19th Jun 2006 14:11
ZincOx Resources PLC19 June 2006 ZincOx Resources plc Preliminary Results - Year Ended 31 December 2005 ZincOx Resources plc, a world leader in the design of processes to treatunconventional zinc bearing material, today announced 12 month results for theyear ended 31 December 2005. ZincOx's objective is to become a major producer of zinc oxide, with operatingcosts among the lowest in the world. Commenting on the results, Andrew Woollett, Chairman, said: "With the recentacquisition of Big River Zinc and the plans for our other advanced projects wenow have a clear timetable for our development into a major zinc recyclingcompany and a leading producer of zinc oxide." Operational Highlights • Acquisition of Big River Zinc Corp (USA) completed since the year end • Jabali deposit (Yemen) - positive feasibility study completed • Aliaga Recycling Project (Turkey) - positive feasibility study completed For more information please contact Andrew Woollett Laurence ReadZincOx Resources Plc Conduit PRTel: + 44 (0)1276 450 100 Tel: + 44 (0)20 7429 [email protected] [email protected] www.zincox.com ZincOx Resources plc Preliminary Results for the year ended 31 December 2005 Chairman's Statement The year 2005 was a milestone year in which we have demonstrated the value oftwo major projects, Jabali and Aliaga. More recently we have acquired the secondlargest zinc smelter in the USA, with the intention of converting it into amajor new central zinc recycling plant for North America. These three projectsreflect the dual mining and recycling nature of our strategy, using the twodifferent technologies that form the cornerstones of our growth in the mediumterm. At the beginning of 2005, with three major feasibility studies underway, wedecided to top up our treasury by undertaking a small private placement. Thisgave us the opportunity to bring in some new institutional investors in advanceof raising development capital for our projects. We placed 4,678,764 new sharesat a price of £1 per share, representing a 112% premium on the previous placingundertaken 18 months previously. The Jabali feasibility study was completed in March 2005. The study, which wascarried out by MDM Ferroman, estimated the total capital cost to be US$75million (+/- 10%) and a post tax net present value (10% discount rate) of £31.2million at a zinc price of $1,000 per tonne. In order to update the capital andoperating cost estimates in line with the general increase in costs throughoutthe industry and the process modifications adopted in the Aliaga plant design, acost review is underway and its completion is expected within the next threemonths. While several foreign owned and managed operations in the oil sector have beenestablished in Yemen for a number of years, there have been no ExploitationPermits awarded for large scale mining. Negotiations regarding the ExploitationAgreement were, understandably, quite protracted. In October 2005, the Ministryof Oil and Minerals approved the Jabali Exploitation Agreement and this has nowpassed through various Government authorities and is currently awaiting cabinetand parliamentary ratification which we expect within the next few months. Inthe meantime, we have progressed our discussions with various providers ofnon-recourse debt finance, and we hope to have this in place before the end of2006. Considerable progress has been made at our most advanced recycling project atAliaga in Turkey (ARP). In October 2005 SNC Lavalin, based in Brussels,completed the design and basic engineering and capital and operating costestimates for the project. In October, Investec Bank was mandated to arrangeproject finance for the development. In order to be able to fast track the development of the project, we decided toraise some equity so that long lead time items that were on the critical pathfor project completion could be purchased. In January 2006 we placed 8,787,333million new shares at £1.50 per share to raise £13.2 million, which representeda 50% premium to the price at which shares had been placed at the start of 2005. The purchase of land for the ARP was completed in February 2006. The site isperfectly suited to the construction of the processing plant and an adjacentlandfill. The entire operation has been the subject of a comprehensiveEnvironmental Impact Assessment involving a number of public meetings and reviewby various government departments. In early June 2006 the feasibility study was completed. The study covers theinitial phase of development, in which the plant will produce 20,000 tonnes perannum of industrial grade zinc oxide (16,000 tonnes of zinc contained)commencing in the fourth quarter of 2007. Over the past year, capital and operating costs of the ARP have been affected bya broad and substantial rise in costs that have affected the mining industryaround the world. Furthermore, in order to benefit from the economies of scaleafforded by a larger project, we decided to increase the sizing for severalelements of the initial plant. This will enable a rapid and