The recent improvement in throughput at ZincOx’s flagship Korean recycling plant removes a good deal of risk for investors, says chairman Andrew Woollett.
Last week, the zinc recycling specialist said continued ramp-up at the plant has now led to around 93% of target throughput at the plant.
Namely, between Christmas day and January 6 this year 5,671 tonnes of Electric Arc Furnace Dust (EAFD) were processed using the company’s technology.
ZincOx produces zinc concentrate using an innovative process to recycle waste generated by the recycling of scrap iron.
“It’s the last bit of the jigsaw that was needed, in order to be sure we have a real project,” Woollett told Proactive.
“It has provided a huge amount of relief and comfort to investors that we are back on track.”
There have been well documented teething problems during the ramp up process at the plant after it was first commissioned in April last year.
Woollett explains how up until the recent improvements, there had been a big question mark over throughput at the plant – unlike other issues such as recovery rates, operating costs and saleability of the product, because up until recently it had really only reached 70% throughput.
But now, he says that even if throughput stayed at the now 90% level the project should be very profitable.
“The only question then is how much money you make – not if you make money, he says.
“At 39 pence ( a share) even at today’s throughput there is considerable upside in the shares,” he notes.
The company now needs to demonstrate that it can maintain these high throughput rates in the forthcoming weeks.
If that happens it will also mean the firm can progress with its plans for the second part of the project – KRP2 – by being able to demonstrate the process to financing organisations.
This is a second plant on the same site.
When in full production both KRP1 and KRP2 combined are expected to produce 92,000 tonnes of zinc in concentrate per year.
In line with the original plan, for the first year of production (until May this year) the target throughput of the KRP1 is 15,500 tonnes per month of EAFD.
The full design capacity is 17,700 tonnes per month – which is on track to be reached in the last quarter of 2013 due to a programme of debottlenecking and efficiency improvements.
Earlier this week Woollett told investors: “We are very pleased with the recent increased throughput of the plant, and we are confident that within a few months we will have demonstrated that it is routinely operating at the target level.
“Furthermore, we are now in a position to finalise the design for future plants, and we are looking forward to doubling the size of KRP and developing similar plants elsewhere in the world.”
The two phase development of the project will ultimately treat 400,000 tonnes of EAFD a year.
The EAFD is being sourced from all the major steel producers in Korea under 10 year exclusive supply agreements and the zinc concentrate has been sold to Korea Zinc under a 10 year off-take agreement.