29th May 2007 10:54
ZincOx Resources PLC29 May 2007 ZincOx Resources plc Preliminary Results - Year Ended 31 December 2006 Operational Highlights £€3.64 million profit, or 8.36p per share. •Over £20 million in cash reserves •Teck Cominco increased holding to 11.5% (warrants for further 3.5%) £€8.1m acquisition of 100,000 tonne per annum Big River Zinc smelter, USA •First EAFD supply option agreements for the Far East, in Thailand Activities during 2007 and outlook Commenting today Andrew Woollett, Executive Chairman, said: "2006 was a landmarkyear for ZincOx with significant progress on all our projects and a Group profitof £3.64m. With the first of our EAFD recycling projects close to developmentand the backing of industry major Teck Cominco, I believe we are on target torealise the first Zinc production from the recycling assets in 2008" For more information please contact ZincOx Resources plc Conduit PRAndrew Woollett Leesa Peters/Ed Portman +44 (0) 1276 450100 +44 (0) 20 7429 6666 +44 (0) 781 2159885awoollett@zincox.com leesa@conduitpr.comwww.zincox.com Chairman's Statement===================== The company and its prospects were completely transformed over the course of2006. We have seen a number of very positive developments and dramatic progresshas been made on all fronts. There were several highlights including: - Commencement of annual Group profits - Acquisition of a major zinc smelter in the USA - Involvement of a strong corporate strategic partner - Refinement of a recycling strategy that is both competitive and environmentally sustainable We achieved a post tax profit for 2006 of £3.64 million, or 8.36p per share on afully diluted basis (2005: (2.99p) per share). This was due to the firstdeferred consideration payment arising from the Shaimerden sale and cashrealised by the partial sale of our Jabali project. With the Shaimerden deferredconsideration expected over the next four years and cash flow from our ownprojects due to commence in 2008, the company is on a firm financial footing andcurrently has over £20 million in cash reserves. Our well defined global strategy for the recycling activities should enable usto become a major global zinc recycling company. Our recycling strategy is basedon the recovery not only of zinc, but also iron and other valuable metals fromelectric arc furnace dust (EAFD), a waste generated from the recycling of steelscrap. In order to emphasise the pre-eminence of recycling the Board has decidedto update the company's logo by the inclusion of a modified version of theinternationally recognised symbol for recycling. Our strategy envisages EAFD being collected from several steel mills and treatedat a central regional scale rotary hearth furnace that will produce anintermediate zinc product suitable as a feed for a central continental scalezinc production facility. The rotary hearth furnaces will in addition produce alow quality iron product suitable for immediate melting into saleable pig ironand a clean slag suitable for construction purposes. The pig iron can be soldback to the same mills that provided the original EAFD. The process produces nosignificant waste so that almost all the EAFD is recycled into useful rawmaterials. Furthermore this is done with less energy consumption than eitherexisting recycling technology or production from primary deposits. We believe,therefore, that our approach will be recognised by the steel industry andenvironmentalists alike as the Best Available Technology (BAT) and, in time,will be the yardstick against which other technologies are judged. The first rotary hearth furnace operations will be based in Ohio, in the USA andAliaga, in Turkey. Each project will process 200,000 tonnes per annum (tpa) ofEAFD and produce about 47,000 tpa of zinc in zinc concentrate and iron as pigiron. The zinc concentrate from both operations will be shipped to the Big RiverZinc smelter located just outside St Louis in the central part of the UnitedStates, where it will be refined into high quality zinc metal. In Ohio a site has been selected that is well placed for infrastructure and thatlies close to the operational base of ESOI our North American EAFD supplier.ESOI is the largest EAFD landfill company in the USA and has a first class trackrecord in the transportation and management of EAFD disposal. Pre-developmentengineering is well underway and we are planning to have the plant ready forcommissioning in the middle of 2008. In Turkey, our new plan based on a rotary hearth furnace operation inside theAliaga Heavy Industrial Zone, met with universal support at the public meetingheld in March 2007. This meeting was part of the environmental permittingprocedure required before construction can commence. We are hoping to have theseformalities completed by the end of June so that development