relatively lessexpensive expansion from 20,000 tonnes of zinc oxide per annum to 30,000 tonnesper annum. The capital cost of the 20,000 tonnes plant is now estimated to beUS$51 million. Investec has reviewed the revised costs and has indicated that itwill increase the amount of debt that it will be prepared to lend to theproject. However, some additional equity will also be required. The preliminary estimate of the additional cost to expand the plant by 50% to30,000 tonnes per annum, is expected to be a further US$12 million. Followingthe commissioning of the plant, we plan to expand the operation to produce30,000 tonnes per annum of zinc oxide, and this should be operational before theend of 2008. Zinc oxide has several industrial applications for which there are numerousproduct specifications. One of the attractions of selling zinc oxide rather thanzinc metal is its value. Generally speaking the price of zinc oxide is based onthe London Metal Exchange value of the zinc contained plus a premium. It is,therefore, more valuable than zinc metal. As the zinc price may fall in themedium term to levels closer to the long term inflation adjusted average price(US$1,480 / tonne) the reduction in price will to some extent be offset by ourpenetration of markets for products having a higher premium. While zinc has traditionally only been sold forward over 27 months, this has nowchanged dramatically and it is currently possible to forward sell zinc overseven years and at prices that would have been unthinkable even a year ago. Thisgives us the possibility of ensuring a strong early cash flow from the project. Using a zinc price of US$1,800 for the first four years of production, fallingto US$1,300 per tonne thereafter, the project has a net present value of £22million and an internal rate of return of 21%. For the expanded operation thenet present value increases to £41 million and the internal rate of return to26%. Most mineral resource projects are based on finite reserves that a have alimited life, consequently projects are traditionally valued on the basis of thecash flow discounted over the life of the project. In the case of Aliaga,however, the raw material is EAFD that is being constantly renewed. There is nofinite resource or fixed life for the project. Bearing this in mind, the limitedlife discounted cash flow basis for its valuation may not be appropriate and anearnings based valuation may better reflect the project's worth. The averageannual earnings generated in the first three years of full production for the20,000 tonnes per annum and 30,000 tonnes per annum capacities would be £5.5million and £8 million respectively, although I should point out that if theseearnings were to be repatriated to UK, further tax may be payable. While there are certain advantages to producing zinc oxide rather than zincmetal, metal production may be preferable under certain circumstances. One suchcircumstance would be acquisition of an existing smelter at a fraction of thecost of its replacement value. The idea of purchasing an existing zinc smeltercheaply and converting it to treat EAFD has been in our mind for some years. TheBig River Zinc Smelter (BRZ), in Illinois, precisely fitted our target profilefor this concept and when its closure was announced at the end of 2005, we movedquickly to secure the purchase ahead of other parties. Following a comprehensive due diligence exercise we negotiated the acquisitionof BRZ for a total consideration of £8.1 million, in June 2006. The acquisitionpresented a unique opportunity to establish us rapidly and cost effectively inthe USA. BRZ's location adjacent to St Louis on the Mississippi river makes itideally suited as a central North American recycling facility. The conversion ofBRZ will, therefore, replace the Mid-West Recycling Project previously plannedto lead ZincOx's recycling strategy in North America. The acquisition and conversion of BRZ has several advantages, including:substantial capital savings, an experienced management team, existing markets,value added products, and the speed of permitting. Furthermore when the zincmarket returns to a more balanced position zinc concentrates should become moreattractively priced and the operation of BRZ's conventional zinc recoverycircuit in parallel with the new EAFD circuit may present attractive expansionpotential. Initially the modified plant will be designed to produce about 30,000 tonnes ofzinc metal per annum and we plan to effect the redevelopment as rapidly aspossible. A cost estimate and feasibility study suitable for project finance isexpected to be completed in the third quarter of this year, with the intentionthat production would commence before the end of 2007. When we sold the Shaimerden zinc deposit in Kazakhstan to Kazzinc in 2003, partof the consideration was a deferred payment related the zinc price at the timeof mining. The mining of the first ore, which lies under about 50 metres ofoverburden, was scheduled for mid 2006. However, in view of the high cost ofdewatering the ore compared