The long, arduous wait for initial production from ZincOx's revolutionary zinc recycling programme is finally over. The company's Korea Recyling Plant is now operational and has delivered the first shipment of zinc oxide concentrate to smelting company Korea Zinc.
Financial results for last year are therefore largely irrelevant, as investors now turn their focus toward the ramp up of zinc production and a possible expansion programme. Initial recovery rates have been strong and ZincOx will continue to fine-tune its innovative recovery process - producing zinc from waste dust generated in the recycling of scrap galvanised steel - while steadily increasing output. Moreover, if estimates from broker finnCap prove accurate the company is on course to post turnover of £36.2m, underlying pre-tax profits of £3.2m and EPS of 3.6p this year.
Meanwhile, an engineering and costing study for a $100m (£63.6m) expansion that would double plant capacity is nearing completion. ZincOx is in talks with a bank regarding a loan, but with $50m already owed to Korea Zinc, management says a significant hedging policy will likely be required. This might put a chill on improving investor sentiment given the current weak zinc market - and even then the loan wouldn't be enough to cover the full expansion cost.
ZINCOX RESOURCES (ZOX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 69p | MARKET VALUE: | £61m | |
| TOUCH: | 69-70p | 12-MONTH HIGH: | 85p | LOW: 50p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 69p | NET DEBT: | 23%* | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | nil | 16 | 23.3 | nil |
| 2008 | 0.26 | 6 | 7.1 | nil |
| 2009 | 1.18 | 0 | -3.4 | nil |
| 2010 | 1.93 | -111 | -89.0 | nil |
| 2011 | 1.65 | -8 | -7.7 | nil |
| % change | -15 | - | - | - |
*Excludes a $35m offtake loan due 2022 | ||||