work on site canbegin enabling production to commence in the second half of 2008. Our new strategy for recycling has been greatly enhanced by our acquisition ofthe Big River Zinc electro-refinery, near St Louis. We were able to purchase theplant for £8.1 million, the cost of which was covered by a small placement ofZincOx shares in June which raised £15 million. A new plant of this type wouldcost over US$300 million to build today and permitting would likely be veryprotracted. Most of the existing plant and infrastructure can be used in the newoperation, although the material of construction for some equipment will need tobe changed and solvent extraction will be installed to replace conventionalpurification. The redevelopment cost of Big River Zinc is expected to be aboutUS$90 million but the saving against building a new operation from scratch willbe well over US$100 million. Demolition of redundant buildings to make way forthe new plant has already commenced. We plan to start commissioning towards themiddle of 2008, slightly ahead of that for the Ohio Recycling Project. The strategy of two regional scale rotary hearth furnaces feeding continentalscale zinc production facilities is a blue print we see being rolled out inother parts of the world. With this in mind towards the end of the year weannounced the first EAFD supply option agreements for the Far East, in Thailand.We now have a small office in Bangkok and are pursuing opportunities elsewherein the Far East. Preparations for the development of the Jabali mine in Yemen have progressedsteadily throughout the year. In light of the significant capital cost increasesreported by almost every new mining project in the world over the past fewyears, we felt it necessary to carry out a comprehensive review of the costestimate prepared in the 2005 feasibility study. This review, together withfurther process refinements, led to our announcement, in November 2006, of arevised capital cost, of US$176 million. We also announced a restructuring ofthe ownership of the project. Anglo American plc had been left with only a 20%interest in the project, which for a company of its size is too small to be ofsignificance, and they exchanged their interest for a modest royalty. At thesame time we reduced our holding in the project to 52% in favour of our localpartners for a payment of US$7.5million in cash. Since our historical cost onthe project at that time amounted to only US$6.5 million, our interest in thislow cost producer represents a very positive creation of value for shareholders.Provided the Exploitation Contract with the Government in Yemen can pass throughthe final stages of this ratification procedure in a timely fashion, we wouldhope to be in production in early 2009. Yemen presents a challenging environment for financing. We felt that investorsused to emerging markets and interested in high rates of return may be morenatural supporters of our Jabali mine development than providers of conventionalproject finance. We are, therefore, in the advanced stages of arranging aproject finance bond amounting to US$120 million. The bond will have both afixed interest and a zinc price related coupon. The bond has been marketed to anumber of specialist emerging market hedge funds and we are now at the finaldocumentation stage. In January 2007 we received the first of the deferred payments due as a resultof the sale of our interest in the Shaimerden zinc deposit, in Kazakhstan.Further deferred payments are expected for the next four years. The amount ofthe payments is dependent on the average zinc price for the previous year. Todate the zinc price for 2007 has averaged US$3,548 per tonne. If the averageprice were to remain at this level and based on the current mine plan, the nextpayment, due in January 2008, would amount to US$39 million. When one considersthat the total investment by us in the project was less than US$2 million andthat we have already received cash totalling US$16.5 million, there has clearlybeen a very satisfactory creation of value for shareholders. The creation of this value has been a result of the continuing strength ofcommodities generally and, over the past two years, zinc in particular. Thiscommodity boom is being driven by very strong demand from China and healthygrowth in Asia. The fundamental shortage of zinc metal is demonstrated by thevery low levels of zinc stocks available in LME warehouses. While it is fairlysimple to assess the amount of new zinc likely to be coming on stream next year,the uncertainty in global demand for zinc, especially from China, makespredictions of the supply demand balance extremely difficult. The generalsentiment in the market, however, continues to be very positive. At the beginning of 2006 we recognised that the company would requireconsiderable