LONDON (Alliance News) - ZincOx Resources PLC Wednesday said its pretax loss widened in 2014 after a rise in revenue was offset by significant impairments, but the zinc recycling company said production is continuing to rise whilst zinc prices look likely to continue to improve over the next two years.
ZincOx, which operates in Asia, said its pretax loss for the year ended December 31 widened to USD33.2 million from a USD26.3 million loss in 2013, after a significant rise in revenue was offset by substantial impairments.
Revenue increased by 39% to USD38.2 million from USD27.5 million, but the company booked USD14.0 million in impairment provisions against the Big River zinc smelter and other US-related assets, considerably higher than a year earlier, and USD7.8 million in depreciation and amortization, which was fairly flat from 2013. ZincOx also recorded a USD1.3 million foreign exchange loss compared to a USD626,000 gain in 2013.
The company's loss before interest, tax, depreciation and amortization totalled USD6.0 million, which is narrower than the USD15.4 million loss reported in 2013. The improvement was largely due to the turnaround at the company's flagship Korean recycling plant, which continued to show improved financial performance month-on-month in the period. The Korean recycling plant recorded a USD1.3 million loss before interest, tax, depreciation and amortization compared to a USD9.2 million loss.
Revenue benefited from improved prices and a rise in production and sales. The company sold 16% more zinc in concentrate at 28,564 tonnes compared to 24,577 tonnes in 2013 whilst zinc prices rose by 13% to USD2,164 per tonne from USD1,910.
Production is set to continue to rise after the Korean plant reported record production figures of 3,786 tonnes of zinc in concentrate in January alone, with the first quarter of the current financial year already experiencing further increases.
"2015 has started very positively with the Korean recycling plant running well and continuously so that ongoing improvements can be tested and implemented," said Chief Executive Andrew Woollett.
ZincOx also is expecting the zinc price to continue to rise over the next 12 to 24 months after it cited analysts that said the zinc market will go into a deficit on the supply side in the period after world zinc stocks fell to 691,600 tonnes at the end of 2014 from 931,175 tonnes at the end of 2013. ZincOx said zinc stocks have fallen a further 26% between January and March.
During 2014, the company processed more electric arc furnace dust, a waste material used to recover zinc, of 119,124 tonnes compared to 103,420 tonnes, representing a 15% increase.
All of its production comes from the Korean recycling plant and all is sold under the company's offtake agreement with Korea Zinc, which was signed in April 2011 as part of the financing of the project.
"Over the next year or so the cash flow from Korean recycling plant is unlikely to contribute sufficiently to advance the development of the new projects. In order to progress these exciting new projects, a search for a strategic partner was initiated with HCF International, and we continue to talk to interested parties that share our vision for the future and which could support our ambitious roll-out plans," said Woollett.
ZincOx shares were down 1.2% to 10.00 pence per share on Wednesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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