ZincOx Resources has firmed up its joint venture with Korea Zinc Company to build a new recycling plant in Vietnam. A special purpose company (SPC) 51%-owned by Korea Zinc and 49% by UK-based ZincOx will develop the new plant.
Korea Zinc will fund the cost of a definitive development study of sufficient detail to raise money to fund the project’s construction. This study is expected to cost US$2.5 million, but if the bill amounts to more than US$3 million ZincOx will see its holding in the SPC diluted.
The recycling plant will be based on the Rotary Hearth Furnace (RHF) technology developed by ZincOx in Korea. Teething problems and a weak zinc price meant Korea Zinc eventually took over the plant there, which now processes the waste dust (EAFD) generated by recycling galvanised steel scrap.
The Korean Recycling Plant is one of the world’s largest facilities recycling the EAFD and has an annual design capacity of 200,000 tonnes.
The Vietnam recycling plant is planned to annually treat 100,000 tonnes of EAFD and in addition to upgrade both the iron and zinc intermediate products of the RHF to final products.
ZincOx has entered into a sale and purchase agreement with Korea Zinc in regard to the company’s remaining interest in Zinc Oxide Corporation (ZOC), formerly known as ZincOx Korea Ltd, owner of the Korean Recycling Plant.
Korea Zinc has agreed to pay US$7.950 million in two tranches for the remaining interest in ZOC, of which US$7 million is to be paid within three weeks and the balance once Korea Zinc has completed various procedural requirements in Korea.
The carrying value of this asset shown in the interim statement of the company at June 30, 2016 was US$5.8 million, thus the transaction results in a gain of approximately US$2 million.
Proceeds will be used to repay the company’s Corporate Loan Notes which amount to approximately US$5 million. The balance will be used to progress other ZincOx projects.