ZincOx has announced that its wholly-owned subsidiary, ZincOx Ltd., has signed a 50-year lease for its Korean Recycling Project (KRP).
According to ZincOx, the lease provides for a minimum rent-free period of five years, provided that ZincOx completes the development of the first phase of the KRP within two years and the development of the second phase within four years. ZincOx expects to complete the developments within the timetable. Under certain conditions, ZincOx says that it could be eligible for rent-free status beyond five years.
The KRP site is located near Pohang, South Korea, one of the country’s major steel producing centers. The facility will supply about 20 percent of KRP’s feed requirements. It will also host potential customers for KRP’s ZHBI iron product.
The KRP will process electric arc furnace dust (EAFD), which is generated by steel recycling companies. ZincOx has 10-year supply contracts for 400,000 metric tons of EAFD per year (23 percent zinc), which is currently disposed of in landfill sites.
ZincOx’s phased development plan forecasts the treatment of 200,000 metric tons of EAFD during the first phase that will produce about 60,000 metric tons per year of zinc oxide concentrate at 73 percent zinc and about 95,000 metric tons per year of ZHBI, an intermediate iron product.
In the second phase, ZincOx plans to treat an additional 200,000 metric tons of EAFD, annually producing about 120,000 metric tons of zinc oxide concentrate and about 190,000 metric tons of ZHBI.
Detailed engineering is underway. ZincOx expects the production of zinc concentrate from the KRP to start by the first quarter of 2012.
“The development of the KRP is beginning to gain significant momentum, and at the same time we are making good progress with our financing plans,” says Andrew Woolett, ZincOx’s executive chairman.
In related news, ZincOx Resources plc has signed a Letter of Intent (LOI) with Korea Zinc Co Ltd and its affiliate for loans amounting to $50 million for the development of the KRP and an off-take agreement to purchase the unwashed zinc concentrate produced from Phase 1 of KRP’s development. The facility is scheduled to be built near Pohang, South Korea.
The agreement is for the entire zinc concentrate production and lasts for ten years from first production. The agreement is for unwashed zinc concentrate, removing the requirement for ZincOx to develop a washing plant, saving about $17 million of capital expenditure from the original phase 1 development plan.
The plant is scheduled to process 200,000 metric tons per year of steel waste dust (EAFD) in Phase 1 and produce about 70,000 metric tons of zinc concentrate with a grade of 58 per cent zinc and 95,000 metric tons per year of an intermediate iron product.
ZincOx adds that capacity is scheduled to double under the second phase, which will be developed following the commissioning of the first phase of KRP’s project.
Commenting on the announcement, Andrew Woollett, ZincOx’s executive chairman, says, “We are pleased to have reached agreement with Korea Zinc regarding these financing arrangements and that we can now move forward with our first metal recycling project in Korea. The offtake and financing package represents a very attractive structure that enables the project to release more cash in the early years than would be possible using normal project finance. It also means that our interest in KRP has not been diluted as would have been necessary by the introduction of a partner.
“Following our entry into a long term lease over the KRP site, we are now able to press forward with the development without delay and are focused on achieving first production in the first quarter 2012 with a ramp up to full production within six months.”