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ZincOx Resources plc

ZincOx Resources plc. Investor Presentation November 2013. “ubi est squales est æ re”. Disclaimer.

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ZincOx Resources plc

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  1. ZincOx Resources plc Investor Presentation November 2013 “ubi est squales est ære”

  2. Disclaimer This document is for informational purposes only and must not be used or relied upon for the purposes of making any investment decision or engaging in any investment activity. No reliance may be placed for any purpose whatsoever on the information contained in this Presentation, nor on assumptions made as to its completeness. No representation or warranty, express or implied, is given by ZincOx Resources plc or any of its advisers, directors, officers, employees or agents, as to the accuracy, fairness or completeness of the information or opinions contained in this Presentation and no liability is accepted for any such information or opinions (which should not be relied upon) or for any loss howsoever arising, directly or indirectly, from any use of this document or its contents or information expressed in the Presentation. The information contained in this Presentation is subject to amendment, revision and updating in any way without any notice or liability to any party. Certain statements in this document relate to the future, including forward looking statements including but not limited to those with respect to the financial position and strategy of the Company, the price of zinc, the estimation of mineral resources and reserves, the realisation of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage and the timing and possible outcome of pending litigation. These forward looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause the actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such statements. Such risks, uncertainties, assumptions and other important factors include, among other things, general economic conditions, exchange rates, interest rates, the regulatory environment, structural changes in the industries in which the Company operates, competitive pressures, selling price and market demand. The forward looking statements in this document reflect views held only as of the date of this document and the Company expressly disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.

  3. Contents Part 1 GeneralRisk FactorsCorporate Overview Part 2 Korean Recycling PlantRamp-UpRevised Economics Part 3 GrowthNew projectsAdded Value Part 4 Fund raising Appendices: Zinc price, stock, share price 3

  4. RiskFactors FinancialFall in zinc priceAdverse exchange rate movement Korean Recycling PlantDelay in reaching full capacityEquipment failure and cost of replacementRamp-up may create further complications including known issues and unforeseen onesInability to realize value of iron product Future ProjectsInability to enter into EAFD supply contractsDevelopment of a more economically attractive technology by competitors 4

  5. Introduction • British zinc recycling company • Taking hazardous waste generated by the recycling of steel scrap • Operating zinc recycling plant – South Korea • Cleaner more efficient technology • Producing zinc concentrate and intermediate iron product • Global roll out potential • Slower than expected production ramp-up to full production • Major problems resolved • Ongoing improvements to ramp-up to full production • Production at 65% of full production and rising • Placing of new shares to take company through to sustained cashflow • International Finance Corporation intend to support the placing 5

  6. Vision The technology employed by ZincOx transforms a global hazardous waste problem into a global zinc resource opportunity The key technology is the Rotary Hearth Furnace (RHF) The RHF creates intermediate zinc and iron products and No Waste Considerable additional value would be created by further processing of the intermediate products into industrial raw materials 6

  7. Corporate Overview Experienced team of metallurgists and resources professionals - Andrew Woollett: Executive Chairman (57)Geologist: MSc, ex: Rio Tinto, Cluff Resources. Founder of Reunion Mining plc which designed the Skorpion Mine/smelter taken over by Anglo American. Founded ZincOx in 1999. • Simon Hall: Finance Director (44)Accountant: BSc Eng., ACA. Initially worked with Hanson plc in UK, India and China, before joining British Telecom where he worked in property, BT Openworld, the corporate division and BT Mobile He joined ZincOx in 2006. • Jacques Dewalens: Technical and Production Director (66)Metallurgical engineer: PhD in Sciences. Until joining ZincOx in 2008, he worked for in the zinc industry for Union Miniere in several roles, including General Manager of the Balen smelter and Metallurgical Process Director for Umicore Engineering. ZincOx was originally set up to repeat the success of Skorpion To develop unconventional (“oxide”) zinc resources Mining sold off, entirely focused on recycling AIM quoted, 103 million shares in issue Debt: Corporate - US$6.3 million, KRP – US$52.7 million Head Office in UK, Technical Office in Belgium, Main operation in South Korea 82 employees 7

  8. Background A thin layer of zinc is used to protect (galvanise) steel from corrosion At the end of its life, a steel object is commonly scrapped and recycled 1/3 of steel is produced by recycling in Electric Arc Furnaces (EAF) EAF generates a waste dust, EAFD, which contains the zinc (20%-30%) ZincOx modified the Rotary Hearth Furnace to recover the zinc and an iron rich by-product - so no waste The first plant is the Korean Recycling Plant, KRP First production April 2012 Other potential projects in: Turkey Thailand Russia (51% JV) SEE FILM 8

