LONDON (Alliance News) - ZincOx Resources PLC on Wednesday said it is looking to raise at least USD6.5 million for working capital through a placing of shares with new and existing investors.
With the price of zinc under pressure, the zinc recycling company warned at the end of September of the potential for a review of its financing options, and a further drop in prices has hurt the company's cash position.
"Given the sale of zinc concentrate is linked to the zinc price and since concentrate is the only income of the business, the decline in the zinc price has had a material adverse impact on the cash position of the company and absent a new injection of capital, the company will face a shortfall in its cash position by the end of 2015," ZincOx said.
The company also noted that it is in advanced talks with Korea Zinc to defer and reschedule the interest and principal repayments due from February 2016 for outstanding loans.
"The proposed fundraising will be conditional upon resolution of these discussions," ZincOx said. "In the event that the company is not able to secure sufficient funding through the fundraising or alternative sources of funding, the company will transfer 90% of the equity in the Korean Recycling Plant to Korea Zinc and thereby retain a 10% interest."
Shares in ZincOx were down 25% at 5.00 pence on Wednesday afternoon.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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