ZOX Zincox Res.

TIDMZOX

RNS Number : 4034J

ZincOx Resources PLC

30 June 2011

ZincOx Resources plc

("ZincOx" or "the Company")

Revised Economics for the Korean Recycling Project

Development cost for Phase 2 has been reforecast enabling a reassessment of its economics:

-- Development cost of Phase 2 reduced by 32% to approximately US$100 million

-- EBITDA, on current assumptions, for the combined phases is approximately US$53 million p.a.

ZincOx Resources plc, which specialises in the recovery of zinc from steel industry waste, is pleased to announce revised project economics for the full development (comprising phase 1 and phase 2) of its wholly owned Korean Recycling Plant ("KRP"). Following a detailed review of the development expenditure required for Phase 2 ("KRP 2"), costs have been reduced by 32% to US$100 million including contingency; US$46 million below the estimate previously reported. This review has been conducted in light of the actual costings being experienced by the Company in Phase 1 of the KRP ("KRP 1").

Commenting on the revised costs, Andrew Woollett, ZincOx's Chairman, said: "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. This more accurate estimate has enabled us to start serious discussions with potential lenders for the development of KRP 2"

KRP Phases 1 & 2

The KRP is being developed in two phases; KRP 1 and KRP 2. KRP 1 is fully funded and approximately half way through development. It remains within budget (US$110 million) and on schedule for production in the first quarter of 2012.

A detailed reappraisal of the cost of developing KRP 2 has recently been undertaken using the actual costs of developing KRP 1. The development cost for KRP 2 is, including contingency, now expected to be about US$100 million, which is US$46 million below the previous estimate.

Part of this reduction is due to the interest from zinc smelters in obtaining unwashed zinc oxide concentrate. As a consequence, and in line with the practice to be employed in KRP 1, the Company does not feel it will be necessary to wash the product itself. The exclusion of a washing plant for KRP 2 has saved US$18 million of capital expenditure. Other savings are due to the design of various parts of KRP 1 having been sized for the expanded operation, the use of actual Korean costs rather than costs derived from the USA and the decision to make KRP 2 an exact copy of KRP 1, thereby greatly reducing engineering costs.

The scheduling of EAFD delivery for KRP 1 is being optimised with the suppliers and based on the latest costs of transport, consumables and utilities, KRP 1 is expected to generate approximately US$31 million of EBITDA per annum (based on a zinc price of US$2,250 per tonne and a pig iron price of US$450 per tonne). The development of KRP 2 is expected to commence in July 2012, with first production approximately 12 months thereafter. By the end of 2013 the full plant is expected to be in operation and will, using the same price assumptions as above, generate approximately US$53 million of EBITDA annually.

KRP 2 Financing

Discussions with banks regarding the financing of KRP 2, have commenced. Since KRP 2 will only be developed once KRP 1 has demonstrated its profitability, the Company is considering structuring the loan as a corporate facility to ZincOx Korea, rather than as a conventional project finance instrument. Discussions to date have indicated that this will have the benefits of both a lower cost of borrowing and higher gearing, meaning that the equity requirement for KRP 2 from the Company is expected to be significantly less than for the development of KRP 1.

Plant Site

Work at the plant site is progressing according to schedule. The first shipment of the Rotary Hearth Components has been delivered to site and erection is scheduled to commence next week. The erection of other equipment has commenced with the Gas Handling System. The next milestone for development is the installation of the main power line scheduled for mid-August.

For more information please contact:

ZincOx Resources plc Andrew Woollett, Executive Chairman +44 (0) 1276 450100

Nominated Adviser and Broker Ambrian Partners Limited Andrew Craig / Jen Boorer +44 (0) 20 7634 4700

Tavistock Communications Paul Youens/Simon Hudson +44 (0) 20 7 920 3150

This information is provided by RNS

The company news service from the London Stock Exchange

END

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