  9. Korean Recycling Project Development Cost: US$ 134 million(Equity: US$60mil., Inter-company loan; US$21mil., Debt: US$53mil.) Experienced Korean management team Technical support from Belgian office Workforce: 61 Supply contracts: 9 years Sales contracts: Exclusive offtake agreement with Korea Zinc, 9 years Full Capacity tonnes per annum EAFD, tonnes pa 200,000 Zinc in concentrate 48,000 Iron product (ZHBI) 100,000 9

  10. KRP Full Production, Actual and Forecast 10

  11. KRP Production, Actual and Forecast Oct. 2013, 2,963t zinc contained 11

  12. Key Indicators: 1. Availability (running time) 12

  13. Key Indicators: 2. Recovery 13

  14. Key Indicators: 3 Feed Rate 14

  15. Products ZINC CONCENTRATEApproximately 90% of expected total revenueHigher grade than envisaged, >64% zinc (expected 59%) All sold to Korea Zinc85% paid within 30 days, balance after 40 daysSales price based on LME price in line with standard industry practice IRON PRODUCTPresently lower quality than expected when at full production due to: - less iron in feed, - lower metallisation, more oxide - less removal of volatile elementsQuality will improve with full fuming efficiency Investigating overseas and local markets Potential to install melter  pig iron and slag for cement industry 15

  16. KRP: Cash Generation At Full Production Assumes availability, recovery and feed rate at target levels 16

  17. New Projects – KRP Expansion (KRP2) KRP site laid out to accommodate doubling of capacity Currently, insufficient EAFD generated to fill expanded plant Potential to import EAFD EAFD grade for expansion lower than for existing operation 17

  18. New Projects - Thailand ASEAN regional facility, 200,000 tpa Site near Rayong under negotiation Thai mills generate up to 90,000tpa(zinc grade approx. 27%)Mostly within 80km of site Other ASEAN 290,000 tpa Close to port Site well suited to: Melting Zinc concentrate upgrading Rayong City Proposed site for ZincOx plant 18

  19. New Projects - Turkey Over 350,000 tpa EAFD generated in Turkey Approx. 5 hectare site in the Aliaga Heavy Industrial Zone Within 3 km of over 120,000tpa EAFD Potential for: 200,000 tpa plant 46,000 tpa of zinc in concentrate PLANT SITE 19

  20. New Projects - Russia Joint venture, 51% ZincOx, 49% Ural Recycling LLC (Magnezit subsidiary) Magnezit GroupMajor magnesite mine, at Satka (since 1901)Largest refractory producer in Russia1.5 million tonnes per annum76% to steel industry, of which 24% to Electric Arc FurnacesJointVentureMagnezit approached ZincOx to form JVVisited KRP in May 2012, CEO plus senior management team Work Programme 2012/14 Project Definition 2014 Feasibility 2015 Construction 2016 Production 20

  21. Value Added Products ZINC CONCENTRATE UPGRADINGExceptional qualitySimple washing up-grades to 95% zinc oxideSecond proprietary step up-grades to industrial quality (>99% zinc oxide) Not an option for KRP due to long term offtake agreementsIndustrial quality zinc oxide is an end market of over 1,000,000 tpaMost industrial quality zinc oxide sells at a premium to the zinc it contains ZHBI MELTINGKRP originally conceived with ZHBI melter to realize full valuePreferred method is Submerged Arc Furnace Testwork and feasibility planned for next year  Pig Iron: Scrap substitute for foundries and EAFs Slag: Raw material for the manufacture of cement Potential to double gross revenues 21

  22. International Finance Corporation Private sector arm of the World Bank Mandate to invest in less developed countries Can provide up to 25% of development finance (debt and direct equity) Concerned with: Technology Environmental Corporate governance Global roll-out Discussions with ZincOx over past 18 months Due diligence; financial, technical, governance and environmental Interested in ZincOx’s new projects in Turkey, Thailand and Russia 22

  23. Use of Proceeds Korean Recycling Plant Capital items US$1 mil. New Projects New plant basic engineering (including improvements) Environmental studies Melter testwork and feasibility study US$3 mil. - US$5 mil. Corporate Working Capital US$3 mil. ================= Total US$7.1 mil. – US$9 mil. 23

  24. Structure and Timetable STRUCTURE Placing (inc.IFC subscription) US$7.1 mil. Open Offer to Shareholders up to US$1.9 mil. TIMINGS Placing Roadshow October 29th – November 8th Announcement November 12th Open Offer November 12th to November 22nd General Meeting November 29th Share Admission December 2nd 24

  25. Appendix 1 Zinc: Price and Stocks 25

  26. Appendix 2. Zinc Price Predictions Source: Metal Bulletin 26

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