Results for the Year Ended 31 December 2013

03 June 2014

ZincOx Resources plc

("ZincOx" or the "Company")

Results for the Year Ended 31 December 2013

ZincOx Resources plc (AIM:ZOX) the developer of one of the largest electric arc furnace dust recycling facilities in the world, today announces its results for the year ended 31 December 2013.

Highlights

· Production of 24,577 tonnes of zinc in concentrate in 2013

· Consistently high quality zinc concentrate

· International Finance Corporation becomes a major shareholder

· Inner tubes of heat exchangers replaced

· Recovery and availability close to target levels

· May 2014 a record month: 3,406 tonnes of zinc in concentrate, 9% increase on previous best month

Commenting today Andrew Woollett, Executive Chairman said:

"Now that the problems of 2013 have been addressed, the Korean Recycling Plant has accelerated its ramp-up and we are operating at record levels of production. We expect this ramp-up to continue while we fine tune the operating conditions and debottleneck critical pieces of equipment, so that full production can be achieved in the fourth quarter of 2014"

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For further information please go to: www.zincox.com

Chairman's Statement

The development of new breakthrough technology is never easy and 2013 demonstrated this very clearly. However, during the year our flagship development in South Korea produced 24,577 tonnes of zinc contained in an oxide concentrate resulting in revenues for 2013 of US$27.1m. The ramp-up is making great progress and a new record for output was set in May 2014, with the production of 3,406 tonnes of zinc in concentrate, representing a 9% increase from the previous best month.

At the Korean Recycling Plant ("KRP") we have demonstrated that the metallurgical process has worked well but we were beset by a number of operational and mechanical issues which led to stoppages that required production to be suspended for several days on each occasion. As a consequence, in most months, the plant was operating for less than two thirds of the time and so recorded a loss. In order to support the Company, new debt and equity was raised during the course of the year and again in April 2014. In one such funding in November 2013, the International Finance Corporation ("IFC"), the private sector arm of the World Bank Group, became our second largest shareholder. We are delighted to have attracted a shareholder of such high calibre and its investment is a clear endorsement not only of our technology but also of our plan to roll this concept out around the world.

The problems that caused the long stoppages last year have been addressed and we are now looking forward to a more continuous operation over the coming months. At current output levels the operation is generating a positive EBITDA and we expect production to increase steadily to full capacity in the autumn of 2014.

Korean Recycling Plant ("KRP")

2013 started well at KRP with a new output level in January continuing the upward trend seen in 2012. In March 2013, however, we experienced the first major air leakages in the inner tubes of the heat exchangers. The leakages were the result of corrosion due to poor manufacture and a minor design fault which required the full closure of the plant for repair. These holes were patched with metal plates and production resumed. While the repair itself took only about four days, repairs to this part of the plant or to the rotary hearth furnace requires three days of cooling before work can commence and another two days of heating after the repair to bring the furnace up to its operating temperature. Thus even quick repairs involve suspension of production for significant periods which have a dramatic impact on operation and cashflow.

Throughout the course of 2013, because of the further leakage, we had to make several repairs to the heat exchangers, each of which required a major stoppage. In November we decided that repairs on this equipment were too unreliable and that the four inner tubes of the heat exchangers should be completely replaced. These replacements were carried out at the end of the year and in February and March/April 2014.

In April 2013, a major blockage of direct reduced iron ("DRI") in the furnace caused the hearth to jam and took several days to clear. This phenomenon has not, to our knowledge, previously been experienced in any rotary hearth furnace. A repeat of such a blockage has been avoided by carefully monitoring the power being drawn by the motors rotating the hearth and by a radar sensor continuously checking the end wall of the furnace.

In September and December 2013 and in February 2014, there were small failures in some of the refractory lining to the furnace and offtake area. These areas were rebuilt but required long production stoppages that had a severe impact on our cashflow.

Following the replacement of the last heat exchanger's inner tube, production recommenced on 12 April 2014 and we do not anticipate any major stoppages until the planned inspection and maintenance closure in August 2014.

Since 12 April 2014, the plant has settled into a steady ramp-up and we expect this trend to continue over the coming months as the optimisation and debottlenecking continues. The plant should be in full production by November, generating about 141 tonnes of zinc in concentrate per day, so that about 40,000 tonnes of zinc in concentrate should be produced for 2014.

While, as a result of the numerous stoppages, the monthly production at KRP has failed to show a steadily rising trend over the past year, when the production is viewed on a weekly basis, excluding its significant stoppage periods, the underlying progress of the ramp-up is very evident. Provided there are no significant stoppages over the coming months, we believe the plant will continue to increase production.

KRP Weekly Production of Zinc in Concentrate: http://www.rns-pdf.londonstockexchange.com/rns/6513I_-2014-6-2.pdf

Notwithstanding this progress the Company is reporting a loss of US$26.3 million for 2013. The main reasons for the losses were due to the cost of the remediation work, and increased unit operating cost as a result of the reduced throughput at KRP.

