Preliminary Results

ZincOx Resources plc

("ZincOx", "the Company" or "the Group")

Preliminary Announcement of Results

Year ended 31 December 2010

ZincOx Resources plc (AIM Ticker: ZOX) which specialises in the low cost recovery of high grade zinc compounds from unconventional sources, today announces its results for the year ended 31 December 2010.

Highlights

·; Korean Recycling Project ("KRP") on track to become the Company's first recycling project to be put into production

·; KRP awarded Foreign Investment Zone status

·; 50 year lease agreed over KRP site

·; Completed the acquisition of the Waste Oxide Recycling Facility (WORF) processing equipment, from a subsidiary of Severstal North America for a consideration of US$4 million

·; Ohio Recycling Project development suspended and Big River Zinc impaired

·; Impairment of the Jabali project as a result of the political situation in Yemen

·; Approximately £38 million in cash at the end of 2010

Post Period Highlights

·; An off-take agreement and the formal documentation for loans to be provided by Korea Zinc Co. Ltd for the development of the first phase of the Company's Korean Recycling Plant

·; Rainwater drainage and sewerage, fencing, lighting and construction offices have been installed

·; Foundations for non-process buildings are finished and foundations for process building are underway and all deep piling work has been completed

·; The refurbishment of equipment in the USA, including the rotary hearth furnace, is well underway and the first batch is ready for shipment and should be available on site for the start of installation in July

·; Over 50% of KRP development cost now committed without recourse to contingency

·; Board restructured reflecting focus on recycling with four directors stepping down

Commenting today Andrew Woollett, Executive Chairman, said:

"We are delighted that the development of the Korean Recycling Project is financed, well underway and remains on budget and schedule to achieve first production ten months from now."

For more information please go to www.zincox.com or contact:

ZincOx Resources plc Tavistock Communications

Andrew Woollett/Simon Hall Charlie Geller / Paul Youens

+44 (0) 1276 450100 +44 (0) 20 7920 3150

[email protected] [email protected]

Ambrian Partners Limited

Andrew Craig (Nominated Adviser)

Jen BoorerTel: +44 (0) 20 7634 4700

ZincOx Resources plc

Annual Report 2010

Chairman's Statement

The development of the Korean Recycling Plant, which is the Company's first recycling project, started in the final quarter of 2010. The project remains on budget and on schedule and is expected to be in production in less than a year. The Company has weathered the most serious financial crisis the world has seen for over 50 years and has managed to finance this US$110 million project without seeking further funding support from its shareholders. We believe that the technology being installed in the Korean Recycling Project represents a major step forward in the treatment of steel industry wastes and we remain convinced that there is a huge opportunity for ZincOx to roll out this technology across the world, thereby presenting substantial growth potential for the company.

The uncertainty of the political and security situation in Yemen has led the Board to carefully consider the way in which our investment in the Jabali project should be represented in our financial statements. Over the past year we have made strenuous efforts to refinance the development of the Jabali mine and whilst technically the project has attracted a good deal of positive interest, the challenging nature of the country has thwarted our efforts. In spite of that we have had serious interest from parties that had carried out detailed due diligence. However, the continuing deterioration of the situation in Yemen, including the necessity to evacuate all our expatriate staff, has suspended this interest. While we remain confident of the economic merits of the project, in the absence of any immediate certainty in its financing, the Board has determined that, at this point in time, none of our investment could be recovered with absolute certainty. We have therefore impaired the Company's share of investment in the Jabali Project (£52 million). When the situation in Yemen stabilises, it is our hope that interest from third parties may be revived and a refinancing can take place. If this were to occur, given the intrinsic value in the project, it could then lead to a reversal of the impairment charge in Jabali. The impairment of the investment in Jabali and those previously announced for the USA have led to a total loss attributable to shareholders of £69.3 million for the year (2009 £2.6 million) While this loss is considerable, the stock market has for some time given us no credit for the Jabali project and the interest of our major shareholders continues to be focused exclusively on our recycling business, which is progressing with great speed and success.

Our management team is now almost exclusively concentrated on recycling and the development and commissioning of our first plant in Korea represents a watershed for this business.

