Zincox Resources Plc Regulatory News (ZOX)

26 Oct 2005 11:41

ZincOx Resources PLC26 October 2005 ZincOx Resources plc signs zinc mine Exploitation Contract with the Government of Yemen 26 October 2005 ZincOx Resources plc (ticker: ZOX) is pleased to announce that its 60%subsidiary company, Jabal Salab, has signed an Exploitation Contract with theGeological Survey and Mineral Resources Board (GSMRB) representing theGovernment of Yemen, to mine and process zinc at the Jabali deposit. The Jabalizinc oxide deposit is located 110km north east of Sana'a, the capital of Yemen,and contains a resource, calculated in accordance with the JORC code of 12.6million tonnes of ore at a grade of 8.9% zinc, 1.2% lead and 68grams/tonnesilver. Andrew Woollett, Managing Director of ZincOx, commented: "The Jabali deposit wasdiscovered in the early 1980s but it has not been developed until now because ofthe complex mineralogy. Once again it is the metallurgical expertise at ZincOxwhich will allow us to realise the potential of this attractive resource for thebenefit of our shareholders, our partners and the people of Yemen." The Exploitation Contract is subject to the approval of the Cabinet andParliament, which is expected during the first quarter of 2006. It will then beratified by the President of Yemen and incorporated in law. It sets out theterms under which Jabal Salab can mine and process zinc from the deposit. Theseinclude a 20 year lease, a 1.5% net smelter return Royalty, a tax holiday of sixyears and repayment of past costs incurred by the GSMRB of US$5millioncommencing in the fourth year. The terms do not differ materially from thoseassumed in the Feasibility study completed earlier this year (see Press Releasedated 15 March 2005). The Feasibility Study, which was completed by ZincOx and MDM, a firm of mineralengineers from South Africa, was based on the mining and processing of 800,000tonnes per annum of ore at a mined grade of 9.2% zinc over a life of 11 years.There is potential to increase the ore resource as the deposit is open on twosides. Mining will be by means of an open pit with a waste to ore strip ratio of 2 to1. The ore will be treated by the LTC process developed by ZincOx and itsconsultants and piloted, using Jabali ore, at an independent laboratory inBelgium. The plant is expected to recover 77% of the zinc for the production ofapproximately 70,000 tonnes per annum of high quality zinc oxide, containingmore than 99% zinc oxide. The quality of the final product will allow JabalSalab to sell direct to end users of zinc oxide, thereby benefiting from apremium price. The capital cost of developing the mine, processing plant, infrastructure andassociated facilities is estimated at US$75.4million. Scott Wilson Mining, a UK based firm of mineral consultants has prepared anenvironmental impact study in accordance with guidelines set down by the WorldBank. The report has already been approved by the Yemen Environment ProtectionAuthority, thereby satisfying all environmental permitting requirements. ZincOx has been approached by various banks with the aim of providing projectfinance for the development of Jabali. Export credit agency political andcommercial risk cover is available for Yemen which will greatly assist thearrangement of finance. The progress now made with the Exploitation Contract will allow ZincOx to pressahead with its plans for project finance which is the next phase of theproject's development. It is expected that financing will be in place during thethird quarter of 2006, with construction, which will take 18 months, startingshortly thereafter. For further information, please contact: For more information please contact: Peter Wynter Bee Leesa Peters / Pam SpoonerZincOx Resources plc Conduit PRTel: +44 (0) 1276 455700 Tel: +44 (0) 20 7618 8533pwynterbee@zincox.com leesa@conduitpr.com www.zincox.com This information is provided by RNS The company news service from the London Stock Exchange