The Company is supplied with dust under long term supply agreements with all Korea's main steel mills, thereby guaranteeing sufficient electric arc furnace dust ("EAFD") for many years to come. Under these exclusive EAFD supply agreements at lower throughputs, the Company is required to cover the cost of landfilling EAFD that is in excess to requirements and this led to US$1.8 million in exceptional costs that would not be incurred when at full production.

The iron product generated at KRP is unconventional, having a high proportion of inert slag. During 2013, zinc recovery ran at about 90% of the target level (95%), which although quite acceptable for this stage of the ramp up, led to more volatile elements remaining in the iron product, and in addition reduced metallisation of the iron. Both these factors reduced its quality to levels which made it unattractive to the steel mills, and so it was sent to landfill, further contributing about US$1.7 million to the loss for the year. We have recently run the plant so as to generate an iron product in line with the target quality and over the next few months we will be marketing this to various steel mills in Korea and elsewhere.

Since April 2014, when the problems caused by the heat exchanger corrosion and refractory failures were addressed, our staff at KRP have been able to concentrate on improving throughput, reliability and zinc recovery and already great progress has been made. Everyone on site is focused on getting the plant up and running as quickly as possible but without ever compromising safety.

KRP was conceived as a two phase development and the second phase was to have commenced operations in October 2013. Unfortunately the delay in ramping up the first phase to full production meant that the Company was not in a position to take EAFD from the steel companies for the second phase on the timescale originally envisaged.

Under the EAFD supply agreements for the second phase, if ZincOx was unable to treat the EAFD, it would have been obliged to cover the cost of the EAFD disposal. The phase two contracts with the mills, were terminated in September 2013, and there is now no liability for disposal of the EAFD under these phase two contracts. It is our belief that we can still offer the Korean steel mills the most attractive medium and long-term option for disposal of their EAFD and the Company will re-open discussions with mills once it has demonstrated that the first phase at KRP is working at its full capacity.

Other Activities

The principal efforts of the executives and staff remain focused substantially on getting KRP in to full production, however, other activities are being undertaken.

After two years of operation, we are very confident as to the exceptional quality and consistency of our zinc product. During the year we successfully completed testwork which demonstrated that, unlike zinc concentrates produced from EAFD by other processes, it can be simply and cheaply upgraded to a zinc oxide chemical of industrial purity. This material would enjoy end markets significantly more valuable than its sale to smelters which treat it as an intermediate feed for the production of metal. The production of this chemical will not be possible from KRP in the short or medium term since its output is already contracted to Korea Zinc as part of the development loan financing for the plant. Our plans for projects in other parts of the world can, however, now include this upgrading, thereby adding substantially to potential revenue and profits.

The upgrading process results in the production of a clean brine suitable for marine discharge, so plants will need to be situated at the coast. In Thailand, therefore, a new site has been reserved at a coastal industrial estate and environmental permitting will commence later this year. In Turkey the reorganization and re-zoning of our land was completed in October and environmental permitting, the cost of which will be covered by one of the steel mills, will commence shortly. Our joint venture with the Magnezit group is making good progress evaluating the availability and quality of EAFD throughout Russia.

Safety

The safety of our staff remains at the forefront of our operating philosophy. As a result of the innovative nature of our plant and the risks involved with any high temperature process, we have carried out an intensive programme to promote a strong safety culture.

Outlook

2013 has severely tested our staff and shareholders and I would like to thank them for their support during this difficult time. While there have been numerous challenges that have disrupted cashflow, shareholders should draw considerable comfort from the fact that these challenges have been overcome and the production at KRP continues to increase. We are looking forward to a continuous operation over the coming months so that we can further optimise the plant and realize the full potential of the operation.

Andrew Woollett

Chairman

2 June 2014

STRATEGIC REPORT

The Directors of the Company and its subsidiary undertakings (which together comprise "the Group") present their Strategic Report for the year ended 31 December 2013.

The Strategic Report is a new statutory requirement under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 and is intended to provide fair and balanced information that enables the Directors to be satisfied that they have complied with s172 of the Companies Act 2006 which sets out the Directors' duty to promote the success of the Company.Principal Activities

The principal activity of the Group is the production of high grade zinc concentrate by the recycling of electric arc furnace dust ("EAFD"). The Company acts as a recycling, development and holding company. A detailed review of the business and future developments is included in the Chairman's Statement and the Operational Review section of the Strategic Report.Business Model

EAFD is probably the world's largest inorganic hazardous waste. EAFD is generated by the recycling of steel scrap in electric arc furnaces. When the scrap is melted the volatile constituents are driven off and form fine particles that need to be filtered from the flue gases. Steel is increasingly protected from corrosion by galvanising, a process whereby a thin coating of zinc is applied to the surface of the steel. This coating insulates the steel from reaction with air and so prevents corrosion. Steel scrap is, therefore, increasingly galvanised, and since zinc is a volatile element it constitutes part of the EAFD. The zinc content of the EAFD is generally between 20% and 25%, and it also contains 25%-30% iron, both of which occur largely as oxides. In addition the EAFD contains lead, cadmium and arsenic, all these toxic elements are to some extent soluble in water, which therefore makes EAFD a hazardous waste.

The steel mills need to dispose of the EAFD either in landfill or by processing to recover the zinc. Process plants based on existing technology have never been developed unless a significant disposal fee has been paid by the steel mills.

