LONDON (Alliance News) - ZincOx Resources PLC Monday said it has reached an agreement with the holders of its loan notes to extend the redemption date by a year and said it has also agreed to sell its assets in the US as planned.
The company, which operates an electric arc furnace dust recycling facility in South Korea, said it has extended the redemption date for its loan notes that amount to GBP4.2 million by 12 months to August 20, 2016.
"In order to have sufficient time to sell the land at a fair price and repay the loan notes, the holders of the notes have agreed to extend the redemption date of the notes by 12 months and allow their early repayment without penalty," said ZincOx.
Previously, the company was planning on developing a recycling facility in Turkey on land it had purchased, but decided not to proceed due to increased competition in the country, which the company said would have made it difficult to secure offtake agreements.
It therefore plans on selling the land where it would have built the plant but said the Turkish elections in June have created "uncertainty" which has made that difficult.
"Unfortunately, due to the uncertainty created around the Turkish election in June, it was not possible to conclude a sale and furthermore the inconclusive election result and continuing political uncertainty is likely to dampen interest until there is more political stability which may not be until after a new election is held towards the end of this year," said ZincOx.
National elections in early June left Turkey's ruling Justice and Development Party short of an outright majority. The AKP has ruled the country alone since 2002, and the election was seen as a blow to the efforts of its founder, President Recep Tayyip Erdogan, to enact constitutional changes creating a presidential-style system empowering his office.
ZincOx said that in return for the noteholders agreeing to extend the redemption date, the 9.5 million warrants held by the noteholders have been re-priced to 25.0 pence from 40.0 pence and the duration of the warrants also have been extended by one year.
Two of the noteholders in question are Executive Chairman Andrew Woollett and Non-Executive Director Gautam Dalal who hold GBP975,000 and GBP500,000 of the notes, respectively.
"The extension to the loan notes means we have not had to rush into a sale and this should enable us to get a fair price for this land," said Chairman Rod Beddows.
In addition to that extension, ZincOx has also sold its land, plant and equipment in the US for a total of USD750,000.
The electrolytic zinc refinery was a former producing asset in Illinois as part of the Big River Zinc project, and the company had originally planned to modify and upgrade the plant to a new leach and purification plant after it acquired it. But the company decided not to progress the plans as it believes the plant could be built somewhere else for much cheaper.
"Our withdrawal from Turkey and the US will reduce overheads and enable us to concentrate fully on the Far East where our next plant will be developed," he added.
ZincOx shares were down 1.8% to 14.00 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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