LONDON (ResourceInvestor.com) -- AIM traded ZincOx Resources [ ZOX] has commenced a feasibility study for a zinc recycling plant to be located in the United States. The company hopes that the feasibility study will be completed by year-end.
The plant will utilise electric arc furnace dust, the residue extracted from the flue gasses of electric arc steel furnaces which contains a significant proportion of zinc oxide and is usually disposed of via landfill.
ZincOx has secured as a partner Ohio based Envirosafe Services, which will assist with the feasibility study and provide feedstock for the plant by way of its position as one of the primary US disposers of electric arc furnace dust. Envirosafe will also dispose of the residue from the putative zinc recycling plant.
Envirosafe will supply ZincOx with feedstock at zero cost, receiving in return a reduced volume of waste material that is likely to be suitable for relatively easy disposal in a non hazardous waste dump.
The plant will be located in the mid western US and its output will equate to around 25,000t of zinc metal per annum. Output will take the form of either zinc metal or high purity oxide, depending on what is deemed to be optimum by the feasibility study.
ZincOx's Peter Wynter-Bee puts the time required for construction of a plant post feasibility study at around eighteen months, and confirms that zinc or zinc oxide production is likely to be achieved at a competitively low cost.
The US zinc recycling project is 'very similar' to one that ZincOx currently has under feasibility study in Turkey. Wynter-Bee says that the company hopes to conclude this study by Q3 2005, after which construction can start.
The Turkish project is projected to produce around 12,000t annum of high purity zinc oxide, increasing to 30,000t per annum during the second year of production.
On the basis of a zinc price of $1,000/t, ZincOx's pre-feasibility study estimates an internal rate of return for the Turkish project of around 30% and a net present value, at a discount rate of 10%, of lb30 million.
Requisite capital investment is slated to be around lb11m, and the plant is to be located within a 4km radius of five separate steel plants to provide a ready supply of around 80,000t per annum of furnace dust at zinc content in excess of 20%.
ZincOx's technical expertise is in the recovery of zinc from non sulphide material, and according to Wynter-Bee the company continues to look for opportunities to exploit these techniques, but will only partake in a project in return for a significant equity interest as opposed to the mere licensing of its technology.
ZincOx is also involved in the mining of zinc, and stands to earn a 60% interest in the Jabali project in Yemen on completion of a feasibility study funded by the company, which is expected to be attained this quarter.
Wynter-Bee estimates that the company will then spend 6-9 months putting together project finance, the requirement for which is likely to be in the region of lb60-70m, and for which the company may come to the market.
Resources at the Jabali project amount to 9.4mt at average grades of 10.8% zinc, 2.3% lead and 76.8g/t silver, with potential to increase this primary resource and to explore some satellite ore bodies. Anglo American is ZincOx's joint venture partner in the Jabali project.
An open pit operation is envisaged at Jabali producing 800,000t ore per annum, to be processed into zinc and lead-silver concentrates. The zinc concentrate will be produced by flotation to grade around 23.5% Zn and then upgraded by fuming. The lead-silver concentrate is expected grade around 60.5% lead and 3,010g/t silver.
ZincOx was formed as a mining company, but increasingly its strategic focus is shifting towards zinc recycling. The company does not rule out further mining operations, but Wynter-Bee states that 'no deal is imminent'.
ZincOx is also developing a fuming technology, the Polykiln process, which originated in Kazakhstan and enables the recovery of zinc from lead slag utilising natural gas as a reducing agent. The company is conducting trials of the Polykiln process and considering acquisitions of suitable slag dumps.