The new technology used by ZincOx recovers the zinc using a rotary hearth furnace. The zinc forms a unique high quality zinc oxide concentrate, an iron intermediate product that can be further processed into pig iron and a clean slag that can be used by the cement industry. This means that there will be no waste.

It has recently been demonstrated that the exceptional quality of the zinc oxide concentrate should enable it to be upgraded to a zinc oxide chemical suitable for various industrial applications. The upgrading would greatly enhance revenue and profitability when developed with the rotary hearth furnace as an integrated operation.

Following the resolution of a number of teething problems, ZincOx's Korean Recycling Plant ("KRP") is ramping up to full production. Once this has been achieved, ZincOx will roll out the technology around the world and preliminary work in a number of countries is well underway. The development of additional plants should enable ZincOx to realize its ambition of becoming one of the world's largest zinc recycling companies.

Operational Review

Korean Recycling Plant (KRP)

Since the first production in April 2012, there had been a steady increase in production. 2013 started with an output in January of 2,603 tonnes of zinc in concentrate ("ZiC"), representing about 60% of target production.

In February 2013, there was some exceptionally cold weather which revealed a requirement for additional insulation for some water lines and pumps required for cooling. This was easily and quickly installed but caused some delays due to safety and reheating procedures.

In March 2013, there were major air leakages in the heat exchangers caused by corrosion particularly where there had been the faulty manufacturing. These holes were patched using new internal plates and production resumed.

In April 2013, there was a major blockage of DRI in the furnace which caused the hearth to jam. In order to remove the blockage, the furnace had to be cooled and the solid lump of welded iron and slag removed by cutting it into smaller pieces that could be manhandled out of a furnace side door.

During May and June 2013, the previously patched areas of the heat exchangers failed and new holes appeared. Sections of the heat exchangers were replaced by cutting out small areas and fitting new sections. At the end of June 2013, it became clear that even these sections were unreliable and it was decided to replace entirely the upper sections of the most corroded units. Following this work the plant ran almost continuously for the next sixty days, with August 2013 being a record month (2,688t ZiC).

In mid-September 2013, the refractory lining the end wall of the furnace partially failed. This was probably due to the impact of the April blockage pressing against the refractory. The refractory was repaired and the furnace restarted with a consequent increased production, so that October 2013 set a new record (2,963t ZiC).

Towards the end of the year, it became apparent that the heat exchangers had been so badly affected by the corrosion caused by air leakage that the partial replacements and repairs were not going to provide the necessary reliability. It was decided to replace all the inner shells with new metal; recognising that the inner tubes of the heat exchangers have a finite life, the inner tubes are now considered to be a consumable item. Spare heat exchangers can be fabricated so that the replacement of any corroded inner tube could be undertaken offsite, and the new units could then be installed immediately with the minimum of production downtime. Having successfully replaced the most corroded of the heat exchanger inner shells in November 2013, there was a plan to replace the others in April 2014 and August 2014.

In December 2013, there were refractory failures in three areas and most of the month was required to rebuild these sections.

2014 started well with another record month in January (3,131t ZiC). In February, however, there were further refractory failures, and while repairs were being undertaken, the heat exchangers were inspected and found to have deteriorated more rapidly than expected. As the refractory repair was being undertaken, it was decided to bring forward the replacement of another heat exchanger inner shell and to schedule the replacement of the other inner shells as soon as special quality steel ordered in November 2013, had arrived on site. The plant was restarted in early March 2014 but closed later in the month to make these replacements.

Production is expected to continue without any major stoppages until the planned inspection and maintenance closure in Q3 2014.

On a weekly basis, ignoring the periods when production was suspended for repair work, the production has been steadily rising and the underlying progress of the ramp-up is very evident.

The production is a function of four factors: the grade of the feed (zinc percentage), the plant running time (hours per week), the zinc recovery of the process (percentage of zinc recovered into the final product) and the hourly feed rate (tonnes of EAFD per hour when running). The grade of the feed has been slightly higher than expected, the running time of the plant has been at or close to target, and the recovery is at about 90% of the targeted 95% recovery. The feed rate, however, has been lower than expected mainly due to the underperformance of the baghouse. This problem is being largely overcome by enriching the oxygen content of the combustion air and so reducing the air required for combustion.

The iron product generated at KRP is unconventional, having a high proportion of inert slag. This slag is costly to melt and steel mills are wary of using this as a scrap substitute. In recognition of this, it is being offered to mills at a price that fully recognises the cost of melting the contained slag. While the zinc recovery is less than the targeted level, there will be more unfumed elements in the iron product and these will effectively dilute the grade of the iron. Recently the plant has been run at lower capacity and higher recovery so as to generate iron product in line with our target. Over the next few months, we will be marketing this material to various steel mills in Korea and elsewhere.

Technology

The zinc oxide concentrate produced by KRP ("HZO") is of exceptional quality, having very low iron (

Testwork has demonstrated that there are two routes by which HZO can be upgraded to a zinc oxide chemical of industrial quality. One of these routes removes chlorides and other soluble impurities by water washing, and this creates a brine effluent. After suitable treatment this effluent may be safely discharged into the sea.

