Zincox Resources Plc Regulatory News (ZOX)

11 Nov 2005 07:29

ZincOx Resources PLC11 November 2005 Aliaga Recycling Project Update 11 November 2005 ZincOx Resources plc is pleased to announce the completion of the first part ofthe feasibility study for the Aliaga Recycling Project (Turkey) being undertakenby SNC- Lavalin Europe. The work to date has included a technical review of theprocess, plant layout, engineering design and an estimation of capital andoperating costs to an accuracy of +/-15%. The Aliaga project envisages the production of high quality zinc oxide fromwaste material (EAFD) generated by the steel recycling industry. Furthersampling of the Turkish EAFD over the past 12 months has allowed the company toincrease the initial capacity of the plant by one third so that the study isexamining the production of 20,000 tpa of high quality zinc oxide generated fromthe EAFD produced by the steel mills at Aliaga alone. ZincOx expects to be able to increase production to at least 30,000 tpa zincoxide by obtaining EAFD from steel mills located elsewhere in Turkey. The 20,000tpa plant has been designed so that it may be expanded to 30,000tpa for theminimum of additional expenditure. Although this adds to the capital of the20,000tpa plant, it reduces the overall capital cost of the expanded project.The cost of this expanded capacity provision and the increase in the initialproduction rate has led to a revised capital cost of US$39 million for theinitial capacity of the plant. Based on SNC-Lavalin Europe's cost estimates, ZincOx has revised its previouscash flow models. For the initial 20,000 tpa capacity without further expansion,using a zinc price of US$1,150 per tonne (Current price US$1,584 per tonne), theproject would have a post tax net present value of £19 million, at a 10%discount rate, and an internal rate of return of 23%. It is intended that the expansion to 30,000tpa would be financed largely out ofthe cash flow generated in the first full year of production. A preliminaryfinancial model based on an expanded project, using a zinc price of US$1,150 pertonne, has a post tax net present value of £28 million, at a 10% discount rate,and an internal rate of return of 26%. SNC-Lavalin Europe is scheduled to complete it's Feasibility Study in March2006. This will include further engineering design up to a stage that willconsolidate the investment cost and confirm the process performance to enableZincOx to satisfy the requirements of the providers of project finance.Discussions regarding the terms for project finance are well underway and theterms of a mandate are close to being concluded. Commenting on the announcement, Andrew Woollett, ZincOx's Managing Director said"Our two phase approach to the feasibility study confirms the value of theproject ahead of the more detailed engineering required for project finance.This allows us to commence infrastructural development on the site and to orderlong lead-time items of equipment so that the overall development schedule forthe project will not be delayed by the arrangement of project finance." For more information please contact: Andrew Woollett Leesa Peters / Pam SpoonerZincOx Resources plc Conduit PRTel: +44 (0) 1276 455700 Tel: +44 (0) 20 7618 8533awoollett@zincox.com leesa@conduitpr.com www.zincox.com This information is provided by RNS The company news service from the London Stock Exchange