development capital to be raised during 2007. We felt that a strongstrategic industrial partner would greatly facilitate our funding efforts notleast by providing independent technical corroboration of our plans. We invitedTeck Cominco, one of the world's largest zinc mining companies and a shareholderfor some years with board representation since 1999 to become our strategicpartner. Following a very successful and detailed review of our strategy and technology,in December, Teck Cominco demonstrated its support by taking up a placing of newshares at the then market price £2.65 per share that increased their holding to11.5%. In addition for each share we issued a warrant priced at a 25% premium(£3.30 per share) to the then share price and having a life of only one year. Ifexercised these warrants would increase Teck Cominco's interest in the companyto 15%. In line with ordinary industry practice, and given their robust economics, therecycling projects should support a high level of conventional project finance.Our equity requirement for these projects and the Jabali project would togetheronly be about US$160 million. The strong zinc price should enable us to monetisethe value of the Shaimerden royalty and we are discussing this with selectedfinancial institutions. We believe this will realize between US$70 million and$90 million. This together with current cash reserves (US$40 million) andpotential receipts from the exercise of the Teck Cominco warrant (US$ 13million) should be enough to cover most of the equity requirement. We areinvestigating various other attractive potential methods of financing, but we donot expect that a major issue of equity will be required. Over the past year we have trebled the number of employees who currently number67, mainly located in the UK at the Bagshot headquarters, in Belgium, where ourresearch and development and engineering is based, and at Big River Zinc wherewe kept on the core management team so as to provide continuity for the newoperation. There are also employees locally in Turkey, Yemen and Thailand. On behalf of the board and shareholders I would like to thank all staff for thehuge efforts they have made over the past year, and I am confident that theseefforts will be no less intense over the coming year. Review of Operations==================== Recycling========= The company's recycling strategy is based on the treatment of electric arcfurnace dust (EAFD). EAFD is a zinc-bearing waste material generated when steelscrap is recycled. The largest use of zinc is for galvanising steel. Whengalvanised steel products reach the end of their life they are recycled fortheir iron units. Recycling scrap takes place in electric arc furnaces in whichzinc and other base metals are driven off as oxides. These form a significantproportion of the dust recovered from the off gas cleaning system. There are over 5 million tonnes of EAFD produced annually around the world frommore than 300 recycling plants. EAFD typically contains 21%-30% iron, 15-25%zinc and 2%-4% lead, generally as simple oxides. The presence of toxic basemetals such as lead, cadmium and arsenic makes EAFD a hazardous waste that has asignificant cost of disposal. About half the world's EAFD is going to landfilland the majority of the rest is being recycled in horizontal rotary kilns (Waelzkilns). ZincOx's strategy involves the recovery of zinc in a two stage process. In thefirst stage, EAFD is thoroughly mixed with coal and briquetted using a smallamount of organic binder. Briquettes are gently fed into a rotary hearth wherethe temperature is raised to over 1,250OC by the ignition of the coal and theuse of subsidiary gas burners. Both iron and zinc, together with other basemetals are reduced and the base metals and zinc, being more volatile, boil off.The metals in the off-gas react with oxygen in the air and form oxide compoundsthat precipitate as a fine dust that is collected in the gas cleaning system.This crude zinc oxide concentrate is the final zinc and lead product from thefirst stage of our process. After the removal of the volatile elements the iron bearing briquette containsabout 50% iron and 50% slag (a vitreous material containing, a mixture of alkalielements, silicates, iron and magnesium). The hot briquettes are dischargeddirectly into a simple electric furnace that raises the temperature sufficientlyto melt the iron which sinks to the bottom of the furnace while the slag floatsto the top, both materials being drawn off periodically. The iron containscarbon and is essentially a "pig iron" suitable for resale to the steel mills.The slag can be used for building purposes. While the chemistry of the zinc reactions is well understood and indeed formsthe basis of existing EAFD re-treatment operations in Waelz kilns, there areseveral important benefits