TIDMZOX
RNS Number : 6616D
ZincOx Resources PLC
01 April 2014
1 April 2014
Not for release, publication or distribution, directly or
indirectly, in whole or in part, in or into the United States of
America, Canada, Australia, The Republic of South Africa, Japan,
New Zealand or Russia.
ZincOx Resources plc
("ZincOx" or the "Company")
Proposed fundraising through a conditional Placing
to raise approximately GBP1.03 million
ZincOx (AIM: ZOX)announces a proposed fundraising by way of a
conditional Placing of approximately 10.3 million new ordinary
shares at a price of 10 pence per share with institutional and
other investors to raise approximately GBP1.03 million before
expenses.
Capitalised terms and expressions used in this Announcement are
defined in paragraph 8, unless stated otherwise.
Highlights
-- 10.3 million new ordinary shares conditionally placed with
institutional and other investors to raise approximately GBP1.03
million.
-- Placing price of 10 pence per share represents a discount of
37.5 per cent. to the closing mid-market price on 31 March 2014
(being the latest practicable date prior to the date of this
Announcement).
-- Intention to raise additional funds by way of an Open Offer
to be made to all qualifying shareholders at the Placing Price of
10 pence per share.
-- Proceeds of the Placing are anticipated to be used for:
o working capital purposes;
o repairs to the refractory; and
o purchase of equipment to complete the ramp-up of the Company's
first recycling plant, KRP.
-- The Placing is conditional only on Admission.
Commenting on the proposals, Andrew Woollett, Executive Chairman
of ZincOx, said:
" Whilst I regret having to revert to shareholders to seek
further support, we are pleased to see a continuing improvement in
production. We are in the process of replacing the inner shells of
the remaining two heat exchangers which, together with refractory
repairs, should greatly improve the reliability of the plant. We
are confident of making further progress with the ramp-up over the
coming months as we continue to optimise the operation."
For further information, please visit www.zincox.com or
contact:
ZincOx Resources plc Tel: +44 (0) 127 645 0100
Andrew Woollett, Executive Chairman
Peel Hunt LLP (Nominated Adviser and Broker) Tel: +44 (0) 207 418 8900
Richard Kauffer
Daniel Harris
Tavistock Communications (Financial PR) Tel: +44 (0) 207 920 3150
Jessica Fontaine
Simon Hudson
Not for release, publication or distribution, directly or
indirectly, in whole or in part, in or into the United States of
America, Canada, Australia, The Republic of South Africa, Japan,
New Zealand or Russia.
ZincOx Resources plc
("ZincOx" or the "Company")
Proposed fundraising through a conditional placing
to raise approximately GBP1.03 million
1. Details of the Placing
On behalf of the Company, Peel Hunt has, conditional only on
Admission, raised approximately GBP1.03 million (before expenses)
by the proposed issue of approximately 10.3 million new ordinary
shares at the Placing Price of 10 pence per share.
The Placing Price represents a discount of approximately 37.5
per cent. to the closing mid-market price of 16 pence per Ordinary
Share on 31 March 2014, being the latest practicable date prior to
the publication of this Announcement. The 10,346,672 Placing Shares
will represent approximately 7.6 per cent. of the current issued
share capital of the Company. Following the issuance of the Placing
Shares, the Enlarged Issued Share Capital of the Company will be
approximately 145.9 million ordinary shares.
Application has been made to the London Stock Exchange for the
Placing Shares to be admitted to trading on AIM. The Placing Shares
are expected to commence trading at 8:00 a.m. on 2 April 2014 and
will rank pari passu in all respects with the existing Ordinary
Shares.
2. Proposed Open Offer
In addition to the Placing, and to enable qualifying
shareholders to participate in a fundraising at the Placing Price,
the Company will shortly post a circular and accompanying
documentation to Shareholders seeking to raise up to approximately
a further GBP4 million by way of an open offer at the Placing Price
(the "Open Offer"). The terms and procedure will be similar to the
open offer undertaken by the Company in November 2013.
3. Background to the Placing and Use of Proceeds
The Directors had anticipated that the fundraising in November
last year would have been sufficient to see the Company through the
ramp-up to full production. Due to the reduction in cashflow
resulting from stoppages required for repairs to the refractory
lining, mainly in certain parts of the RHF, the cash reserves that
were put in place in November have been critically reduced. In
order to provide sufficient funds to see the Company through to
full production, we have raised a further GBP1.03 million in order
to continue the ramp-up and optimisation of the KRP. As this
Placing is being carried out at a considerable discount to the
current market price, we will be giving all qualifying shareholders
the ability to participate in the Open Offer at the Placing
Price.