to the overburden, Kazzinc decided to remove ahigher proportion of overburden before commencing mining and little ore will bemined this year. There is, however, a deemed start to mining in October 2006. Ifthe zinc price were to average US$2,500 per tonne during the final quarter of2006 the deferred payment would amount to about US$4.0 million and would be paidin January 2007. Mining is expected to be at full production during 2007 andthis would result in 60,000 tonnes of deemed production, which at a zinc priceof US$2,500 per tonne would make the deferred payment for 2007 worth US$24.0million. China and India's high growth continued throughout the period and demand forzinc has remained strong as reflected in the persistent reduction in LMEwarehouse stocks. The price of zinc strengthened through 2005 and then began torise strongly through 2006, hitting an all time high of US$4,000 / tonne in May.Needless to say some of this price increase is due to the activities ofinvestment funds rather than consumers, but the underlying fundamentals forsupply and demand for zinc remain excellent and I believe that barring asignificant slow down in Asian growth, zinc will perform well in the short term. While I was delighted to be taking on the role of Chairman at such an excitingtime in the company's development, we will miss Noel Masson's comprehensiveknowledge of the zinc industry and the metallurgy of the metal. I am, however,delighted to say that Noel has been kind enough to make himself available as aconsultant to the company and we have on several occasions availed ourselves ofhis assistance. I would like to thank Noel on behalf of my colleagues and allour shareholders for his leadership of the company over the past seven years andwe look forward to his continuing advice for many years to come. Our growth as a company needs to be matched with an appropriate strengthening ofour board, management team and senior technical and administrative personnel. Atthe end of last year we decided that we needed a full time finance director. Iwould like to thank Peter Fry for so ably managing the finances of the companysince we listed on AIM and we are delighted that he has agreed to stay on theboard in a non-executive capacity. Simon Hall, our new finance director, comesto us from BT Consumer Mobile. His knowledge of setting up the finances of jointventures in China and India has prepared him well for our expandinginternational portfolio of projects. Peter Beck retired from the Board towardsthe end of last year to sail across the Pacific and I am delighted that he hasre-joined the Board. The arrangement of project finance is a critical part ofour business, and our Board has been greatly strengthened by Gilles Masson, whois a director of a leading European financial institution, where he isresponsible for project and export finance for mining. Finally, Jon Collins hasretired from Cominco and resigned from our Board. I would like to thank him forhis support over the past three years. The Jabali deposit has attractive economics due in part to the size of themineral resource and our ability to take the maximum advantage of economies ofscale in both capital and operating costs. Our two recycling projects aresmaller operations which could benefit from greater throughputs and both havethe potential for rapid expansion particularly at Big River. The greatsignificance of these projects, however, is that they demonstrate thepracticality and economics of two different EAFD treatment routes that betweenthem will have implications for EAFD treatment globally. Our strategy is todevelop these two operations as rapidly as possible so that they may form theblueprint for similar operations, perhaps of greater size, in other parts of theworld. Over the past year we have spent a good deal of time investigating wherethe next generation of projects may be located and we hope to develop theseideas more publicly over the next year. The year 2005 was an exciting and challenging period and there are no signs thatthe current year is any less stimulating. I would like to thank all our staffand my fellow directors for their very hard work over the past year andshareholders may rest assured that their efforts will be no less intense overthe coming months. A C Woollett 19 June 2006Chairman Review of Operations====================-PRIMARY DEPOSITS----------------Jabali zinc deposit - Yemen--------------------------- The Jabali zinc deposit is located 110 km north east of Sana'a, the capital ofYemen. It contains a geological resource, calculated in accordance with the JORCcode, of 12.6 million tonnes of oxide ore with a zinc grade of 8.9%. By completing a feasibility study for the development of the deposit in March2005, ZincOx earned a 60% interest in a joint venture that owns a MineralExploration Licence over the deposit. The other parties to the joint venture areAnglo American plc (20%) and Ansan Wikfs (Hadramaut) Limited (20%). ZincOx isthe manager of the joint venture. At the end of October 2005, the joint venture company, Jabal