1st Apr 2014 09:25
LONDON (Alliance News) - ZincOx Resources PLC Tuesday said it had conditionally raised GBP1.0 million by way of a placing of roughly 10.3 million shares at a price of 10 pence per share, and announced plans to raise a further GBP4 million by way of an open offer at the same price.
The zinc recycling company said the placing price represents a discount of 38% to the closing mid-market price of the company on March 31. ZincOx shares were down 25% to 11.95 pence, putting it among the worst AIM fallers Tuesday.
The company said the proceeds of the placing and open offer will be used for general working capital purposes, repairs to its refractory, and the purchase of equipment to complete the ramp-up of the company's first recycling plant, KRP in South Korea.
"Whilst I regret having to revert to shareholders to seek further support, we are pleased to see a continuing improvement in production," Executive Chairman Andrew Woollett said in a statement.
The company has been hit by multiple reliability and technical problems at its Korean Recycling Plant. In March, it noted that production was being constrained by a lack of oxygen contracted from its external supplier. Due to a fault in the gas handling system during February, it decided to bring forward the replacement of its inner shell from March. This was completed successfully in February, but led to a low production rate in February of 1,053 tonnes of zinc in concentrate.
The company announced at the time that it has decided to move forward replacement of its inner shells on two further heat exchangers to April from August in order to improve the reliability of the plant
ZincOx said it had envisaged that a fundraising in November last year would have been enough to see the company through its ongoing ramp-up of operations but, due to reductions in cashflow resulting from repairs and stoppages, the cash reserves from November have been critically reduced.
However, the company did note in January that it produced a record 3,131 tonnes of zinc in concentrate during the month, which generated a positive earnings before interest, taxation, depreciation and amortisation of over USD200,000.
"We are in the process of replacing the inner shells of the remaining two heat exchangers which, together with refractory repairs, should greatly improve the reliability of the plant," Woollett said. "We are confident of making further progress with the ramp-up over the coming months as we continue to optimise the operation."
By Tom McIvor; [email protected]; @TomMcIvor1
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