January 2014 was a record month for production at KRP, with
3,131 tonnes of zinc in concentrate being produced, which generated
a positive EBITDA at KRP of over US$200,000 prior to unrealised
foreign exchange gains and losses. Production during the month was,
however, constrained by a lack of oxygen contracted from the
external supplier. The supplier has since increased the capacity of
the supply by the addition of a new evaporator which is now in
operation. In March, as a result of the increased availability of
oxygen, production rose and during the month we have sold 2,596
tonnes of zinc in concentrate. In order to improve the reliability
of the plant, the closure to replace the inner tubes in the last
two heat exchangers, which we had planned for April, was brought
forward to 26 March. While these are being fitted, we will take the
opportunity to repair a part of the refractory in the offtake duct
above the RHF.
Following the work on the heat exchangers, these units should
not require further attention for several months and production
should be able to proceed with minimal interruption until
August/September when a routine inspection and maintenance stoppage
is scheduled in line with the overall operating plan for the
plant.
The monies raised through the Placing will be used for further
optimisation of the plant and for working capital purposes.
4. Financing
The Company has an outstanding debt facility with Korea Zinc Ltd
of $15 million which is due for repayment in February 2015. The
Company is currently in discussion with Korea Zinc Ltd and a number
of debt providers with respect to the refinancing of this debt.
Whilst the Directors are confident that they will be able to
refinance this debt, Shareholders should be aware that there is no
certainty that this will be achieved on terms at least as
favourable as those in relation to the current debt or at all.
5. Directors' Participation in the Placing
The Directors whose names are listed below have subscribed for
the following numbers of the Placing Shares as part of the Placing
at the Placing Price:
Name of the Director No. of Placing Shares
---------------------- ----------------------
Andrew Woollett 1,212,000
Jacques Dewalens 182,000
Rod Beddows 300,000
Simon Hall 60,600
Total 1,754,600
---------------------- ----------------------
The interests (all of which are beneficial, unless otherwise
stated) of the Directors and their immediate families and the
persons connected with them (within the meaning of section 252 of
the Companies Act) in the issued share capital of the Company or
the existence of which could, with reasonable diligence, be
ascertained by any Director as at the date of this Announcement and
as expected to be immediately following Admission, are as
follows:
As at the date of this Announcement Immediately following Admission
--------------------------------------------------------- --------------------------------------------
No. of Ordinary
No. of existing % of the Company's No. of % of Enlarged Shares over
Ordinary existing issued ordinary Issued Share which options
Name Shares share capital shares Capital are granted
Andrew Woollett 4,175,596 3.08% 5,387,596 3.69% 4,515,854
Gautam Dalal 560,000 0.41% 560,000 0.38% 0
Jacques Dewalens 71,445 0.05% 253,445 0.17% 1,500,000
Rod Beddows 522,500 0.39% 822,500 0.56% 0
Simon Hall 85,000 0.06% 145,600 0.10% 1,731,318
Guy Lafferty 0 0.00% 0 0.00% 0
------------------ ---------------- ------------------- ---------- -------------- ----------------
6. Placing Agreement
Pursuant to the Placing Agreement, Peel Hunt has conditionally
placed the Placing Shares with placees at the Placing Price of
10pence per Placing Share to raise approximately GBP1.03 million
before expenses. It is anticipated that dealings in the Placing
Shares will commence at 8:00 a.m. on 2 April 2014. The Placing is
conditional on Admission becoming effective and the Placing
Agreement becoming unconditional in all respects by no later than
8:00 a.m. on 2 April 2014 or such later date (being not later than
8:00 a.m. on 22 April 2014) as the Company and Peel Hunt may
agree.
The terms and conditions applicable to the Placing are set out
in the Placing Agreement. Peel Hunt has agreed to use its
reasonable endeavours to procure placees for the Placing Shares.
The Placing Agreement contains certain customary warranties. The
Company has also agreed to indemnify Peel Hunt against all losses,
costs, charges and expenses which Peel Hunt may suffer or incur as
a result of, occasioned by or attributable to the carrying out of
its duties under the Placing Agreement.
7. Risk Factors
The risks and uncertainties described below are some of the
material risk factors facing the Company which are currently known
to the Directors. These risks are not the only ones facing the
Company and additional risks and uncertainties not presently known
or currently deemed immaterial may also have a material adverse
effect on the Company's financial position and prospects. If any or
a combination of the following risks materialise, the Company's
financial position and prospects could be materially and adversely
affected to the detriment of the Company and the Shareholders.
Therefore, before investing, Shareholders and other investors
should carefully consider the risk factors described below. Please
note that the risks are not presented in any order of priority and
are not intended to be exhaustive.
Financial
-- As a majority of the Group's sales are derived from the sale
of zinc concentrate, a material fall in the zinc price for a
sustained period will affect the Group's earnings and the Company's
ability to finance future projects and repay its debts.