RECYCLING

Several years ago we recognized the recycling opportunity presented by the zinc rich waste dust generated by the recycling of scrap in electric arc furnaces. The increasingly galvanized nature of steel and therefore scrap and the volatile nature of zinc leads to the concentration of zinc in the dusts that are generated by the furnaces. This material is very much richer in zinc than the average zinc ore-body. Our highly skilled and experienced technical team have been investigating the best way to recover the zinc from this material for the past nine years, and about four years ago selected the Rotary Hearth Furnace as having the potential to provide a major leap forward in the recycling of this dust, since it would produce a high grade zinc concentrate, an iron intermediate product and no waste.

A global review of the steel recycling industry led us to focus on four countries, the USA, Thailand, Korea and Turkey. The realization of a recycling plant requires the successful organization of a number of factors that may not be in the control of the developer. Bearing in mind these uncertainties we decided to pursue recycling projects in each of these countries with the intention of immediately pursuing the first project that could satisfy all the development prerequisites. Thereafter the other projects would be pursued once the first project had successfully demonstrated the technology.

In 2008 the most promising project was in Ohio and an equity fundraising was undertaken to develop the project. However, the subsequent commodity price crash, credit crunch and dramatic reduction in steel output in the USA, and therefore associated waste generation, derailed its development plans.

Korean Recycling Plant

In April 2009, we signed supply contracts with every steel recycling company in Korea. These contracts together amounted to about 400,000 tonnes of waste per annum, and it is the largest ever contract of waste of this nature. While Korea immediately became the largest and most exciting project, the extreme shortage of suitable industrial land in Korea and its very high cost, significantly reduced the likelihood of Korea becoming the first to have fulfilled the various development prerequisites.

In mid 2009 we identified a suitable plant site at the Cheonbuk industrial complex, near Gyeongju in South Korea and at the end of that year obtained the necessary environmental permit. In order to encourage the development of projects deemed to be especially desirable for the country, foreign investors may have projects granted Foreign Investment Zone status. This provides a number of tax benefits including a waiver of corporate tax for five years. Recognising that the high cost of land in Korea is a significant disincentive for foreign investors, some years ago the Korean government introduced a scheme by which the site for a project having Foreign Investment Zone status may be purchased by government and leased back to the foreign investor, thereby significantly reducing the initial capital development cost.

The Korean Recycling Plant was granted Foreign Investment Zone Status in May 2010 and the government purchased the site in July 2010. This purchase marked a significant watershed in the development of the Korean Recycling Plant. Having had sight of the draft lease prepared by government, we were confident that our first recycling plant should be in Korea and we took the decision to make it the Company's priority development project. The final piece of the jigsaw required for project development was the arrangement of project finance and we began to discuss possible financing scenarios with commercial banks and potential offtakers of our zinc product. These discussions were sufficiently encouraging that we started to undertake the basic engineering for the plant in August 2010. This allowed a costing exercise to be undertaken in September 2010 that estimated the development cost of Phase 1 to be US$110 million, which was the basis of a cashflow model from which the economic indicators were derived.

In January 2010, we completed the purchase of a rotary hearth furnace and other equipment from Severstal's Rouge Steelworks, in Detroit. It was acquired for a fraction of the original development cost and has probably reduced the capital development cost by US$20 million. During 2010, our engineering team have been working closely with the company that originally supplied and built the plant, Global Research and Engineering LLC ("Global"). By the end of December 2010 the equipment had been removed from Rouge and transported to the original fabricators for refurbishment.

Global is an American company whose directors have been involved in the design and supply of rotary hearth furnaces for over 40 years. During 2010, Global worked with us to design modifications to the furnace in order to optimise the recovery of zinc. We have forged a close technical relationship with Global and this culminated in the signature of a worldwide exclusivity agreement, by which Global has agreed not to supply rotary hearth furnaces to other companies primarily involved in the recovery of zinc provided ZincOx continues to order furnaces from Global on a regular basis. This is an important agreement for the Company as it provides us with a high level of protection for the intellectual property being developed for our operations.