Preliminary economic evaluation of the processes indicate that the upgrading can be undertaken relatively inexpensively. Since a large proportion of zinc oxide is made by burning zinc metal, the price of zinc oxide exceeds that of zinc metal per tonne of zinc contained. Consequently, upgrading has the potential to double the revenue per tonne of zinc produced. The relatively low cost of upgrading and the significant increase in revenue should make it more profitable than the operation of the rotary hearth furnace alone. A fully integrated rotary hearth furnace and upgrading operation has the potential to have a significantly enhanced rate of return.

Commercial scale testwork of the upgrading using HZO from KRP is scheduled for the latter half of 2014.

New Projects

In Thailand, a new potential plant site has been identified on the south eastern seaboard about 2 km from the coast. Discussions concerning the supply of EAFD from the mills in Thailand and elsewhere are underway and environmental permitting will commence shortly.

In Turkey, the Company owns a 4.5 hectare site in the Aliaga Heavy Industrial Zone which is among the most concentrated areas of scrap recycling in the world. The site lies less than 1.5 km from the coast and within 3 km of five steel recycling companies. About two years ago, ZincOx was asked to consider changing the position of its land slightly to accommodate the rationalisation of small plots in the Zone. The reorganization and re-zoning of the land was completed in October 2013. Outside the Heavy Industrial Zone, there is further land owned by the subsidiary company and this has been subdivided and is being gradually sold off for light industrial usage. Environmental permitting, the cost of which will be covered by one of the steel mills, will commence shortly.

Our joint venture with the Magnezit group is making good progress evaluating the availability and quality of EAFD throughout Russia.

Other

In the USA, the Company's Big River Zinc facility continues to provide services to third parties distributing sulphuric acid and diesel emission fluid and it is planned to use the washing plant for testwork on the upgrading of the HZO produced by KRP.

As reported in last year's annual report, in March 2013, the 52% interest in the Jabali deposit, in Yemen, was sold to our joint venture partners. Rather than burden our partners with a significant upfront payment, the disposal was structured along the lines of that successfully used for the Shaimerden deposit, in Kazakhstan, which consisted of a series of deferred payments to be made once production is underway.

Performance Review

Financial

Group Results

The result for the year attributable to shareholders of the parent company was a loss of US$26.3 million compared to a loss of US$9.4 million last year.

The Group has an underlying operating loss of US$22.3 million compared to an underlying loss of US$17.7 million in 2012. Administrative costs deducted in arriving at the underlying operating loss in the year amount to US$10.2 million (2012: US$10.0 million). In addition, a foreign exchange gain of US$0.7 million (2012: gain of US$3.2 million) has also been included in arriving at the underlying operating loss.

This Group made an EBITDA loss of US$15.3 million for the year to 31 December 2013 (2012: EBITDA loss of US$3.4 million). The result for the Group was affected throughout the year by the various closures at KRP required to remediate the plant. Every time the plant closed it had a twofold negative effect on the financial result in terms of unbudgeted remediation costs and suspension of production, leading to a reduced contribution.

Key Performance Indicators

With its first full year of operations, the Group produced 24,577 tonnes of zinc contained in concentrate (2012: 8,489 tonnes) and as a result has now moved from a development company to a production company. This has

resulted in the continued development of the management information and key performance indicators ("KPI's") required to manage KRP.

*before any foreign exchange impact

The directors monitor any hazards that are reported on operational sites and review any accidents and incidents as part of the ongoing environmental health and safety tracking. During the year, the total number of man hours worked across the Group was two hundred and eight thousand, with one lost time incident. The lost time incident related to an acid burn to the leg of one of our employees at BRZ.

At the Group level, until a steady state production is achieved in Korea, the directors continue to monitor the cash requirements of the business when compared to cash requirements to maintain development progress on the various projects and any financing opportunities which need to be pursued.

Funding

The initial development of KRP was funded through equity from the Group and two external loans from Korea Zinc. At the end of 2013, the Korea Zinc Offtake Loan, which had an initial value of US$35 million, had increased to US$37.8 million as a result of the "payment in kind" interest which was rolled into the loan up until June 2013, after which interest became payable at a rate of USD 6 month LIBOR +5%. The Development Loan has an outstanding balance of US$15 million at an interest rate of 15%, which was payable throughout the duration of 2013.

Interest charges for the year, in relation to the Offtake Loan, were US$2.1 million (8 months to 31 December 2012: US$1.4 million) and in relation to the Development Loan were US$2.3 million (8 months to 31 December 2012: US$1.5 million). Although this total interest of US$4.4m has been charged as an expense to the income statement in accordance withGroup policy, the actual interest paid in 2013 on both Korea Zinc loans was US$3.4 million.

The Korea Zinc development debt of US$15 million will fall due in February 2015. Based on the current management projections for throughput at KRP and zinc price of US$2,000 per tonne, insufficient cash will be generated to repay the loan and the directors are pursuing options to make up the shortfall or refinance the debt as is appropriate. Refinancing options range from a renegotiation for the date of repayment on the US$15m debt facility, to a full refinancing of all KRP debt with a project finance bank or other such institution.