-- As a majority of the Group's sales are denominated in United
States Dollars whereas most of its expenditure and operating costs
are denominated in Korean Won, exchange rate movements may have a
negative impact on the Group's earnings.
-- There is no certainty that the funds raised in the Placing
will be sufficient to satisfy the funding requirements of the
Company over the next 12 months, which may include any unforeseen
adverse developments relating to equipment, operations, currency or
the price of zinc.
-- There is not yet certainty that the cashflow from KRP will be
sufficient to repay or enable the refinancing of the outstanding
loan, currently amounting to $15 million, which is due for
repayment in February 2015. Whilst the Directors are confident that
they will be able to refinance this debt, there is no certainty
that this will be achieved on terms at least as favourable as those
in relation to the current debt or at all.
KRP1
-- The Company's earnings will be detrimentally affected in the
event that the gradual increase in production (known as the
"ramp-up") is delayed.
-- Equipment failure could lead to operational delays and
increased costs of repairing or replacing such equipment.
-- An offtake agreement has been entered into in respect of the
zinc product. However, as no definitive agreement has yet been
entered into in respect of the iron product, these sales cannot be
guaranteed. Inability to realise value of the iron product will
have a negative impact on the Company's potential earnings. None of
the financial models assume any income from the sale of the iron
product so the negative impact is one of reduced upside.
Future growth
-- The development of future projects outside Korea depends on
the Group obtaining contracts from steel mills for the supply of
EAFD. Should these not be forthcoming, it will prevent the Group
from developing such further projects.
-- The development of future projects also depends upon the
Company arranging for bank and/or other financing for this purpose.
In the event that such financing is not available on appropriate
terms at the appropriate time, the development of future projects
would be delayed.
-- There is a risk that a potential competitor may design a
technology for the treatment of EAFD which could be economically
more attractive than the technology used by the Company and, hence,
restrict the number of new plants that might be constructed by the
Group.
8. Definitions
The following definitions apply throughout this Announcement,
unless otherwise stated herein:
"Admission" the admission of the Placing Shares to trading
on AIM becoming effective in accordance with
Rule 6 of the AIM Rules for Companies
"AIM" a market of that name operated by the London
Stock Exchange
"AIM Rules" the AIM Rules for Companies published by the
London Stock Exchange governing the admission
to, and the operation of, AIM
"Announcement" this announcement
"Board of Directors", the directors of the Company as at the date
"Board" or "Directors" of the Announcement
"Business Day(s)" any day on which banks in London are open for
business (excluding Saturdays, Sundays and
public holidays)
"Companies Act" the Companies Act 2006, as amended
"Company" or "ZincOx" ZincOx Resources plc
"CREST" the computerised settlement system (as defined
in the Regulations) operated by Euroclear which
facilitates the transfer of title to shares
in uncertificated form
"EBITDA" earnings before interest, tax, depreciation
and amortisation
"EAFD" Electric Arc Furnace Dust
"Enlarged Issued the issued ordinary share capital of the Company
Share Capital" following the issue of the Placing Shares
"FCA" the Financial Conduct Authority of the United
Kingdom
"FSMA" the Financial Services and Markets Act 2000,
as amended
"Group" the Company and its subsidiaries and subsidiary
and associated undertakings at the date of
this Announcement
"KRP" the Korean Recycling Plant
"London Stock Exchange" London Stock Exchange plc
"Official List" the Official List maintained by the United
Kingdom Listing Authority
"Open Offer" as such term is defined in paragraph 2 of this
Announcement
"Ordinary Share(s)" the issued ordinary shares of 1p each in the
capital of the Company at the date of this
Announcement
"Peel Hunt" or "Broker" Peel Hunt LLP, the Company's nominated adviser
and broker, a limited liability partnership
incorporated in England and Wales with registered
number 0C357088, whose registered office is
at Moor House, 120 London Wall , London EC2Y
5ET
"Placing" the conditional placing of the Placing Shares
at the Placing Price by Peel Hunt on behalf
of the Company
"Placing Agreement" the conditional placing agreement dated 31
March 2014 entered into between the Company
and Peel Hunt
"Placing Price" 10 pence per Placing Share
"Placing Share(s)" the 10,346,672 new ordinary shares of 1p each
to be issued in the capital of the Company
pursuant to the Placing
"Regulations" the Uncertificated Securities Regulations 2001
(SI 2001/3755), as amended from time to time
"Restricted Jurisdiction(s)" the United States of America, Canada, Australia,
the Republic of South Africa, Japan, New Zealand
and/or Russia
"RHF" rotary hearth furnace
"Securities Act" the U.S. Securities Act of 1933, as amended
"Shareholder(s)" holder(s) of Ordinary Share(s) from time to
time
"stock account" an account within a member account in CREST
to which a holding of a particular share or
other security in CREST is credited
"United Kingdom" the United Kingdom of Great Britain and Northern
or "UK" Ireland, its territories and possession, and
all areas subject to its jurisdiction
A reference to "GBP" is to pounds sterling, the lawful currency
of the UK.
