ZincOx Resources Signs Loan, Off-take Contracts in Korea

ZincOx Resources plc, headquartered in Surrey, U.K., has completed an off-take agreement and the formal documentation for loans to be provided by Korea Zinc Co Ltd., Seoul, for the development of the first phase of the company’s Korean Recycling Plant (KRP). The plant is scheduled for completion by the first quarter of 2012 in Geongju, South Korea. The plant’s official groundbreaking was held March 11, 2011.

According to a ZincOx release, under the first phase of the project, KRP will treat 200,000 metric tons per year of steel waste dust 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.

The company says that capacity will double under Phase 2, which will be developed following the commissioning of Phase 1.

ZincOx’s off-take agreement covers the entire zinc concentrate production from Phase 1 and will last for 10 years from first production. The concentrate will be sold on the basis of the ordinary international formula for pricing of concentrate between mines and smelters, but includes a fee to cover the cost of removing chlorides and fluorides by washing, in line with ordinary industry practices.

ZincOx also announced that Korea Zinc has agreed to provide the company with two loans, an off-take loan and the development facility. The off-take loan is for $35 million and will bear interest at 5 per year. Repayment will begin following the repayment of the development facility.

The development facility is for $15 million and will an interest rate of 15 percent per year. It will be repaid from KRP’s free cash flow, according to ZincOx.

Commenting on the announcement, Andrew Woollett, ZincOx’s executive chairman, says, “We are delighted to have such strong support from one of the world’s largest zinc producers and their commitment reinforces the strength of the technology. Excellent progress is being made at site and the development remains on schedule and within budget.”

ZincOx‘s principal business is recycling electric arc furnace dust. The company’s long-term objective is to operate a network of recycling plants covering each of the major steel recycling regions of the world.