In Korea, the Group makes use of a "receivables purchase agreement" with Standard Chartered Bank Korea ("SCBK"), whereby it can receive funds in between the monthly receipts that are made by Korea Zinc.

In August 2013, the Group completed a loan of £4.2 million which is borrowed using the land assets held in Turkey as collateral. The income from the land outside the heavy industrial zone, which has been parcelled and is being gradually sold off, is being used to fund the interest on the loan, and these funds are held in escrow for the loan subscribers. At the end of December the balance in the escrow account was £404k. The land inside the heavy industrial zone is being used as collateral to cover the capital for the loan. The loan has an interest rate of 10% and a repayment date of July 2015.

The Group completed a fundraising of £4.5 million (equivalent to US$7.5 million) after expenses in December 2013, which was principally raised for the purpose of funding additional working capital, and the Company used this opportunity to bring the International Finance Corporation ("IFC") onto the Company's share register. This is particularly encouraging as we look to our new recycling projects in parts of the developing world. The shares were issued at a price of 15.5p and resulted in the number of issued voting shares after the fundraising increasing to 136 million (2012: 103 million). Following the operational difficulties in December 2013 and February 2104, a further fundraising was completed in April 2014 for an amount of £3.0m after expenses for the purpose of giving the Group the additional funding expected to be required to complete the ramp up (note 8).

Liquidity

The cash funds of the Group at 31 December 2013 were US$4.8 million (2012: US$10.6 million). These cash funds were held in a range of currencies at the year end, the most significant of which were US Dollars 3.4 million (2012: US$2.1 million), Euro 0.2 million (2012: €2.6 million) and Pounds Sterling 0.7 million (2012: £2.7 million).

Going Concern

The directors have considered scenarios in reviewing the budgets and projections for 2014. These scenarios are centred on the financial modelling of a ramp up for KRP over the next twelve months including (but not limited to) sensitivity to the zinc price, recovery of zinc from EAFD, tonnes of zinc sold and key operating costs.

The zinc price assumption started with a review of the actual price since the start of 2014 and adopted a price below this for the remainder of the year. The market predictions for zinc price are upward in the second half of 2014 and, as such, the directors have assumed a conservative price assumption of US$2,000 per tonne in all projections. The ramp up profile is expected to achieve target production by the end of 2014 taking into account the requirement for a key planned maintenance period in Q3 2014 which will reduce throughput in that quarter. The zinc tonnes sold assume a rising zinc recovery up to target levels through the remainder of 2014. As throughput rises, so the operating cost metrics (i.e. measured in consumptions per tonne of EAFD), are expected to fall through the remainder of the year.

The directors have also considered the requirement to repay the Korea Zinc development loan of US$15 million in February 2015 and are pursuing options for the refinance of this debt if available cash generated from KRP is insufficient. The options include, a rescheduling of the current due date, traditional debt through both a traditional bank or the bond market and monetising a proportion of future zinc production in exchange for upfront payments. The exact amount of any shortfall will depend on the zinc price and the ramp up progress in the run up to the repayment date. Other discretionary spend has been scrutinised and scheduled accordingly in this important period where the continuing ramp up of KRP is the critical factor in the future success of the Group.

The directors have assessed the material uncertainties concerning the future funding requirements of the Group on this basis, compared them with the levels of expected finance available at a corporate and project level and, subject to the successful refinancing of this debt, and in consideration of the expected ramp up, have a reasonable expectation that the Group has adequate financial resources to manage its business risks and continue in operational existence for the next twelve months.

Financial Review of Operations

Korean Recycling Plant (KRP)

KRP made its first sale of commercial HZO product at the end of May 2012 and, in the year to 31 December 2013, a total of 24,577 tonnes of zinc in concentrate was sold to Korea Zinc. (8 months to 31 December 2012: 8,489 tonnes). All of the material was sold to Korea Zinc under the offtake agreement which had been signed in April 2011 as part of the financing of the project. This resulted in revenues of US$27.1 million (8 months to 31 December 2012: US$9.8 million). The quality of the product was higher during 2013 with an average zinc grade of 65.0% compared to 63.2% percent during 2012.

The product sold by KRP is a zinc oxide concentrate sold under an international formula and as a result, the monthly revenues are always dependent on the LME zinc price. The LME zinc price can be volatile and during the year had an average of US$1,910 per tonne, with a maximum over the same period of US$2,187 per tonne and a minimum of US$1,784 per tonne.

The sales of zinc concentrate are made in US Dollars and the majority of costs incurred at KRP are incurred in KRW, the high point for this exchange rate in the year was 1,170 KRW per USD and the low point was 1,054 KRW per USD with an average for the year of 1,101 KRW per USD.

The analysts and forecasters who watch the zinc market suggest that as certain key mines become exhausted over the next 15-18 months then the zinc market will go into a deficit on the supply side which is expected to have a positive impact on the zinc price. One key measure for this is the zinc stocks which were 1,220,000 tonnes at the start of 2013 and dropped by 23% to 933,000 tonnes by the year end. This has continued since the year end such that at the end of May 2014 the stock has fallen by a further 24% to 712,000 tonnes. The zinc price has also strengthened since the end of the year with an average price to the end of May 2014 of US$2,035 per tonne.