A reference to "United States Dollars" or "US$" is to United
States dollars, the lawful currency of the United States of
America.
Peel Hunt LLP, which is authorised and regulated in the United
Kingdom by the Financial Conduct Authority, is acting exclusively
for the Company as nominated adviser and broker and no one else
(including the recipients of this Announcement) in connection with
the Placing described in this Announcement and will not be
responsible to anyone other than the Company for providing the
protections afforded to customers of Peel Hunt LLP or for advising
any other person in connection with the matters described in this
Announcement. Peel Hunt LLP makes no representation, express or
implied, with respect to the accuracy or completeness of any
information contained in this Announcement and accepts no
responsibility for, nor does it authorise, the contents of, or the
issue of this Announcement, or any other statement made or
purported to be made by the Company, or on its behalf, in
connection with the Company or any of the other matters described
in this Announcement and, accordingly, to the fullest extent
permitted by law disclaims all and any liability whatsoever whether
arising out of tort, contract or otherwise which it might otherwise
have in respect of this Announcement or any other statement.
Important information
The distribution of this Announcement outside the UK may be
restricted by law. Persons outside the UK who come into possession
of this Announcement should inform themselves about and observe any
such restrictions. Failure to comply with such restrictions may
constitute a violation of the securities laws of such
jurisdictions. This Announcement does not constitute an offer to
sell or an invitation to subscribe for, or solicitation of an offer
to subscribe or buy, the Placing Shares to any person in any
Restricted Jurisdiction. In particular, this Announcement is not
for distribution in or into the United States of America, Canada,
Australia, The Republic of South Africa, Japan, New Zealand or
Russia. Accordingly, the Placing Shares may not, subject to certain
exceptions, be offered directly or indirectly in or into the United
States of America, Canada, Australia, The Republic of South Africa,
Japan, New Zealand or Russia. The Placing Shares have not been and
will not be registered under the United States Securities Act of
1933 (as amended) or under the securities legislation of any state
of the United States of America, Canada, Australia, the Republic of
South Africa, Japan, New Zealand or Russia and they may not be
offered or sold directly or indirectly within those Restricted
Jurisdictions or to or for the account or benefit of any national,
citizen or resident of such jurisdictions.
This Announcement is being distributed in the United Kingdom
only and is directed at persons who are (i) investment
professionalswithin the meaning of paragraph (5) of Article 19 or
high net worth companies or unincorporated associations within the
meaning of paragraph (2) of Article 49, of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005 (S1
2005/1529); and (ii) qualified investors within the meaning of
section 86(7) of theFinancial Services and Markets Act 2000 (all
such persons together being referred to as "relevant persons"). Any
person who is not a relevant person should not act or rely on this
Announcement or any of its contents.
AIM is a market designed primarily for emerging or smaller
companies to which a higher investment risk tends to be attached
than to larger or more established companies. AIM securities are
not admitted to the Official List of the United Kingdom Listing
Authority. A prospective investor should be aware of the risks of
investing in such companies and should make the decision to invest
only after careful consideration and, if appropriate, consultation
with an independent financial adviser. Neither the London Stock
Exchange nor the UK Listing Authority have examined or approved the
contents of this Announcement. The AIM Rules are less demanding
than those of the Official List of the UK Listing Authority.
The directors of the Company accept responsibility for the
information contained in this Announcement. To the best of the
knowledge and belief of the directors (who have taken reasonable
care to ensure that such is the case), the information contained in
this Announcement is in accordance with the facts and does not omit
anything likely to affect the import of such information.
Forward-looking statements
Certain statements contained in this Announcement are or may
constitute "forward-looking statements". These statements may be
identified by words such as "expects", "looks forward to",
"anticipates", "targets", "aims", "may", "would", "could",
"intends", "plans", "believes", "seeks", "estimates", "will",
"project" or words of similar meaning. They include all matters
that are not historical facts. Such statements are based on the
current expectations and certain assumptions of the Directors, and
are, therefore, subject to certain risks and uncertainties.
Forward-looking statements are not guarantees of future performance
and a number of factors could cause actual results and developments
to differ materially from those expressed or implied by the
forward-looking statements. The forward-looking statements in this
Announcement speak only as of the date of this Announcement. Except
as required by law, the Company disclaims any obligation to update
any such forward-looking statements to reflect future events or
developments.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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