Salab Company(Yemen) Limited, signed an Exploitation Contract with the Ministry of Oil andMinerals in Yemen for the development of the deposit. The Contract is subject toapproval by the Yemeni parliament, after which it will be incorporated in law.This is expected to be concluded in the next three months. The Contract sets out all the terms and conditions for the mining, processingand marketing of the zinc from Jabali over a 20 year term. It includes a sixyear tax holiday, exoneration from import duty taxes and a 1.5% net smelterreturn royalty. It also includes the repayment after four years from start up ofproduction of $5 million of past costs incurred on exploration of the deposit bythe local Geological Survey between 1982 and 1995, prior to ZincOx'sinvolvement. The Government of Yemen is keen to attract foreign investment into its miningsector and diversify its economy away from its dependence on oil exports.Consequently the terms of the Exploitation Contract are attractive but will alsoensure long term benefits to the country through employment and the positiveimpact of the mine's development on local economic activity. The feasibility study economics are currently being updated to take into accountboth the worldwide increase in mining costs which have occurred over the lasttwo years, as well as the increase in zinc prices. The deposit will be developedat the rate of 800,000 tonnes of ore per annum. Processing will involve theapplication of a hydrometallurgical process developed and piloted by ZincOx overthe last few years. The final product, 70,000 tonnes per year, will be a highquality zinc oxide which can be sold directly to the ceramics, rubber, andchemical industries. Because most zinc oxide around the world is produced fromzinc metal, and therefore sells at a premium to the international zinc price,the Jabali operation will have a very strong cost advantage over itscompetitors. Capital costs for the project development were originally estimated at $75million. Discussions with international banks that provide traditionalnon-recourse project finance, as well as banks from the Middle East, arecurrently underway. It is anticipated that construction will start in 2007, withproduction scheduled for 2008. Shaimerden zinc deposit - Kazakhstan------------------------------------ The Shaimerden zinc oxide deposit is located in northern Kazakhstan, 300 kmsouth west of the city of Kostanai. While ZincOx sold its interest in thedeposit for $7.5 million in December 2003 to Kazzinc, a large local zincproducer owned by Glencore, there is a deferred receipt due to ZincOx which ispayable annually based on production over the years 2006 to 2010 and is based onthe average annual zinc price in each of those years. At an average zinc price of $2,500 per tonne over the 4-5 year period, thedeferred receipt is worth $79.9 million to ZincOx. Details of the payment of the deferred receipt are set out below: The deferred receipt is receivable on the first 200,000 tonnes of ore mined fromthe deposit, at a rate of $0.235 per tonne for every dollar that the LME zincprice is above $800 per tonne. Provided the zinc price is above $800 per tonneand certain other conditions are met (see below) the deferred receipt is payableregardless of whether Kazzinc commences mining or not. The payment schedule isbased on Kazzinc guaranteeing minimum and maximum rates of 40,000 and 60,000tonnes per year of zinc contained in ore, respectively, commencing at the startup of production or October 2006, whichever is the earlier. Under certain conditions, the deferred receipt may be suspended by Kazzinc.Firstly, if the in-situ resource at a 5% zinc cut-off grade is more than 25%below that reported to Kazzinc of 4.55 million tonnes at 21.14% zinc; andsecondly, if there are certain events, largely of a force majeure nature, thatprevent Kazzinc mining the deposit. Kazzinc has made good progress over the last two years, accessing the ore bodyby the removal to date of 45 metres of overburden, amounting to 6.5 millioncubic metres of waste material. Kazzinc expects to make a deferred payment toZincOx based on 10,000 tonnes of ore mined during the last quarter of 2006(payable January 2007), increasing to 60,000 tonnes of ore mined in 2007(payable January 2008). Secondary zinc resources - EAFD================================Background---------- ZincOx has identified two zinc bearing waste materials that present significanttonnages at a grade in excess of the average zinc mine: electric arc furnacedust (EAFD) and lead smelter slag waste. EAFD is a product of recycling steel in electric arc furnaces, from which theworld derives about 35% of its steel and which generates over 3,000,000 tonnesof EAFD per annum. Due to the galvanised nature of much of the scrap, the EAFDtypically contains between 15% and 25% zinc. As a result of elements harmful tothe environment, EAFD is considered to be a hazardous waste. Generally steelmills pay to have the EAFD removed and disposed of safely. ZincOx has developed two hydrometallurgical