The equipment we purchased has the capacity to treat approximately 50% of the EAFD contracted in Korea. Since a furnace capable of treating 400,000 tpa of EAFD would be larger than any furnace of this type ever built and in order to reduce the initial capital cost of the plant, it has been decided to execute the Korean development in two equal phases. The demonstration of the operation in the first phase and the cashflows from it will make lending for the development of the second phase much more attractive for banks, as it will be seen as the expansion of an existing operation rather than the development of a new greenfield site.

Following the costing exercise, in October 2010, Xmetech were awarded the EPCM contract for the development of the plant. Xmetech are an independent Korean engineering company that were formerly the engineering division of Korea Zinc. They are, therefore, uniquely qualified to manage the construction of the development.

In December 2010 we entered into a 50 year lease over the project site and on 13 December we announced the signing of a Letter of Intent with Korea Zinc, by which they would provide development loans amounting to US$50 million. The letter of intent was converted into loan agreements on the 26 April 2011. Since these loans, together with cash held on deposit by the Company, is sufficient to develop Phase 1 of the Korean Recycling Plant, the Company is pressing ahead with the development with all haste and we look forward to commissioning the plant at the beginning of next year.

Using a price of zinc of US$2,250 per tonne and pig iron of US$450 per tonne, over a 20 year life, post tax and financing, at the first phase of the Korean plant alone it is estimated to have a net present value of about US$100 million and an internal rate of return of over 30%. The Korean Recycling Plant will produce a zinc concentrate of high quality suitable for sale to a conventional smelter for the production of zinc metal. It is similar in many ways to that of a conventional mineral concentrate from a mine and at full production (92,000 tonnes of zinc contained) its capacity is equivalent to that from a medium/large scale deposit. However, it is likely that the project will continue to treat steel industry waste for the foreseeable future, unlike a mine which always has a finite life. Therefore the life of the Korean Recycling Plant will not be limited and so the operation will be more like a conventional manufacturing operation, and we believe earnings are therefore a better basis for valuing the business. Based on the assumptions above, the EBITDA of the first phase of the Korean recycling project are expected to be about US$29 million per annum.

Further recycling projects

The development of recycling operations elsewhere in the world will be undertaken after the successful commissioning of Phase 1 of the Korean Recycling Plant. In the latter part of this year, work will commence on the basic engineering and costing of these plants, so that feasibility studies can be completed as Phase 1 is being commissioned. These studies will provide the basis of financing either through project finance or industrial partnerships.

MINING

Jabali (52% interest)

Towards the end of 2009, the bondholders that had provided about 50% of the funds required to develop the project served a default notice. At the beginning of 2010, together with our partners, we were able to recover 100% of the project free from encumbrances. During the course of the year we have explored numerous refinancing options including bank debt and industry partnerships. The project itself is robust technically, with strong economics at the current zinc and silver prices. Indeed the increasingly strong silver price has refocused our attention on the silver content of the ore, which today represents a very important potential by-product credit.

Although Yemen is a challenging place to operate we have demonstrated our ability to develop the project physically on the ground and indeed work continued through the year, albeit at a low level pending the refinancing. This work was carried out at the expense of our partners who were catching up with the expenditure we had made independently during the latter part of 2009.

The uncertainty of the political and security situation which existed through the year and at the year end have meant that the refinancing of the project was not achieved in the year. The continuing deterioration of the political situation has led the Board to determine that the recoverable amount at this time is nil, necessitating a full impairment of the ZincOx share of the project.

Shaimerden

In January 2010 we received US$ 12.2 million from Kazzinc in respect of the deferred payments due from our sale of the Shaimerden deposit and in January 2011 we received the final deferred payment amounting to US$ 3.3 million. The sale of the Shaimerden deposit has provided the company with revenue for the past five years while we have been developing our recycling business.

CORPORATE

In March 2010, two shareholders attempted to change the direction of the Company by calling for the removal of a number of directors. These shareholders wanted to use conventional technology to treat steel waste, but this approach offered nothing new and was not considered to be attractive by either the Board or the majority of shareholders, and the resolutions were overwhelmingly defeated. This exercise was very distracting for management and unsettling for our business partners.

