ZincOx Resources plc (AIM: ZOX.L) has been granted a loan of US$6.3M (£4.2M) together with four year warrants over 9.450 million new ordinary shares at an exercise price of 40 pence per share.
The Loan will enable the completion of the ramp-up of the first phase of the Company’s Korean Recycling Plant, KRP1, and to provide working capital.
The loan notes are secured against the shares in ZincOx Anadolu Çinko SVTAS, the Company’s wholly owned Turkish subsidiary that owns the freehold to land held in Turkey.
In April 2012 the Company finished the construction of the first phase of development of its wholly-owned Korean Recycling Plant (KRP1), in the Cheonbuk Industrial Complex in South Korea.
The rotary hearth furnace plant is designed to treat 400kt/y of electric arc furnace (EAF) dust using two plants to produce zinc oxide concentrate and hot briquetted iron. The dust is being supplied by Korea’s steel recycling companies under a 10 year supply agreements. A number of sampling campaigns over the have demonstrated that the EAF dust contains about 23% zinc and 28% iron.
The plant has suffered a series of delays due to equipment limitations which have limited output to around 45% of target capacity earlier this year.
The Company anticipates that the proceeds from the Loan will enable the Company to continue to ramp-up to full production at KRP1, and provide general working capital for the Company. As the ramp-up approaches full production, these funds may also be used to progress the expansion phase of KRP2 and projects in other parts of the world.
While recovering a valuable resource, the ZincOx technology competes against the long established Waelz kiln as well as Outotec’s Ausmelt process which has also conducted trials on Korean EAF dust.
The present loan follows an earlier equity finance of £6.5M made in November 2012 through the issue of 14.36 million new Ordinary shares.