LONDON (Alliance News) - ZincOx Resources PLC shares rose on Thursday after the company said it is looking to rebuild the company by finding a new asset, potentially a new zinc recycling plant in Vietnam, after tough conditions in 2015 saw it lose control of its major asset.
ZincOx shares were up 24% to 0.775 pence per share on Thursday.
The zinc recycling company stayed firmly in the red in 2015 after producing a USD10.0 million pretax loss, but that was signficiantly narrower than the USD18.4 million loss reported in 2014. Revenue remains low, and the driver of the narrower loss was a reduction in costs.
Revenue in the year totalled USD246,000 from USD605,000 the year before, producing a gross loss of USD1.8 million compared to a USD82,000 loss. Administrative expenses, net of gains and impairments, dropped to USD7.8 million from USD17.6 million.
Breaking those costs down, impairment provisions fell to USD2.4 million from USD13.9 million and other gains rose to USD1.6 million from USD1.1 million, but those were partially offset by higher depreciation costs and by the USD2.1 million foreign exchange loss, which swung from a USD1.5 million gain last year.
That led the operating loss to shrink to USD9.3 million from USD17.7 million.
"2015 was an extremely challenging and frustrating year for the company. However, having proven the technology at Korean Recycling Plant, we are now moving forward to find and assess new projects where the technical intellectual property developed by the company can be used in the future," said Chairman Rod Beddows.
The Korean Recycling Plant, which was developed using inteelectual property owned by the business, had previously faced technical issues but by the time those matters were resolved zinc prices had plummeted and started to cause huge losses from the operation.
As a result, ZincOx restructured the ownership of the plant and the company now only holds a 10% stake, with the remainder going to its partner in the country, signalling a fundamental change in the business.
Under AIM rules, ZincOx has until October 28 to find a new asset or opportunity to avoid its shares being cancelled.
"We now look forward to relaunching the company using its broad and deep experience of zinc recovery processes. In the meantime, however, in order to give management time to find a suitable project, the overheads of the company have been reduced to an absolute minimum, the Belgian office has been closed and most of the staff made redundant with executive directors on a greatly reduced salary and non-executive directors foregoing any salary," the company said.
The most likely prospect is that ZincOx will find a partner to develop a recycling plant near Ho Chi Minh City in Vietnam, where it has approval to build a site and is in the process of identifying a site for the plant.
The plant would have the capacity to produce 100,000 tonnes of elecric arc furnace dust per year, and ZincOx wants a partner to help finish a bankable feasibility study in order to secure financing to construct the plant.
"An incoming partner could earn a significant interest in the project and at the same time, therefore, reduce the capital required by ZincOx for its development. Notwithstanding the excellent economic returns presented by the project, the slow ramp up at Korean Recycling Plant and the continuing general sentiment towards commodities, creates a very tough environment in which to find partners for the project," it said.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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