Our business is now almost entirely focused on recycling and our mining activites no longer form part of our core business. We have recently added to our website to help explain the role of ZincOx in the global steel recycling business and we are excited by the prospect of rolling out this technology around the world. However, the Company's resources, both financial and human, are currently devoted to getting the first phase of Korea up and running within budget and on schedule.

Board Reorganisation

I am delighted to welcome Gautam Dalal to the Board following the departure of Jeff Hewitt in January 2011. The structure of our Board was established at a time when we were actively involved in multiple mining and recycling projects. As a result of our more focused strategy on recycling it is now appropriate for us to reduce the size of the Board. Peter Wynter Bee, Simon Mulholland, Jerry Saville and Gilles Masson have offered to step down from the Board. I am, however, delighted to confirm that Peter and Simon will be available to the Group as required. I am also pleased to confirm that Rod Beddows has accepted the role of Deputy Chairman. I would like to thank Jeff, Jerry and Gilles for all their hard work for the company over the last three years and wish them well for the future.

I should also like to thank all our staff for their very hard work over the past year and also the Board and shareholders for their strong support for the management team's vision to create a "state of the art" zinc recycling company.

Andrew Woollett

Chairman

9 May 2011

REVIEW OF OPERATIONS

RECYCLING

Korea, Korean Recycling Plant

Significant progress was made with the Korean Recycling Plant ("KRP") project during the course of 2010 and it is now the Company's flagship recycling project with first production scheduled for the first quarter of 2012.

At the end of 2009 ZincOx applied for Foreign Investment Zone Status for the site and this was granted in May 2010. This grant enabled the government to press ahead with the purchase of the plant site which was completed in July 2010 and a lease was entered into on 7 December 2010. A letter of intent covering an offtake for 100% of the zinc product and the provision of US$50 million in loans was signed with Korea Zinc on 13 December 2010. This was ratified by fully binding documentation on 28 April 2011. The balance of the development cost will be provided from the Company's existing cash resources.

The KRP has been designed to treat 400,000 tpa electric arc furnace dust ("EAFD"). The EAFD is being supplied by all Korea's steel recycling companies under 10 year supply agreements. A number of sampling campaigns over the past 5 years have demonstrated that the EAFD contains about 23% zinc and 28% iron.

The KRP will be developed in two equal phases, so that each phase will produce about 46,000 tpa zinc in a high quality zinc oxide concentrate and about 100,000 tpa of low quality hot briquetted iron.

Following the decision to prioritise the development of KRP in July 2010, a contract to cost the development of the plant was awarded to Xmetech, a Korean company that was formerly the engineering division of Korea Zinc. Xmetech are uniquely qualified to assist in the development since they are familiar with projects of this size and in this region. They are also familiar with the sorts of equipment and processes being employed and with working with overseas companies. This exercise indicated a capital cost for Phase 1 of US$110 million and a schedule for development of 15 months. An internal provisional estimate of the cost of developing Phase 2 is US$146 million assuming there is a washing plant to upgrade the zinc product.

The development of Phase 1 will use the rotary hearth furnace purchased a little over a year ago from Severstal North America. The furnace and other equipment was dismantled during November and December 2010 and is currently being refurbished and modified at the workshops of the original equipment suppliers. The refurbished plant will then be sent out to Korea and shipments will start in May 2011.

The KRP site covers 9.2 hectares in the Cheonbuk Industrial Complex, which lies about 10 kilometers south west of Pohang, Korea's largest steel making city. Following the signature of a 50 year lease over the site at the end of November 2010, a site soil survey was conducted that confirmed foundation requirements and the layout of the plant was confirmed. The plant layout has been designed for both phases of development and also provides for the installation of a melting plant for the iron product should this be required.

The site construction offices and temporary power for development were installed during January and February 2011 and this was immediately followed by the installation of site rainwater drainage, lighting and utility supplies. The rainwater will be collected in a storage pond and used for plant cooling, although the evaporation of this water will require additional make up water from municipal supplies. The laying of foundation for various elements of the plant is well underway and the construction of buildings has also commenced with first equipment installation expected in July 2011.

Commissioning of the feed preparation of the plant is scheduled for November 2011 and hot commissioning of the RHF in February 2012. Preparations for the production operation are well underway. Contracts for the supply of utilities, reagents and coal are under negotiation and senior production staff have already been recruited.