of the rotary hearth furnace, most notably lessenergy consumption and the recovery of a high value iron product. Crude zinc oxide produced by the rotary hearth furnace, and indeed existing EAFDre-treatment operations, contain levels of halides (chlorides and fluorides)that critically affect the operation of conventional zinc smelters. Material ofthis type needs to be further beneficiated to remove the halides, consequentlycrude zinc oxide trades at a discount to the price paid for ordinary concentratewith the same zinc grade. In the second stage of the ZincOx process, zinc will be produced from crude zincoxide without the necessity for additional beneficiation. By avoiding thebeneficiation step, the ZincOx approach enjoys significantly lower overalloperating costs. Production of zinc metal in the second stage is in most waysthe same as for a conventional plant, the difference being the replacement ofconventional chemical purification by solvent extraction, a process successfullydesigned by the ZincOx technical team and employed at the Skorpion zinc oxidemine/refinery, in Namibia. ZincOx intends initially to build two rotary hearth furnaces, at Aliaga and inOhio and send crude zinc oxide concentrate to Big River Zinc for the recovery ofzinc metal. Ohio zinc recycling project - United States of America------------------------------------------------------ There are over 1,000,000 tonnes of EAFD produced annually in North America.Steel mills pay a fee to have the EAFD removed from site and disposed of orretreated in some way. ZincOx plans to treat 200,000 tonnes per annum of EAFD ata new rotary hearth furnace operation, the Ohio Recycling Project (ORP) thatshould be on stream in mid 2008. ZincOx has an EAFD supply agreement with Envirosafe Services of Ohio Inc.(ESOI). ESOI is a specialist hazardous waste disposal company with a ten yeartrack record in the sourcing, handling and transport of EAFD. ESOI will sourceEAFD and transport it to the new facility. ZincOx has an option to purchase a 7 hectare plot of land in northern Ohio. Theland is zoned for industrial use and the infrastructure, such as access to railand road transport, electricity, gas and water is excellent. At a capacity of 200,000 tpa of EAFD containing an average of 24.4% zinc, theplant should produce 70,000 tpa of crude zinc concentrate containing 68% zinc.In addition the plant should produce 56,000 tonnes per year of pig iron and48,000 tonnes per year of slag. The pig iron will be sold to the steel mills and the slag will be suitable foruse by the local construction industry. ZincOx expects to submit an application for the 'Operating and ConstructionPermit' to the Ohio Environmental Protection Agency (OEPA) shortly, withapproval expected by the end during the fourth quarter of this year. Earlydiscussions with the OEPA have been very positive. Engineering is now underway to create a standard basic design for both the Ohioand Aliaga projects. Detailed engineering will commence at the beginning of thethird quarter of 2007, with construction beginning during the fourth quarter. The capital cost of the ORP will be about US$107 million. Using a zinc price ofUS$1,900 per tonne for 5 years and US$1,500 thereafter and using a discount rateof 10%, the project has a post tax net present value of US$60 million and aninternal rate of return of 20%. The project should support conventional projectfinance having a debt equity ratio of 2:1. Aliaga zinc recycling project - Turkey-------------------------------------- There are over 200,000 tonnes of EAFD produced annually in Turkey and this islikely to rise to over 300,000 tpa over the next two years. The EAFD is producedin three regions; around Istanbul, near Iskenderun and at the Aliaga HeavyIndustrial Zone about 60 km north of Izmir, in western Turkey. EAFD is currentlydumped in un-engineered sites, a practice that is becoming unacceptable underTurkish legislation. ZincOx plans to treat 200,000 tpa of EAFD at a new rotaryhearth furnace operation, the Aliaga Recycling Project (ARP), that should be onstream in the second half of 2008. The company has purchased a 4.2 hectare plot of land in the Aliaga HeavyIndustrial Zone which is well serviced by all the necessary infrastructure andutilities and lies within 4 km of five steel mills which together produce over100,000 tpa of EAFD. At a capacity of 200,000 tpa of EAFD containing an average of about 24.2% zinc,the plant should produce 91,000 tpa of crude zinc concentrate containing 53%zinc. In addition the plant should produce 46,000 tpa of pig iron and 39,000 tpaof slag. The pig iron will be sold to the steel mills and the slag will be suitable foruse by the local construction industry. ZincOx submitted Environmental Impact Assessment (EIA) documentation to theMinistry of the Environment, in February 