processes for the recovery of zincfrom the EAFD: L-SX-EW as employed at the Skorpion zinc mine in Namibia, and theLTC process, which is to be used at the Jabali zinc mine in Yemen. The L-SX-EWprocess produces zinc metal and the LTC process produces zinc oxide. The LTCprocess will be employed at the Aliaga recycling project in Turkey, and theL-SX-EW process will be used in the modified flow sheet at the Big River Zincplant in the USA. A number of zinc bearing slag waste dumps have been identified around the world,each with resources in excess of two million tonnes and a grade between 8% and14% zinc. We have been working for some years to recover the zinc by fumingusing a new type of equipment, Polykiln. A Polykiln pilot plant has been runningfor over a year but to date we have been unable to produce consistent resultsthat would support the operating cost savings that we are seeking. Research workis continuing. Aliaga zinc recycling project - Turkey--------------------------------------- ZincOx owns a 100% interest in the Aliaga zinc recycling project, which is to belocated in the Aliaga heavy industrial zone, 60 km north of Izmir in westernTurkey. A 25 hectare plot of land on the edge of the Aliaga industrial zone,suitable for the plant and residue disposal, has already been purchased byZincOx. The project is designed to treat 100,000 tonnes per year of EAFD,containing an average of 22% zinc. The EAFD is generated from five steel scrap recycling plants located in Aliaga.The ZincOx plant will process the dust and recover 20,000 tonnes per year ofhigh quality zinc oxide, containing 80% zinc, suitable for direct sale to theceramics and animal feed industries. Small modifications to the plant willenable production of a product suitable for the rubber industry, which generallypays a higher price. Provided permitting is completed without undue delay the plant is scheduled tobe operational in the fourth quarter of 2007. An expansion to 30,000 tonnes ofzinc oxide, and modifications required to produce rubber quality zinc oxide,will be financed out of cash flow almost immediately thereafter. The design and basic engineering of the plant, as well as capital and operatingcost estimates, have been carried out by SNC Lavalin (Europe) and a feasibilitystudy has been completed. The study includes a detailed environmental impactassessment (EIA) which has been carried our by SRK Consulting, from its officein Ankara, Turkey. On approval of the EIA by the Ministry of Environment and Forestry in Ankara,expected shortly, all construction permitting can proceed. This includesapproval of an extension to the Aliaga heavy industrial zone by the GreaterIzmir Municipality. The capital cost of the plant is estimated by SNC Lavalin at $51 million.Investec Bank has been mandated to provide non-recourse debt finance forapproximately two thirds of the total cost. Big River Zinc project, United States------------------------------------ The Big River Zinc plant (BRZ) is the second largest electrolytic zinc refineryin the USA. It occupies a site covering 37 acres on the east side of theMississippi River, in Sauget, Illinois, about 4 kilometres from the centre ofthe city of St Louis, Missouri. Sauget is a community of 250 residents thathosts a number of older heavy industrial plants and more recently a medium sizedlight industrial park. Zinc production at BRZ commenced in 1929 with the treatment of zinc calcinegenerated by Monsanto's adjacent roasting facility. Subsequently the site hasgone through various redevelopments and it now has the capacity to produce100,000 tonnes of zinc per annum using a simple roast, single leach,electrowinning flow sheet, to recover zinc metal of 99.995% quality, suitablefor almost all industrial needs. BRZ was traditionally fed from mines in Missouri, Illinois and Tennessee, whichin the first half of the 20th century constituted one of the largest lead andzinc mining areas in the world. The mines in this region have generally produced concentrates very low in iron.Such concentrates are amenable to treatment in simple flow sheets, as describedbelow. Elsewhere in the world, however, concentrates usually have higher ironcontent, and a significant proportion of the zinc ends up in ferrite, formedduring roasting. In order to maximise the recovery of zinc, electrolyticrefineries have a hot acid leach circuit that can break down ferrites andrecover the associated zinc. No such circuit exists at BRZ and the plant needsto have low iron concentrates if overall zinc recovery is not to be compromised. BRZ was purchased by Korea Zinc in 1997 for US$50 million, since when over $80million has been spent on upgrading the plant. This has included a completerefurbishment of the roasters and partial automation of the electrowinningfacilities. Over the past ten years, the marked decline of mining in the region has resultedin the closure of all primary zinc mines and zinc concentrate supply has beenlimited to the by-products of lead mining. In conventional zinc smelters, ironis a major contributor