The development of Phase 2 is in the initial planning phase, and basic engineering has recently commenced. A feasibility study for Phase 2 is scheduled for completion before the end of 2011, so that bank finance for the expansion may be arranged in the first half of 2012. Assuming a smooth commissioning of Phase 1, the construction of Phase 2 is planned to commence in June 2012 so that full production of the KRP can commence in mid 2013.

Thailand , South East Asia Recycling Project

The recycling plant in Thailand will treat EAFD generated throughout the region - the South East Asian Recycling Plant ("SEARP"). We have recently re-engaged with various steel companies for the provision of their EAFD under long term supply agreements.

We have obtained strong support from government and the local steel industry for our plans in Thailand. We are negotiating to purchase a site in a newly developed industrial area where an environmental impact assessment will commence shortly. This will be followed by basic engineering, costing and the production of a full feasibility study that should enable us to raise the necessary project finance towards the middle of 2012. As an alternative to ZincOx providing all the equity component for the development, discussions have commenced with potential offtakers and other parties who would be interested to provide finance or act as partners in the project.

USA, Ohio Recycling Project

Before it was decided to make the KRP the Company's first development project, considerable work had been undertaken on the Ohio Recycling Plant ("ORP"). The Company owns a six hectare site near Delta Ohio, which is well serviced by road and rail and is capable of offering competitive EAFD transport costs from numerous mills in the northern USA and southern Canada. The environmental permit for the site lapsed in August 2010 but subsequent discussions with the Environmental Protection Agency indicated that it should be possible to obtain the necessary permits again without undue delay.

One of the delays in developing this project was the time it was taking to negotiate long term EAFD supply agreements with the steel mills. Any difficulties in ORP taking contracted EAFD could cause the mills severe problems and considerable financial liability. ZincOx believes that the superior environmental characteristics and production of a valuable iron product will enable the Company to enter into suitable long term EAFD supply contracts once the KRP has demonstrated the technology and reliability of the equipment.

The development of the ORP could be restarted as early as the middle of 2012.

Turkey, Aliaga Recycling Project

The Company has been active for many years in Turkey, where it has two sites amounting to 6.4 hectares in the Aliaga Heavy Industrial Zone, near Izmir. Turkey is the largest importer of scrap in the world and its growing steel recycling industry produces about 400,000 tonnes EAFD per annum. Aliaga is a major centre of steel production and about 160,000 tonnes of EAFD is produced in the area annually.

The site at Aliaga is planned to treat 200,000 tpa of EAFD and a systematic sampling programme of the EAFD in Turkey undertaken some years ago indicated an average grade of about 24% zinc.

USA, Big River Zinc Smelter

ZincOx owns the Big River Zinc electro-refinery near St Louis, USA. This 100,000 tonnes per annum zinc facility is currently on care and maintenance but acts as a base for ZincOx operations in North America. The Big River site is permitted for the disposal of halide solutions of the type generated by the upgrading of zinc oxide concentrates derived from EAFD. As such it could be used as the washing site for upgrading zinc oxide concentrate derived from the Ohio Recycling Plant or other rotary hearth based plants in North America. In the meantime it carries out upgrading of zinc oxide concentrates from Waelz kiln operations on behalf of third parties as well as providing sulphuric acid storage and distribution. An impairment review of assets held in the USA was performed at the year end. See Financial Review below.

MINING

Yemen, Jabali Zinc and Silver Mine

The exploitation and development rights to the Jabali zinc deposit are owned by Jabal Salab Company (Yemen) Limited ("Jabal Salab"), in which ZincOx holds a 52% interest. The balance of 48% is held by Ansan Wikfs Investments Limited ("Ansan").

