RNS details to follow18 Dec 2015 10:41
RNS Number : 2932H
ZincOx Resources PLC
30 November 2015
30 November 2015
ZincOx Resources plc
("ZincOx" or the "Company")
Korean Debt Rescheduling
Further to the press release on 25 November 2015 announcing the Company's intention to raise US$6.5 million in working capital and reschedule its loans from Korea Zinc Company Limited ("Korea Zinc"), ZincOx is pleased to announce that it has entered into a rescheduling agreement for the loans. The agreement also provides for the potential release of zinc concentrate to the Company which could be upgraded so as to enhance value and profitability.
Debt Rescheduling
KRP has been developed with the support of two loans from Korea Zinc:
1. Offtake Loan - a long term loan of US$37.7 million bearing interest at 5% over 6 month US$ LIBOR and repayable from 50% of free cashflow with any balance being repayable in 2022.
2. Development Loan - a short term loan of US$19.4 million bearing interest at 9.5% and repayable in six equal six monthly instalments starting on 2 February 2016.
In view of the unexpected fall in the zinc price over the past four months and the uncertain outlook for commodity prices generally, Korea Zinc has agreed to roll up all interest payments due on the Development and Offtake Loans amounting to US$5.4 million until 31 December 2016 unless the monthly average zinc price rises above US$2,000 per tonne for a period of three months, when payments would recommence. Similarly, the semi-annual principal repayments due on the Development Loan have been postponed by one year, unless the monthly average price of zinc rises above US$2,500 per tonne for a three month period. This agreement however is effectively conditional upon the Company raising a further US$5million before 31 December 2015.
The Board is therefore now focused on securing at least US$5 million of investment and is exploring a number of potential opportunities from both existing and new investors with the aim of completing the fundraising by the end of 2015. There is, however, no certainty that the fundraising will be successful.
In the event that the investment is not made, the Company has agreed to transfer 90% of its interest in its Korean subsidiary company (KRP) to Korea Zinc, or upon Korea Zinc's request have KRP cancel, all or in part, the existing shares of KRP, and issue and offer Korea Zinc new shares through conversion of the outstanding loans into equity until Korea Zinc owns 90% of KRP.
Since the transfer of such 90% interest in KRP under the above arrangements would constitute a disposal that is classed as 'a fundamental change of business' under the AIM Rules for Companies, these arrangements are conditional upon the consent of shareholders in a general meeting.
As both the raising of new capital or the disposal of 90% of the shares in KRP would both require shareholder approval it is planned that a General Meeting of the Company will be ca
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