As has been noted, the plant had various stoppages through the year to fix critical equipment. These stoppages meant the ramp up has been drawn out and the plant did not reach its target capacity in 2013. The impact of running the KRP at below its capacity is that certain operating parameters were not yet at the target levels and additional costs were incurred for remediation. This resulted in an underlying EBITDA loss, prior to any foreign exchange movements, of approximately US$9.2 million relating to KRP during the year (8 months to 31 December 2012: EBITDA loss US$9.3 million).

The remediation and maintenance costs required to fix the issues amounted to US$5.4 million, (8 months to 31 December 2012: US$2.6 million) and were charged to cost of sales during the year. In addition landfill costs for EAFD not processed in the year during the remediation stoppages, amounting to US$1.8 million (8 months to 31 December 2012: US$0.98 million) has been charged to cost of sales. With stop/start production the quality of the DRI produced was extremely variable and the DRI which was produced in the year was landfilled at a cost of US$1.7million (8 months to 31 December 2012: US$0.64 million). The impact of the stoppages at KRP resulted in the operation not achieving target cost levels for utilities and other consumables, notably the gas consumption and associated cost When the plant is operating at full capacity, however the gas consumption is still expected to be close to planned levels as are other main operating costs.

Interest of US$4.4 million (8 months to 31 December 2013: US$2.9 million) on Korean debt facilities has been charged as an expense to the income statement in the year in accordance with Group policy.

A depreciation charge of US$5.9 million (8 months to 31 December 2012: US$3.5 million) has been included in cost of sales for KRP, in arriving at the result for the year.

The Group terminated the mandate with Standard Chartered Bank ("SCB") for the financing of the expansion of KRP (KRP2) in September 2013. Part of the condition of the mandate was that KRP was subject to a performance test to demonstrate that the plant was performing consistently and producing regular cashflows. The ongoing delays to ramp up meant that the plant could not commence the test in a timely manner and it was felt the most appropriate route was to cancel the mandate and re-engage with SCB when the plant was performing as planned.

Other Projects

At the end of 2013 the Group is showing 'assets held for sale' with a net realisable value of US$1.5 million. This relates to land held in Turkey (US$1.2 million) and property, plant and equipment relating to the Rubber Grade Plant ("RGP") now transferred from Pearl Zinc SA to ZincOx Belgium Sprl (US$0.3 million).

Following a rationalisation of the land which ZincOx has purchased in Turkey, the plot of land outside the heavy industrial zone, which ZincOx purchased in 2006 and no longer requires for development of the project, has been split into smaller plots to facilitate sales. These plots have been marketed over the last year or so and this has resulted in the sale of 38 of the plots by the end of 2013 generating total cash of US$3.2 million (YTL 6.8 million) and a total profit of US$2.0 million (YTL 3.7 million). The profit generated in the year to 31 December 2013 was US$1.2 million / YTL 2.2 million (2012: US$0.4 million / YTL 0.7 million) and is shown in other gains and losses in the Group income statement. In view of the uncertainty over the expected receipts for the remaining 25 plots, the historic cost of US$1.2 million (YTL 2.6 million) has been applied as being the lower of fair value less cost to sell.

The remaining property, plant and equipment reclassified as asset held for sale consists of two pieces of machinery following the sale of the RGP building in Pearl Zinc SA, which is being actively marketed.

Jabal Salab, the mining project in which ZincOx had a 51% share, was sold to our Yemeni partner on 11 March 2013. Following the sale, ZincOx will be eligible to receive certain cash payments when the project goes into production and provided the zinc and silver prices are above certain thresholds.

Environmental, Health, Safety & Quality

The Group believes that what is good for the planet is good for business and good for the communities in which ZincOx operates. There is an overriding commitment to Sustainable Development which is pursued through the effective management of Environment, Health, Safety and Quality ("EHSQ") using best practices from ZincOx and other third parties.

As the projects are progressed internationally, the directors remain relentless in their pursuit of an injury free environment for all employees and others who come onto ZincOx sites and the Group seeks to ensure that its business contributes lasting benefits to society through the consideration of health, safety, social, environmental, ethical and economic aspects in all decisions and activities.

During 2013, some two hundred and eight thousand hours were worked in ZincOx worldwide, including projects, with no significant environmental incidents and only one lost time incident involving one of our employees at BRZ. ZincOx's management believe that all incidents and injuries are preventable and strives to create a workplace culture where all employees and contractors share these beliefs.

Risks

Set out below are certain risks which may affect performance. Such risks are not intended to be presented in any order of priority. Although the directors and senior management have significant experience and take steps continually to mitigate and review risks as far as possible and reasonably practicable, any of the risks set out below, as well as any other risks referred to in this annual report, could have a material adverse effect on business performance. In addition, the internal and external risks set out below are not exhaustive and additional risks, not presently known to the directors, or which the directors currently deem immaterial, may arise or become material in the future.