The Jabali deposit contains a mineable reserve of 8.7 million tonnes of ore at an average grade of 9.2% zinc and 68 grams per tonne of silver. The development of the mine and processing facilites commenced in 2008 but during 2010 the activity at the site has been much reduced pending the refinancing of the project. The deposit has been designed to be mined at the rate of 800,000 tonnes per annum by open pit with a strip ratio of 2:1. Ore will be crushed and calcined prior to milling and leaching using ammonia based solutions. Following purification, zinc carbonate will be precipitated and calcined for the production of 70,000 tonnes per annum of very high quality zinc oxide (>79% zinc) containing approximately 56,000 tonnes of zinc. The zinc oxide will be bagged and shipped in part to customers in the paint and ceramics industries. The balance will be shipped to Jabali's Rubber Grade Plant ("RGP") in Belgium where it will be further milled to produce a high quality product required by the rubber industry. It is planned to extend the plant to treat the silver bearing zinc plant residue once the zinc oxide operation has reached operational capacity. This extension will use conventional processing technology to recover silver in doré bars and is expected to produce 1.4 million ounces of silver per annum.

The project was originally financed by US$96 million of shareholder equity together with US$120 million bond (the "Jabali Bond"). After the Jabali Bond defaulted in October 2009 ZincOx and Ansan successfully negotiated to purchase back unencumbered ownership of the project for US$10 million. ZincOx and Ansan have been pursuing a number of avenues to re-finance the Jabali project since then.

While Yemen has a higher risk profile than many other countries, the directors of ZincOx and Ansan had been confident throughout most of 2010 that, with strong support from the Government of the Republic of Yemen, the project would be successfully re-financed. However, the perceived risk (to potential investors) of operating in Yemen increased significantly during the last quarter of 2010, due in particular to the increase in political tensions between opposing groups in specific parts of Yemen. By the end of 2010, the directors of ZincOx considered it likely that if the situation continued to deteriorate the project would not be re-financed in the near term.

The region has seen dramatic change during the first quarter of 2011, starting with the "Jasmine Revolution" in Tunisia and progressing on to Egypt, Bahrain, Libya, Syria and Yemen. While the circumstances of each are different, the impact of the whole is to decrease the appetite of investment into the region.

The situation in Yemen itself has changed significantly during March 2011, culminating in the Government of the Republic of Yemen declaring a State of Emergency. Of greater concern to Jabal Salab is that the increase in tensions between opposing groups has exposed the operation to an unacceptable level of risk. As a result we have had to withdraw all overseas staff from Yemen and all non-security staff and all contractors from the project site.

ZincOx and Ansan are nevertheless continuing to pursue the re-financing of the project and will re-assess the cost and schedule to complete the project once the political environment allows a clear path forward.

FINANCIAL REVIEW

Results

The Group loss after tax attributable to shareholders of the parent company was £69.3m compared to a loss of £2.6m last year. The Group had an underlying operating loss of £2.6m (2009: loss of £11.3m) in the year. The administrative expenses deducted in arriving at the underlying operating loss in the year amount to £3.6m (2009: £11.5m) and include an unrealised foreign exchange gain of £1.2m (2009: loss of £5.9m) as a result of the significant US dollar balances being held as cash at the year end and due to the significant movement in the US dollar exchange rate through 2010. Administrative expenses, excluding foreign exchange, have reduced to £4.8m in the year from £5.5m in 2009.

The key items within other gains and losses include deferred consideration in respect of Shaimerden of £2.5m (2009: £9.7m) and £3m (2009: £nil) from the disposal of scrap metal from Big River Zinc. The Shaimerden gain has been grossed up for withholding tax deducted at source.

The most significant impact on the financial statements and the associated result for the year arises due to the impairment review which is necessary under IFRS and which looks at the carrying value of an asset against an estimate of the value in use or the fair value less cost to sell of the cash-generating units to which the asset has been allocated. This impairment assessment has been carried out at the year end looking at the mining and recycling sides of the business separately.

On the recycling side the impairment review has taken into account the strategic change to the business that the first rotary hearth furnace would now be in Korea rather than in the USA. Previously any project spend that was incurred in the USA, which included the spend incurred at Big River Zinc ("BRZ"), were tested against the value in use of the rotary hearth furnace in the USA, which was estimated using discounted cash flow techniques. However, with the change to the strategy and the location of the first recycling plant now moving to Korea, the Board has decided to look at the value of the Group's USA assets on a more stand alone basis, by estimating the recoverable amounts and to impair the value accordingly. As explained at the half year this has resulted in impairment amounts of £12.9m (US$20.0m) against property, plant and equipment and £6.6m (US$10.2m) against intangible assets. BRZ continues to upgrade material for other producers and to provide acid storage and distribution in the USA at the year end.

