Zincox Resources Plc Regulatory News (ZOX)

ZincOx Resources plc

("ZincOx" or the "Company" or the "Group")

US$6.3 million raised by Loan Notes with warrants

ZincOx Resources plc (AIM: ZOX.L)announces a loan of US$6.3 million (£4.2 million) together with four year warrants over 9,450,000 new ordinary shares at an exercise price of 40 pence per share (the "Loan").

Highlights

·; US$6.3 million raised by way of a loan

·; The Loan will enable the completion of the ramp-up of the first phase of the Company's Korean Recycling Plant, KRP1, and to provide working capital

Andrew Woollett, Executive Chairman of ZincOx, said:

"Further to my statement at the AGM, this loan will enable us to overcome the problems that have held back our throughput this year and we can now move forward to full production and complete the transition from development to full operations."

1. Details of the Loan and warrants

The Company has raised US$6.3 million (before expenses) by way of a loan note instrument relating to the issue of loan notes repayable in two years at an interest rate of 10 per cent per annum. For each one pound advanced (converted at the rate US$1.5/£) the subscribers to the Loan are being issued with 2.25 warrants to subscribe for new ordinary shares in the Company, exercisable at any time within four years of their issue at an exercise price of 40 pence per share. The warrant exercise price represents a premium of 154% per cent. to the closing mid-market share price of 15.75pence per ordinary share on 8 August 2013. The 9,450,000 warrants, if exercised in full, will represent approximately 9.1 per cent of the current issued share capital of the Company prior to the exercise of the warrants.

The loan notes are secured against the shares in ZincOx Anadolu Çinko SVTAS, the Company's wholly owned Turkish subsidiary (the "Turkish Subsidiary") that owns the freehold to land held in Turkey. The proceeds from those plots of land owned by the Turkish Subsidiary in the Light Industrial Zone in Aliaga, Turkey, which have already been sold will amount to approximately US$1.8 million (£1.2 million converted at the rate US$1.5/£). Other plots of land owned by the Turkish Subsidiary in both the Heavy and Light Industrial Zones in Aliaga, Turkey were recently valued at €5.66 million (US$7.4 million converted at the rate of US$1.3/€). The Loan is conditional upon the execution, delivery and perfection of further security interests by the Turkish Subsidiary after the Loan has been advanced.

2. Background to the Loan

In April 2012 the Company finished the construction of the first phase of development of its wholly-owned Korean Recycling Plant ("KRP1"), in the Cheonbuk Industrial Complex in South Korea.

A summary of the current progress on ramp-up was given in the AGM Statement announced on 25 June 2013.

The Company anticipates that the proceeds from the Loan will enable the Company to continue to ramp-up to full production at KRP1, and provide general working capital for the Company. As the ramp-up approaches full production, these funds may also be used to progress the expansion phase of KRP2 and projects in other parts of the world.

3. Directors' participation in the Loan

Certain directors of ZincOx have agreed to subscribe, for the following amount of loan notes (with warrants):

4. Related Party Transaction

As the two aforementioned directors are proposing to participate in the Loan, the size of their subscription is such that it constitutes a related party transaction under Rule 13 of the AIM Rules for Companies. The independent directors consider, having consulted with Peel Hunt, the Company's Nominated Adviser, that the terms of the transaction are fair and reasonable insofar as shareholders of ZincOx are concerned.

Current Trading and Prospects

KRP1 is the first phase of a two phase development and on completion of the full development, KRP1 and KRP2 have been designed to treat 400,000 tonnes of electronic arc furnace dust ("EAFD") per annum.

KRP1 represents the Company's only material productive asset and output has increased over the past six months. The ramp-up to full production is expected to be completed towards the year end. Following the ramp-up period, during the first full year of production the project is scheduled to treat 175,000 tonnes of EAFD rising to full capacity (200,000 tonnes of EAFD per annum) during the second year.

The Board believes that the KRP concept can be replicated in other countries and regions where there is substantial generation of EAFD.

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