Operational risks

· Failure of equipment or third party services,

· Unavailable materials and equipment is managed through regular dialogue with external suppliers and monitoring of equipment on the site by the maintenance team,

· Further remediation at KRP which may lead to delays in ramping up to full production,

· Environmental incidents are managed by routine monitoring and training of staff,

· Health and safety incidents, and nil returns are reported on a monthly basis,

· Single project dependence, and

· Loss of key personnel.

Financial risks

· Zinc price movements and its associated volatility will affect the monthly profitability of KRP, as well as the amount of finance which may be available for the development of other projects within the Group. Any decline in zinc prices will therefore have an adverse impact on the business. No hedging is currently undertaken to mitigate this risk,

· Loss of production at KRP will impact timing of cash receipts and payments and further this will impact on generating surplus cash to fund the Group and repay the debts,

· Foreign exchange movements, notably between US Dollars and Korean Won (KRW) has a particular effect on the Group's result as the revenues are received in US Dollars (matching the borrowings of the Group) and the critical costs at KRP are in KRW. This is continuously monitored and no hedging is currently undertaken to mitigate this risk,

· Cost inflation is managed by reviewing alternative suppliers where appropriate,

· Insurances may not cover all liabilities. Insurance policies are held both at the Group level and at the project level, and are reviewed annually,

· Maintaining debt equity ratios in respect of borrowings,

· Negotiation with authorities regarding spend commitment in Korea,

· Realisation of iron revenues,

· Any legal proceedings,

· Repayment or refinance of Development Loan in Korea which is currently being reviewed for potential refinancing before February 2015, and

· Material fall in zinc price.

There is still an ongoing political risk associated with the tensions between North Korea and the surrounding region including South Korea where the plant is located.

All of these risks could materially affect the Group, its business, results of future operations or financial condition.

Uncertainties

Set out below are certain principal uncertainties which may affect potential growth across the Group.

· Dependence on the EAFD supply contracts, which is why the Group is aiming to sign up long term EAFD agreements with target territories for expansion,

· Availability of capital to fund other recycling projects. The directors continue to maintain a good relationship with prospective suppliers of finance,

· Ensuring intellectual property and know how is protected,

· Competitors signing up EAFD supply agreements in the other targeted territories, and

· Competing technology especially in respect of competitors copying KRP in other parts of the world.

The Group is further exposed to uncertainty connected with the political, fiscal and legal systems, including taxation and currency fluctuations in the territories in which the Group operates.

On behalf of the Board.

Andrew Woollett

Chairman

2 June 2014

FORWARD LOOKING STATEMENTS

The Chairman's Statement and the Strategic Report 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 2013

# the adjusted loss per share calculation for 2012 excludes the one-off gain of US$10,463,000 following the loss of control of Jabal Salab at 31 May 2012 and its subsequent deconsolidation from these financial statements.

ZINCOX RESOURCES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2013

ZINCOX RESOURCES PLC

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2013

ZINCOX RESOURCES PLC

 CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2013

ZINCOX RESOURCES PLC

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2013

Notes:

1. Preparation of non-statutory accounts

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2013 or 2012 or 2011 but is derived from those accounts. Statutory accounts for 2012 and 2011 have been delivered to the registrar of companies, and those for 2013 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) included a reference, without qualifying their report to an emphasis of matter in relation to going concern in 2013 and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

2. Critical Accounting Estimates and Judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future, which by definition will seldom result in actual results that match the accounting estimate. The estimates and assumptions that have a significant risk of causing material adjustments to the carrying amount of assets and liabilities within the next financial year are discussed below:

Going Concern

The directors have considered scenarios in reviewing the budgets and projections for 2014. These scenarios are centred on the financial modelling of a ramp-up for KRP over the next twelve months including (but not limited to) sensitivity to the zinc price, recovery of zinc from EAFD, tonnes of zinc sold and key operating costs.

The zinc price assumption started with a review of the actual price since the start of 2014 and adopted a price below this for the remainder of the year. The market predictions for zinc price are upward in the second half of 2014 and, as such, the directors have assumed a conservative price assumption of US$2,000 per tonne. The ramp-up profile is expected to achieve target throughput by the end of 2014 taking into account the requirement for a key planned maintenance period in August which will reduce throughput in that month. The zinc tonnes sold assume a rising zinc recovery up to target levels through the remainder of 2014. As throughput rises, so the operating cost metrics (i.e. consumptions per tonne of EAFD), are expected to fall through the remainder of the year.

The directors have also considered the requirement to repay the Korea Zinc development loan of US$15 million in February 2015 and are pursuing options for the refinance of this debt if available cash generated from KRP is insufficient. The options include, a rescheduling of the current due date, traditional debt through both a traditional bank or the bond market and monetising a proportion of future zinc production in exchange for upfront payments. The exact amounts of any shortfall will depend on the zinc price and the ramp-up progress in the run up to the repayment date. Other discretionary spend has been scrutinised and scheduled accordingly in this important period where the continuing ramp up of KRP is the critical factor in the future success of the Group.

The directors have assessed the material uncertainties concerning the future funding requirements of the Group on this basis, compared them with the levels of expected finance available at a corporate and project level and, subject to the successful refinancing of this debt, and in consideration of the expected ramp up, have a reasonable expectation that the Group has adequate financial resources to manage its business risks and continue in operational existence for the next twelve months.