On the mining side of the business, the impairment review considered the investment the Group has made in the Jabali project in Yemen, and the recovery of this investment at the year end. Following the previous lenders withdrawal in October 2009 the project became unencumbered in January 2010. There has been a considerable effort in finding finance through to the end of the year against the backdrop of a worsening political situation, which has deteriorated further since the year end. The political situation in Yemen and in the wider Middle East at the date of the accounts give the Board cause to think it may be some time before the situation in Yemen will enable a refinancing of the project to occur on favourable terms. The value in use is estimated by discounting future cash flows, and this process gives rise to estimates being required in respect of the cash flows themselves and the discount factors applied and clearly a significant aspect of any discounted cash flow is the timing and delay that the political situation will have on refinance. The carrying value, prior to an impairment provision, of the Groups share of Jabali at the year end is US$76m. The various scenarios using discounted cash flows continue to demonstrate a value to the Group even with an inflated discount rate to reflect risk. However, due to the deteriorating political situation through the final quarter of 2010 up to the year end, the Board has continued to monitor the situation and most recently has taken the steps to evacuate the expat staff from the country. The Board, in reviewing the year end carrying value of the Jabali investment against the value in use, has had to seriously consider whether the current political situation in Yemen will leave the Company unable to complete a refinancing in a timely way. It has therefore determined that the recoverable amount, at this time, is nil and considers it sensible to make a full impairment in the Group's financial statements at 31 December 2010. The resulting impairment has a significant impact on the results for the year as the impairment affects several areas of the Group balance sheet. While the directors believe a full impairment to be the correct approach for the time being, there has been significant interest in the project during the last year and there remains the possibility that once the current uncertainties within the country are resolved, the refinancing of the project will be possible and any intrinsic value in the project may be realised.

Liquidity and funding

The cash funds of the Group at 31 December 2010 were £38.4m compared with £46.9m at the end of 2009. These cash funds were held in a range of currencies at the year end but principally US dollars (US$56.3m) and sterling currencies (£1.3m).

The directors have reviewed the budgets for 2011 and the projections for 2012 developed during the planning cycle. The directors have considered a range of different scenarios, with their associated risks and uncertainties, and the impact of these on the Group's cash balances. Further, the directors have assessed the future funding requirements of the Group and compared them with the levels of expected project finance available for the Korean project and, based on this work, the directors are satisfied that the Group has adequate resources for at least the next twelve months from the date of signing these financial statements.

Principal risks and uncertainties

Throughout its operations, ZincOx faces various risks, both internal and external, which could have a material impact on the Group's long-term performance. The principal risks facing the Group in the current economic climate are those relating to the challenges of delivering a project in Korea for the first Rotary Hearth Furnace project, which is mitigated by employing quality contractors in Korea under the supervision of ZincOx's own technical expertise. There is also the risk due to the ongoing political uncertainty in Yemen and the wider Middle East which will continue to influence the speed of any refinancing of the Yemen project which is being mitigated by continuous monitoring of the ongoing situation. The volatility of the zinc price affects the availability of finance as well as the value of projects within the Group. The geopolitical risks of the Yemen project continue to be reflected in the future availability, timing and cost of any refinancing package. Other risks continue to include the risks of competing technologies and the reliance on the expertise of the key Group personnel.

The Group has exposure to various other risks connected with the uncertainties of the political, fiscal and legal systems, including taxation and currency fluctuations in the territories in which the Group operates.

Clearly, these are not the only risks that the Group will face. Some risks are not yet known and some that are not currently deemed material could later turn out to be material. All of these risks could materially affect the Group, its business, results of future operations or financial condition.

FORWARD LOOKING STATEMENTS

The Chairman's Statement, the Review of Operations and the Financial Review all contain discussion of future operations and financial performance by use of various forward-looking words such as "anticipates," "estimates," "expects," "projects," "intends," "plans," "believes" and terms of similar substance. These forward-looking statements are based on management's current expectations and beliefs about future events but as with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances which could cause the Group's actual activities and results to differ materially from those contained in the forward-looking statements.