to residue tonnage, with increasing environmentalpressure for smelters to reduce their output of residue. Low iron concentrateshave become increasingly in demand. During 2006 increasing demand for zinc has made zinc concentrates increasinglydifficult to source and spot prices have become increasingly expensive whencompared to long term contracts. The situation is exacerbated for BRZ by itsrequirement for low iron concentrates. Korea Zinc has been unable to source zinc concentrates of the required qualityat an attractive price and was consequently unable to run the plant at fullcapacity. Given the high proportion of fixed costs in smelting activities, itwas not possible to operate profitably and, in December 2005, Korea Zincannounced the close of the plant and sought a buyer for BRZ. ZincOx plans to redevelop the plant to treat EAFD. The future operation willrequire the construction of a new leach and purification plant. These operationswill be essentially the same as those successfully developed by the ZincOxmanagement team, while at Reunion Mining PLC, for the Skorpion electrolyticrefinery, in Namibia. Zinc metal will be recovered using BRZ's existingelectrolytic cellhouse, melting and casting facilities. Initially the new plant will be designed to produce about 30,000 tonnes of zincper annum. The EAFD will be mixed with dilute sulphuric acid, and the zinc willbe dissolved in a series of agitated tanks. The pulp will then be partiallyneutralised so as to precipitate iron and other elements that may interfere withsolvent extraction. The partially neutralised pulp is then thickened andfiltered so as to separate zinc bearing clarified solution and the leachedresidue. The residue is physically and chemically stabilised before beingtransported to one of a number of commercial landfill sites. The zinc richsolution is then fed into BRZ's existing cellhouse for zinc metal recovery aheadof melting and casting into a range of ingot shapes and sizes. If suitable zinc sulphide concentrates can be sourced, production could beexpanded significantly by re-starting the existing conventional roast-leachoperation in parallel with the new EAFD based plant. Certain key members of BRZ staff have been retained by ZincOx. This team willform the nucleus of our staff for the new operation and their experience of theprocess and local conditions will, we believe, ensure a smooth and rapid startup for the new operation. BRZ is located in the centre of the USA with excellent road and rail links andclose to the Mississippi river. As such it is close to zinc customers and easilyaccessible to potential suppliers of EAFD, the steel mills. EAFD will bedelivered under a supply agreement with Envirosafe Services of Ohio Inc (ESOI),our strategic partners. ESOI is a specialist hazardous waste disposal companywith a ten year track record in the sourcing, transport and handling of EAFD.Under the agreement with ESOI, EAFD will be delivered to BRZ, the residuestabilised, removed from site and disposed of, at no cost to BRZ. ZincOx intends to fast track the redevelopment of BRZ and SNC Lavalin, Montreal,has been appointed as the main engineering contractor for the basic engineeringand feasibility study. SNC has already commenced work and an environmental sitesurvey has recently been completed. SNC was the joint lead engineeringcontractor for the design and construction of the Skorpion project referred toabove. A cost estimate and the feasibility study suitable for providers ofnon-recourse debt finance is expected to be completed in the third quarter ofthis year, with production commencing in the fourth quarter of 2007. BRZ represents one of the most important zinc plants in North America and it isideally suited to be modified as a recycling centre. However, the recentrefurbishment of the plant carried out by Korea Zinc will allow conventionalzinc production to resume when the concentrate market returns to normality. Thiswill give the advantages of economies of scale by sharing capital and fixedoperating costs in a way that would not be possible at a new green field site. ZincOx Resources plc Consolidated Profit and Loss Account for the year ended 31st December 2005 31st December 2005 31st December 2004 £ £ Turnover - -Cost of Sales - - ---------------- ----------------Gross Profit - - Exploration Costs (155,194) (463,187)Other Administrative Expenses (820,357) (1,148,053) ----------- ---------------Total Administrative Expenses andOperating Loss (975,551) (1,611,240) Share of Losses of Associate (7,775) (2,623)Profit on disposal of subsidiary &other assets - 84,053 -------------- ---------------(Loss) on Ordinary Activities beforeInterest (983,326) (1,529,810) Net Interest receivable and similarincome 225,965 92,416Loss on Sale of investments (34,822) - Amounts written off investments 4,058 (136,943) ------------- --------------(Loss) on Ordinary Activities beforeTax (788,125) (1,574,337) Taxation (6,196) (3,844) --------------- ----------------(Loss) for the year taken toReserves (794,321) (1,578,181) ------------ --------------(Loss) per Ordinary Share - Basic £ (2.74)p £ (6.68)p ============= ================ All operations are continuing. ZincOx Resources plc Consolidated Balance Sheet as at 31st December 2005 31st December 2005 31st December 2004 £ £ FIXED ASSETS Intangible Assets 6,136,310 3,957,997Tangible Assets 509,956 12,031Investments 225,737 426,605 --------- --------- 6,872,003 4,396,633 ----------- ----------- CURRENT ASSETS Debtors due within one year 171,341 83,057Debtors due after one year 196,779 116,098 Cash at bank and in hand 3,935,045 2,524,398 ----------- ----------- 4,303,165 2,723,553Creditors - amounts falling duewithin one year (438,481) (294,262) ----------- -----------NET CURRENT ASSETS 3,864,684 2,429,291 ----------- -----------NET ASSETS 10,736,687 6,825,924 ------------ -----------CAPITAL AND RESERVES Called up Share Capital 7,243,522 5,906,943Share Premium 8,555,221 5,188,848Other Reserves (1,001,974) (1,004,106)Profit and Loss Account (4,060,082) (3,265,761) ------------- -------------EQUITY SHAREHOLDERS' FUNDS 10,736,687 6,825,924---------------------------- ============ =========== ZincOx Resources plc Consolidated Cash Flow Statement for the year ended 31st December 2005 31st December 31st December 2005 2004 £ £ NET CASH OUTFLOW FROM OPERATINGACTIVITIES (824,329) (1,306,805) RETURNS ON INVESTMENTS AND SERVICING ONFINANCEInterest received 225,965 92,416 CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPurchase of Intangible Fixed Assets (2,333,507) (1,454,429)Sale of investments 162,329 845,330Purchase of Tangible Fixed Assets (522,763) (5,579)Investment in Associate - (220) ----------- ------------Net cash outflow from CapitalExpenditure (2,693,941) (614,898) ------------- -----------DISPOSALSSale proceeds on disposal ofsubsidiary - 4,249,075 ------------- ----------- MANAGEMENT OF LIQUID RESOURCES (Purchase) of Short Term Deposits (1,312,923) (2,258,063) FINANCING Issue of Shares for cash 4,986,665 -Expenses paid in connection withshare issue (283,713) - ----------- ---------Net cash inflow from financing 4,702,952 - ----------- ---------INCREASE IN CASH 97,724 161,725 =========== ========= ZincOx Resources plc 31st December 31st December 2005 2004 £ £ Statement of Total Recognised Gains And Losses (Loss) for the period taken to reserves (794,321) (1,578,181)Currency translation differences 2,132 476 ------------- ---------------Total Recognised Gains and (Losses) forthe Year (792,189) (1,577,705) ----------- ------------- Reconciliation of Movements in Consolidated Shareholders' Funds 31st December 2005 31st December 2004 £ £ (Loss) for the Period (794,321) (1,578,181)Other Recognised Gains and Losses 2,132 476New Share Capital and Related SharePremium 4,702,952 1,807,721 ----------- -----------Net Movement in Shareholders' Funds 3,910,763 (1,577,705) Opening Shareholders' Funds 6,825,924 8,403,629 ----------- -----------Closing Shareholders' Funds 10,736,687 6,825,924 ============ =========== 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 2005 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 2005 statutory financial statements uponwhich the auditors' opinion is unqualified. 2. (Loss) per Share The calculation of the loss per share is based on the loss attributable toordinary shareholders of £794,321 (2004: £1,578,181) divided by the weightedaverage number of shares in issue during the year of 28,313,843 (2004:23,627,772). There is no dilutive effect of share options. 3. Net Cash Flow From Operating Activities --------------------------------------- 31st December 2005 31st December 2004 £ £ Operating (Loss) (955,551) (1,611,240)Depreciation 24,838 10,013Deferred Exploration costswritten-off 155,194 463,187Gains/(Losses) on foreign exchangetranslations 2,132 476(Increase)/Decrease in Debtors (168,965) (106,085)(Decrease)/Increase in Creditors 138,023 (63,156) --------- ----------Net Cash outflow from operatingactivities (824,329) (1,306,805) =========== ============= Reconciliation of Net Cash Flow to Movement in Funds---------------------------------------------------- 31st December 2005 31st December 2004 £ £ Increase/(Decrease) in cash in theyear 97,724 161,725Deconsolidation of RIF Zinc - (562)Cash inflow/(outflow) from reductionin liquid resources 1,312,923 2,258,063 ----------- ----------- Movement in net funds in the period 1,410,647 2,419,226Opening net Funds 2,524,398 105,172 ----------- ---------Closing net Funds 3,935,045 2,524,398 =========== =========== Analysis of changes in net Funds-------------------------------- At 1st January Cashflow Purchase of short term At 31st December 2005 deposits 2005 £ £ £ £Cash inhand & 266,335 97,724 - 364,059at bankShort termdeposits 2,258,063 - 1,312,923 3,570,986 ----------- ------- ----------- ----------- 2,524,398 97,724 1,312,923 3,935,045 =========== ======== =========== =========== 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 at Cheapside House, London, EC2V 6LH. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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