29th Dec 2015 07:24
LONDON (Alliance News) - ZincOx Resources PLC on Tuesday said it will start cutting costs and jobs across the business in order to shore up its financial position after it failed to raise the funds required under its agreement with Korea Zinc.
The company struck a deal with Korea Zinc in November to reschedule the USD57.1 million in debt ZincOx owes to Korea Zinc, but this was dependent on ZincOx raising USD5.0 million by the end of 2015.
Despite "intensive efforts" ZincOx said had been made in recent weeks to raise the funds before the end of the year, it has not been able to secure a sufficient number of investors to fund this amount.
Under the terms of the agreement with Korea Zinc, ZincOx is now obligated to transfer 90% of its interest in its ZincOx Korea Ltd subsidiary, the owner of its Korean recycling plant operation, to Korea Zinc.
The disposal will come formally effective in January 2016, the company said, and during the month in which the transfer of the operation will take place, ZincOx will continue to assist with the operation.
ZincOx cautioned, however, that given the negative outlook for the zinc market, more funds may have be injected into its Korean business and any amount which would have had to be paid by ZincOx, given it will retain a 10% stake in the unit, will result in its holding in the subsidiary being reduced in line with the amount required for investment.
Following the sale of the asset, ZincOx will have net cash of around GBP240,000, and its other assets will comprise industrial land in the US and Turkey, plus a profit-sharing interest in the Jabali zinc project in Yemen. Given the current uncertain security situation in Yemen, however, ZincOx said it is difficult to assign any value to the latter asset.
ZincOx said that given its current tight cash position, it will be actively seeking to cut costs and will review its staff numbers. The board of the company has said it will waive its remuneration for the time being.
The company will now start seeking to raise new funds, though it also said it will consider managing the business in order to sell off its remaining assets.
By Sam Unsted; [email protected]; @SamUAtAlliance
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