2007. This marked the beginning of aprocess to obtain the necessary environmental approvals for the construction ofthe project. Discussions with the various relevant ministerial departments havebeen very positive. Engineering is now underway to create a standard basic design for both the Ohioand Aliaga projects. Detailed engineering will commence at the beginning of thefourth quarter of 2007. The capital cost of the ARP will be about US$110 million. Using a zinc price ofUS$1,900 per tonne for 5 years and US$1,500 thereafter and using a discount rateof 10%, the project has an updated post tax net present value of US$38 millionand an internal rate of return of 17%. The project should support conventionalproject finance having a debt equity ratio of 2:1. Big River Zinc refinery - United States of America-------------------------------------------------- The Big River Zinc refinery is the second largest electrolytic zinc refinery inthe United States. It occupies a site covering 37 acres on the east side of theMississippi River, in Sauget, Illinois about 4 km from the centre of the city ofSt Louis, Missouri. Historically, the refinery treated zinc sulphide concentrate largely producedfrom local mines and had a capacity of 100,000 tpa of zinc metal. Several localzinc mines closed during the time of low zinc prices between 2002 and 2004, andthe operation became increasingly reliant on zinc concentrates from theexpensive "spot" market. Following exhaustive technical, financial and environmental due diligence,ZincOx acquired the operation in June 2006 and BRZ will be used as a centralNorth American recycling centre. Initially it will be fed by material from thecompany's EAFD treatment operations in Aliaga and Ohio. In order to treat the impure zinc concentrate generated from the rotary hearthfurnaces, some of the process stages and materials of construction of otherparts of the BRZ plant will need to be changed. The biggest change will be thereplacement of conventional zinc dust purification by solvent extraction. ZincOx has submitted an application for the 'Operating and Construction Permit'to the Illinois Environmental Protection Agency with approval expected duringthe fourth quarter this year. Discussions with the Agency have been verypositive. Process design and engineering is at an advanced stage, with constructionscheduled to commence in July this year. Work on site to demolish unwantedbuildings and remove redundant plant has already commenced. BRZ is expected to produce about 90,000 tonnes of zinc metal and 25,000 tonnesof lead concentrate per annum. The modifications and refurbishment of the plantare expected to cost about US$90 million. Development is scheduled to begin inthe middle of 2007 with first production in the middle of 2008. Using a zincprice of US$1,900 per tonne for 5 years and US$1,500 thereafter and using adiscount rate of 10%, the project has an updated post tax net present value ofUS$142 million and an internal rate of return of 37%. The project should supportconventional project finance having a debt equity ratio of 2:1. Mining====== Jabali Zinc Deposit - Yemen---------------------------- The Jabali zinc oxide deposit is located 110 km north east of Sana'a, thecapital of Yemen. At a 4.4% zinc cut off grade, and calculated in accordancewith the JORC code, the deposit contains a Measured and Indicated Resource of10.8 million tonnes at 8.7% zinc, 1.2% lead and 68 grams per tonne of silver,with an additional Inferred Resource of 1.8 million tonnes at 9.4% zinc, 1.2%lead and 71 grams per tonne silver. It is open for exploration potential on twosides. The rights over the deposit are held by Jabal Salab Company (Yemen) Limited,owned 52% by ZincOx and 48% by Ansan Wikfs Hadramaut Ltd, a company controlledby Yemeni businessmen. It is planned to develop the deposit at the rate of 800,000 tonnes of ore peryear for the production of 70,000 tonnes per year of high quality zinc oxide. A Feasibility Study for the development of the project was completed in 2005. Ithas been updated over the last year and new design, engineering and costestimates have been completed by SNC Lavalin Europe, MDM Engineering and ZincOx.An audit of the updated study has been carried out by Saint Barbara ConsultingServices in London, on behalf of Exotix Limited, who have been mandated by theproject company to assist in the provision of finance for the project. Theupdated study concluded that the total funding requirement to finance thecapital cost of plant and equipment, including contingencies and all financingcosts needed to construct the mine and associated facilities, and workingcapital sufficient to finance operations until such time as positive cash flowis forecast to be generated in the first quarter of 2009, is currently estimatedto be $186 million. The