacques Dewalens, Ian Halliwell, Guy Lafferty    

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Shares in Issue:

ZincOx Resources plc has 77,860,620 issued shares quoted on the AIM market of The London Stock Exchange. None of the shares are held in treasury and 25.6% of the issued shares are not in public hands. There are no restrictions on the transfer of ZincOx shares.

The Company has options in issue over 6,778,659 shares.