Zincox Resources Plc Regulatory News (ZOX)

15 Mar 2005 07:00

ZincOx Resources PLC15 March 2005 Jabali Feasibility Study Completed ZincOx Resources plc ("ZincOx" or "the Company" - symbol ZOX) is pleased toannounce the completion of the feasibility study for the development of theJabali zinc oxide deposit, in Yemen. The study indicates a project, with aninternal rate of return (IRR) of 27% and a net present value of £31.2 million(post tax, using a discount rate of 10% and a zinc price of $1,000 / tonne)Commenting on the results, Andrew Woollett, Managing Director of ZincOx, said"This study confirms the considerable value we have created at Jabali and itshould allow the project finance for its development to be put in place beforethe year end so that construction can commence early next year" The deposit, which is located 110 km northeast of Sana'a, the capital city ofYemen, contains a geological resource of 12.6 million tonnes of oxide ore withgrades of 8.9% zinc, 1.2% lead and 68g/t silver. There is the potential forincreasing the resource further as the deposit is open on two sides. The mineral rights to the deposit are held through an Exploration Licence whichis owned by a joint venture comprising ZincOx, Anglo American plc and AnsanWikfs (Hadramaut) Ltd, a Yemeni company. Under the terms of the joint ventureagreement, ZincOx is entitled to a 60% interest by completing the feasibilitystudy and Anglo and Ansan are entitled to 20% each. ZincOx is currently working towards the finalisation of the terms of anExploitation Agreement with the Government of Yemen, which will confirm the taxand other fiscal conditions assumed in the feasibility study. MDM Ferroman, a mineral engineering firm from South Africa, carried out thefeasibility study, with input from other consultants. The process flowsheet wasdesigned by ZincOx and tested in a pilot plant operated by CTP, an independentBelgian metallurgical laboratory. The study is based on the mining and processing of 800,000 tonnes per year ofore, containing 9.2% zinc, over 11.2 years. Mining will be from an open pit,with a 2:1 ratio of waste to ore. The ore will be treated by means of aproprietary hydrometallurgical process, test work on which has indicated a 77%zinc recovery. The plant is designed to produce approximately 70,000 tonnes peryear of a high quality (99.9%) zinc oxide, containing 80% zinc. Marketingstudies and test work carried out by ZincOx indicate that the final product willbe of a quality suitable for direct marketing to zinc oxide consumers in Europe,the Far East and America. This material will command a substantially higherprice for the contained zinc than that offered by zinc smelters, which typicallyonly pay about 55%-65% of the value of the metal contained. Capital costs of the project are estimated at US$68.7 million, with a furtherUS$4.0 million for waste rock removal prior to mining of ore and US$2.7 millionrequired for working capital. A small amount of lead is recovered and sold but generally the lead is not of aneconomic grade. The silver, however, passes to the tailings and a separate studyhas commenced to assess the viability of its commercial recovery. Scott Wilson Mining carried out an Environmental Impact Assessment as part ofthe feasibility study, in accordance with World Bank guidelines and input fromthe Yemen Environmental Protection Authority. The study states that overall theproject is considered to provide a net beneficial impact. The effect of theproject with respect to employment and infrastructure development will have along term positive impact beyond the life of the project and the area of themine. The Government of Yemen has stated its intention to diversify the economy of thecountry away from its dependence on oil and gas and is actively encouraginginvestment in the mining industry. The revenue generated from Jabali in terms oftaxes and industrial development in Yemen will bring significant long termbenefits to the country. Discussions have commenced with certain financial institutions with respect tothe provision of debt finance for development of the project. Assuming theExploitation Agreement is finalised by the end of the second quarter, thenfinancing should be completed by the end of this year. Construction will thencommence in 2006 with production scheduled for the second half of 2007. For more information please contact: Peter Wynter Bee Leesa Peters/Laurence ReadZincOx Resources plc Conduit PRTel: +44 (0) 1276 455700 Tel: +44 (0) 20 7618 8708+44 (0) 7973 818125 +44 (0) 781 2159885pwynterbee@zincox.com leesa@conduitpr.com www.zincox.com This information is provided by RNS The company news service from the London Stock Exchange