3. Finance Income / (Costs)

4. Loss Per Share

The calculation of the loss per share is based on the loss attributable to ordinary shareholders of US$26,331k (2012: US$9,406k) divided by the weighted average number of shares in issue during the year of 106,370,166 (2012:90,634,426).

An adjusted loss per ordinary share for 2012 has been presented to exclude the gain of US$10,463,000 on the loss of control of Jabal Salab at 31 May 2012. It has been calculated based on adjusted loss attributable to ordinary shareholders of US$19,869,000 divided by the weighted average number of shares in issue during 2012 of 90,634,426.

There is no dilutive effect of the share options in issue during 2013 and 2012.

5. Trade and Other Receivables

Impairments of US$84k against an associate loan to the Jabali project were made in the year (2012: impairment of US$352k, 2011: reversal of impairment of US$26k).

None of the current receivables are past due.

6. Trade and Other Payables

A non-current rent accrual of US$2,795k (2012: US$1,880k, 2011: US$912k) was made for the lease of the land from the Korean government authorities in relation to the Korean Recycling Plant.

At 31 December 2013, the Group made accruals of KRW 2.7bn, equivalent to US$2.6m (2012: KRW 3.5bn equivalent to US$3.3m). Of these, KRW 2.3bn, equivalent to US$2.2m, is in respect of disputed invoices relating to the KRP construction.

7. Loans and Borrowings

Korea Zinc loans

In 2011, two separate loans were taken out with Korea Zinc Company Limited ("Korea Zinc") by ZincOx (Korea) Ltd to provide US$50 million of the required funding for the development of KRP in Korea.

A long term 'Offtake Loan' was agreed for US$35 million and is repayable on 30 June 2022. Up to June 2013, interest on this loan was rolled into the principal amount and thereafter chargeable at USD 6 month LIBOR plus a 5% margin. A shorter term 'Development Loan' was agreed for US$15 million and is repayable three years from first drawdown being February 2015. Interest is chargeable at 15% and became payable immediately from first drawdown in line with the agreed interest periods.

Interest on both loans was capitalised up to May 2012, the point at which the plant went into operation. It was capitalised to the construction in progress account in accordance with Group policy. Since then interest has been charged to the Group income statement.

At 31 December 2013 the Offtake Loan balance was US$37.8 million including rolled up interest (2012: US$37.0 million) and the Development Loan balance was US$15.0 million (2012: US$15.0 million). Both loans with Korea Zinc are secured by a debenture over the assets of KRP only.

Standard Chartered Bank Korea Ltd facility

In April 2013, a US$5 million Receivables Services facility was taken out by ZincOx (Korea) Ltd with Standard Chartered Bank Korea Ltd ("SCBK"). Interest is chargeable at USD 3 Month LIBOR plus a 4% margin and is payable immediately.

Secured loan notes

In July 2013, the Company issued loan notes to a value of £4.2 million together with four year warrants over 9,450,000 new ordinary shares of the Company at an exercise price of 40 pence per share. Interest is 10%, payable immediately on a monthly basis with repayment due in July 2015.

The loan notes are secured against the shares in ZincOx Anadolu Cinko SVTAS, the Company's wholly owned subsidiary that owns the freehold land held at Aliaga, Turkey.

Other loans

An unsecured loan taken with the International Bank of Yemen by Jabal Salab Company (Yemen) Ltd on 12 March 2011 was deconsolidated when there was a loss of control of the subsidiary undertaking.

Other bank borrowings represent an unsecured facility taken out by ZincOx Resources Belgium Sprl to fund short-term working capital requirements.

8. Post Balance Sheet Events

On 28 January 2014, the Company granted 4,989,760 options over its ordinary shares at a subscription price of 24.5 pence per ordinary share and issued a further 5,410,240 options under its Performance Share Plan at a zero subscription price. At the same time, the Company cancelled all 5,650,000 outstanding options over its ordinary shares that had been granted in 2013 (see note 21 for details).

In March 2014, an agreement was reached with Korea Zinc to defer the interest payments on both loans for a period of twelve months in return for additional offtake material as covered by the separate Offtake Agreement with Korea Zinc.

On 1 April 2014, the Company raised £1.0 million (after deducting expenses) by way of a conditional placing of 10.3 million new ordinary shares at a price of 10 pence per share.

On 24 April 2014, the Company raised a further £1.95 million (after deducting expenses) by way of an open offer through the issuance of 20.4 million new ordinary shares at a price of 10 pence per share.

9. Annual Report

In accordance with AIM Rule 20, copies of the Annual Report together with the Notice of Annual General Meeting and Proxy Card will be sent to shareholders on 5 June 2014.

The Annual Report, Notice of General Meeting and Proxy Card will be available to view on the Company's website at www.zincox.com on 5 June 2014, or from the Company at Knightway House, Park Street, Bagshot, Surrey, GU19 5AQ. It should be noted that online voting will be available from 6 June 2014.

10. Annual General Meeting

The Annual General Meeting of the Company will be held at 12.30pm on 30 June 2014 at the offices of Eversheds LLP, One Wood Street, London EC2V 7WS.

ENDS