ZINCOX RESOURCES PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2010

ZINCOX RESOURCES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2010

ZINCOX RESOURCES PLC

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2010

ZINCOX RESOURCES PLC

 CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2010

ZINCOX RESOURCES PLC

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE

YEAR ENDED 31 DECEMBER 2010

The non-controlling interest represents amounts due from Ansan Wikfs relating to the financing provided to Jabal Salab Company (Yemen) Limited of which they own a 48% share. The deficit balance of £4,296,000 at 31 December 2010 is in accordance with the provisions of IAS 27 and consistent with the terms of the shareholder agreement between Ansan Wikfs and ZincOx Resources (Yemen) Limited.

Notes:

1. Preparation of non-statutory accounts

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.

The consolidated balance sheet as at 31 December 2010 and the consolidated income statement, consolidated statement of comprehensive income, consolidated cash flow statement, consolidated statement of changes in shareholders' equity and associated notes for the year then ended have been extracted from the Group's 2010 statutory financial statements upon which the auditors' opinion is unqualified, and does not include any statement under Section 498 (2) or (3) of the Companies Act 2006.

2. Loss per Share

The calculation of the loss per share is based on the loss attributable to ordinary shareholders of £69,323,000 (2009: £2,633,000) divided by the weighted average number of shares in issue during the year of 77,860,620 (2009: 77,700,741).

There is no dilutive effect of the share options in issue during 2010 and 2009.

3. Other Gains and Losses

The deferred consideration on disposal of subsidiary relates to the deferred consideration due to the Group's subsidiary, Zinc Corporation of Kazakhstan, following the sale of its subsidiary, Shaimerden Joint Stock Company on 12 December 2003. The deferred consideration is based on the production during the year representing 9,826 tonnes (2009: 60,000 tonnes) and has been grossed up for withholding tax deducted at source.

The gain on disposal of scrap equipment relates to the sales of anodes and cathodes made in the year from Big River Zinc.

4. Impairment Provisions

The Group performs impairment tests on assets under the course of development by estimating the recoverable amount of the cash-generating project to which it has been allocated. This recoverable amount is estimated by either discounting future cashflows (value in use) or by considering the fair value less costs to sell of the assets. It should be noted that, where discounting is used, the zinc price and the discount rate have the most significant impact on the value in use calculations.

The impairment review for 2010 in relation to the assets held in the USA needed to look at the strategic change the Group has made, whereby its first recycling cash generating unit has moved from USA to Korea. In considering the alternative use value of the USA assets which is made up of land in Ohio and assets at BRZ, an impairment of £20m has been made in accordance with IAS36.

For the impairment review of the Jabali project, considering the uncertainty that existed at the year end surrounding the worsening security situation and the difficulty that this has caused in relation to a refinancing, the Directors have determined that the recoverable amount is nil and have therefore fully impaired the project costs of £94m, the Company's 52% share of this amount being £52m.

The impairment provisions in the year are included in the Group income statement in arriving at operating loss and are summarised in the table below.

5. Post Balance Sheet Events

On 10 January 2011, Jeff Hewitt resigned from the Board as a non-executive director and was replaced by Gautam Dalal.

On 13 January 2011, the Group received the Shaimerden payment of US$3.3m (£2.2m) shown as other debtors.

On 26 April 2011, signed an off-take agreement and two loan agreements with Korea Zinc Co Ltd for the development of the first phase of the Company's Korean Recycling Plant scheduled for completion in the first quarter of 2012. This follows the signing of a Letter of Intent previously announced in December 2010.

On 9 May 2011, following a reorganisation of the Board, Peter Wynter Bee and Simon Mulholland resigned as executive directors with Gilles Masson and Jerry Saville resigning as non-executive directors.

6. Preliminary Statement

Copies of the Annual Report will be sent to shareholders shortly and may be viewed on the Company's website www.zincox.com. The Annual Report will be available from the Company at Knightway House, Park Street, Bagshot, Surrey GU19 5AQ and from Ambrian Partners.