arrangement of financing for development is at an advanced stage. Itincludes a U$120 million bond with a coupon which is made up of both a fixedinterest rate and zinc price related elements. The term of the bond is six yearswith a three year grace period on principal repayments. The balance of the funds, and interest earned during construction, will befunded by ZincOx and Ansan in line with their interests, 52% and 48%respectively. Financing is subject to the approval of the Jabali Exploitation Contract by theYemeni parliament. This Contract, which sets out all the terms and conditionsunder which the deposit is to be mined, was approved by the Cabinet in October2006. Parliamentary approval is expected shortly, after which it will beratified by the President and incorporated in law. Progress with Parliamentaryapproval has been slow as the Contract is the first of its kind in Yemen. In parallel to arranging finance, detailed engineering has commenced and ordershave been placed on certain long lead time items, such as Caterpillar miningequipment. Assuming financing is completed in June, construction on site willcommence immediately thereafter, with plant commissioning scheduled for the lastquarter of 2008. Mining of the waste material overlying the ore body isscheduled to commence in November of this year. Shaimerden Zinc Deposit - Kazakhstan------------------------------------ ZincOx sold its interest in the Shaimerden zinc oxide deposit in 2003 toKazzinc, a large local zinc producer owned by Glencore. While the sale includeda cash amount of U$7.5 million that was paid in 2003, it also included adeferred consideration linked to the zinc price, which is paid annually. The deferred consideration is payable on the first 200,000 tonnes of zinccontained in ore that are mined from the deposit. The payments are paid at therate of U$0.2375 per tonne for every dollar that the LME zinc price is aboveU$800 per tonne. The deferred payment is based on the amount of zinc in oremined and, regardless of whether the deposit is being mined or not. In order toprevent Kazzinc from delaying development there is a deemed start date formining (18th September 2006) and in order to avoid mining at an insignificantrate, a deemed minimum rate of production of 40,000 tonnes per annum ofcontained zinc. There is also a maximum mining rate of 60,000 tonnes per year ofcontained zinc which ensured that the deferred consideration payments would bespread over a number of years so that accelerated mining during a year with alow average zinc price would have less impact on the amount of the deferredpayments. The Shaimerden mine commenced production on 17th September 2006 and by the endof the year the mine had to make a payment based on production of 11,616 tonnesof contained zinc. The first deferred consideration payment amounted to U$9.04million and was paid to ZincOx in January 2007. During the first quarter of 2007, Kazzinc mined almost 30,000 tonnes ofcontained zinc, indicating that this year the deemed maximum of 60,000 tonnes ofzinc should be applicable for the deferred consideration. If the zinc price wereto continue to average $3,548 during the course of the year, an amount of U$39million would be paid to ZincOx in January 2008. Kazzinc's mining schedule envisages the first 200,000 tonnes of zinc in ore, onwhich our deferred consideration is due, being mined before the end of 2007. Thepayments, however, will be spread over the next four years due to the deemedmaximum rate of mining as described above. ZincOx Resources plc Consolidated Profit and Loss Account For the year ended 31st December 2006 Restated 2006 2005 £'000 £'000 Turnover 169 -Cost of Sales (525) - -------- --------Gross (Loss) (356) - Operating Expenses (5,169) (1,028) ------- -------Operating (Loss) (5,525) (1,028)Share of losses of associate (2) (8)Profit/(Loss) on disposal of fixed assets 8,384 (31)Net interest 745 226 -------- --------Profit on ordinary activities before Tax 3,602 (841) Taxation (13) (6) -------- -------Profit / (Loss) on ordinary activities after Tax 3,589 (847)Equity minority interest 47 - -------- -------Profit / (Loss) for the year taken to reserves 3,636 (847) ________ ________Earnings / (Loss) per share - Basic 8.61p (2.99p)Earnings / (Loss) per share - Diluted 8.36p (2.99p) ------- ---------All operations are continuing ZincOx Resources plc Consolidated Balance Sheet as at 31st December 2006 Restated 2006 2005 £'000 £'000FIXED ASSETSIntangible Assets 10,575 6,136Tangible Assets 8,777 510Investments 2 226 ------ ------- 19,354 6,872 ------ -------CURRENT ASSETSDebtors due within one year 9,823 171Debtors due after one year 235 197 Raw Materials Stock 1,020 -Cash at Bank and in Hand 23,176 3,935 ------ ------ 34,254 4,303 Creditors - amounts falling due within one year (3,715) (438) ------- ------ NET CURRENT ASSETS 30,539 3,865Creditors - amounts falling due after one year (1,698) - ------- -----NET ASSETS 48,195 10,737 ------- ------CAPITAL AND RESERVESCalled up Share Capital 12,105 7,244Share Premium 37,245 8,555Other Reserves (1,109) (1,002)Profit and Loss Account 1 (4,060) ------- -------EQUITY SHAREHOLDERS' FUNDS 48,242 10,737Minority Interest (47) - ------- -------NET SHAREHOLDERS' FUNDS 48,195 10,737 ------- ------- ZincOx Resources plc Consolidated Cash Flow Statement For the year ended 31st December 2006 2006 2005 £'000 £'000 NET CASH OUTFLOW FROM OPERATING ACTIVITIES (6,439) (824) ------- ------RETURNS ON INVESTMENTS AND SERVICING ON FINANCENet Interest Received 745 226 ------- ------Net Cash Inflow from returns on investments andservicing of finance 745 226 ------- ------ CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPurchase of Intangible Fixed Assets (5,391) (2,333)Sale of Investments 218 162Purchase of Tangible Fixed Assets (2,108) (523) ------- -------Net cash outflow from Capital Expenditure and financialinvestment (7,281) (2,694) ------- -------ACQUISITIONSCash at bank acquired with subsidiary 23Purchase of subsidiary undertaking (1,358) - ------- -------Net cash outflow from acquisitions (1,335) - ------- -------MANAGEMENT OF LIQUID RESOURCES (Purchase) of Short Term Deposits (18,957) (1,313) -------- -------Net Cash (Outflow) from management of liquid resources (18,957) (1,313) -------- -------FINANCING Issue of Shares 34,813 4,987Expenses paid in connection with share issue (1,262) (284) ------- ------Net cash inflow from financing 33,551 4,703 ------- ------INCREASE IN CASH 284 98 ------- ------ ZincOx Resources plc Restated 2006 2005 £'000 £'000Statement of Total Recognised Gains and LossesProfit / (Loss) for the period taken to reserves 3,636 (847)Currency translation differences (107) 2 ------ ------ 3,529 (845) ===== =======Reconciliation of Movements in Consolidated Shareholders' Funds Restated 2006 2005 £'000 £'000 Profit / (Loss) for the Period 3,636 (847)Minority Interest (47) -Other Recognised Gains and Losses (107) 2Share Based Payments 425 53New Share Capital and Related Share Premium 33,551 4,703 ------- ------Net Movement in Shareholders' Funds 37,458 3,911Opening Shareholders' Funds 10,737 6,826 ------- -----Closing Shareholders' Funds 48,195 10,737 ======= =======Notes: 1. Preparation of non-statutory accounts The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The balance sheet at 31st December 2006 and the profit and loss account, cashflow statement, statement of total recognised gains and losses, reconciliationof movement in shareholders' funds and associated notes for the year then endedhave been extracted from the Group's 2006 statutory financial statements uponwhich the auditors' opinion is unqualified. 2. Profit / (Loss) per Share The calculation of the earnings / (loss) per share is based on the profit /(loss) attributable to ordinary shareholders of £3,636,000 (2005 £(847,000))divided by the weighted average number of shares in issue during the year of42,230,332 (2005 - 28,313,000). The calculation of the diluted earnings / (loss) per share is based on theprofit / (loss) attributable to ordinary shareholders of £3,636,000 (2005 £(847,000)) divided by the weighted average number of shares in issue during theyear of 43,504,806 (2005: There is no dilutive effect of share options). 3. Net Cash Flow From Operating Activities 2006 restated £'000 2005 £'000Operating loss (5,525) (1,028)Depreciation 433 25Deferred exploration costs written off 952 155Losses / (Gains) on foreign exchange transactions (107) 2(Decrease)/Increase in Creditors (2,400) 138Decrease/(Increase) in Debtors (446) (169)(Increase) in Stock 229 -Share based payments 425 53 ------- ------Net cash outflow from operating activities (6,439) (824) ======= ====== restated 2006 2005 £'000 £'000Reconciliation of net cash flow to movement in funds Increase in cash in the period 284 98Cash inflow from increase in liquid resources 18,957 1,313 ------ -----Change in net funds resulting from cash flow 19,241 1,411 ------ -----Movement in net funds in the period 19,241 1,411Opening net funds 3,935 2,524 ------ -----Closing net funds 23,176 3,935 ====== ===== Analysis of change in net funds At Cashflow Purchase of At 31 1 January Short Term December 2006 Deposits 2006 £'000 £'000 £'000 £'000 Cash in hand and at bank 364 284 - 648Short term deposits 3,571 - 18,957 22,528 ----- ---- ------ ------ 3,935 284 18,957 23,176 ===== ==== ====== ====== 4. Preliminary statement Copies of the Annual Report will be sent to shareholders shortly and will beavailable from the company at Knightway House, Park Street, Bagshot, Surrey GU195AQ and Numis Securities Limited. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Zincox Resources Plc