ZincOx Resources plc Annual Report & Accounts 2014zincox.com/wp-content/uploads/2015/04/ZincOx_AR14_160415... · 2017. 9. 6. · Globally, the outlook for zinc continues to be positive,

ZincOx Resources plcAnnual Report & Accounts 2014

ZincOx Resources plc Annual Report & Accounts 2014

Introduction

Vision 1Highlights 1Chairman’s Statement 2Chief Executive’s Review 4

Strategic Report

Principal Activities 6Business Model 6Operational Review 6

Korean Recycling Plant 6Technology 8New Projects 8Other 9

Performance Review 9Financial 9Environmental, Health,Safety and Quality 12

Risks 12Uncertainties 13

Corporate Governance

Directors 14Group Information 16Board of Directors 17Board Committees 17Director’s Report 19

Financial Statements

Independent Auditor’sReport (Group) 20Consolidated Income Statement 21Consolidated Statement of Comprehensive Income 22Consolidated Balance Sheet 23Consolidated Cash Flow Statement 24Consolidated Statement of Changes in Equity 25Notes to the Financial Statements 26Independent Auditor’s Report (Company) 48Company Balance Sheet 49Notes to the Financial Statements (Company) 50

Other Information

Forward Looking Statements 57Notice of Annual General Meeting 58

Contents

ZincOx Resources plc Annual Report & Accounts 2014 1

Highlights

2014

— Revenues of US$38.2m, an increase of 39% year on year— Production of 28,564 tonnes of zinc in concentrate in 2014— Consistently high quality zinc concentrate (>64%)— Solution to heat exchanger corrosion implemented in August 2014

Post Year End

— 90 days uninterrupted operation at KRP— January 2015 a record month: 3,786 tonnes of zinc in concentrate

produced — Improving quarterly performance, Q1 2015 showing record throughput,

recovery and zinc concentrate production— Korean debt restructured, weighted average interest reduced to 6.2%,

interest reduced by US$0.5m per annum— Recovery and throughput at KRP close to target levels

INTRODUCTIONSTRATEGIC REPORT

CORPORATE GOVERNANCEFINANCIAL STATEM

ENTSOTHER INFORM

ATION

VisionZincOx intends to become a major zinc recycling company by the applicationof breakthrough technology that enables the profitable recovery of zinc andother metals from wastes that were considered to be of little or no value.

In South Korea the Company owns and operates the Korean Recycling Plant(“KRP”) one of the world’s largest zinc recycling facilities. It plans to roll thistechnology out around the world so as to create a network of recycling plants.

Chairman’s Statement

2 ZincOx Resources plc Annual Report & Accounts 2014

2014 was a year which saw a transformation in the reliabilityand performance of our Korean operation (KRP) and I ampleased to report that these improvements continuedthrough to the first quarter of 2015. This has been a recordquarter in terms of throughput of electric arc furnace dust(“EAFD”) processed while still maintaining a high level ofrecovery so that a record zinc production was achieved.Revenue for the Group was US$38.2 million for the year, anincrease of 39% compared to 2013. The increased revenueresulted from the improved performance of KRP that wasmainly due to the success of modifications made to the heatexchangers which had previously caused severalunscheduled stoppages. KRP showed an improving EBITDA1 trend through the year,so that in the first half there was a loss of US$1.4 million andfor the second half it was slightly positive. The EBITDA lossfor the year was US$1.3 million compared to an EBITDA lossfor 2013 of US$9.2 million, an improvement of US$7.9 millionfor the year. The first quarter of 2015 showed continuingimprovement and an EBITDA profit of US$0.8 million. Since the major modification to the heat exchangers inAugust, all but two of the months have had a positiveEBITDA and, as we foresee no closures or supplyreductions for the next three months, we expect the nextquarter to be significantly more positive than the first quarterof this year. KRP is generating positive monthly operatingcash flow which will increase as a result of ongoingimprovements to throughput and recovery. Since most ofthe operation’s costs are fixed, the final ramp up to full dailythroughput has a disproportionately positive impact onprofitability, so that, at today’s zinc price (US$2,150 pertonne) and assuming target zinc grade of EAFD, in a fulloperating month the plant should generate well overUS$1 million of EBITDA per month.

The Company is now in a position where the technologyhas been sufficiently demonstrated to be able to plan thedevelopment of the next plant. The profitability of the nextplant will, however, be greatly enhanced by the upgrading of both the zinc and iron intermediate products made by the rotary hearth furnace (“RHF”) into high value final products.We refer to this concept as the “Full Cycle” approach and in order to accelerate the development of new projects weare considering the introduction of a strategic partner. Our increasing focus on Asia combined with full EAFDrecycling capacity in the USA have led us to record animpairment of the investment of the Big River Zinc Smelterand other USA related assets. This one off charge hasadded US$13.7 million to our reported losses, which wouldotherwise have been US$19.5 million, a reduction ofUS$6.3 million compared to 2013. Given that the operationnow has good reliability and positive operating cash flow,the results of 2014 do not reflect the current position atKRP or its prospects for 2015 and shareholders should bereassured by the recent operational successes so that wecan look forward to very much more positive financialresults for the current year. In order to make the critical modifications to the heatexchangers, necessary to improve plant reliability andprovide working capital while the modifications were beingmade, a placing of new shares and a rights issue wasundertaken in April 2014. This fundraising, which was wellsupported by existing shareholders, raised £2.9 million.Globally, the outlook for zinc continues to be positive,supported by strong demand, falling production andinsufficient new discoveries or mine developments. In asurvey of analysts at the end of the year there was broadconsensus that the zinc price will average over US$2,300for 2015, rising to US$2,500 and US$2,600 during 2016and 2017 respectively.

Revenue for the Group wasUS$38.2 million for the year, an increase of 39% comparedto 2013.

Dr Rod Beddows, Chairman.




ENTSOTHER INFORM

ATIONOTHER INFORM

ATION

I should like to record my thanks to Guy Lafferty andJacques Dewalens who are stepping down from the Board.Guy has represented Höegh Capital Partners on the Boardfor the past six years and his contribution during the criticaldevelopment period has been much appreciated. I amdelighted that Jacques Dewalens will continue to work forthe Company as a consultant and, by being relieved of hisBoard duties, he will have more time available to dedicate tothe optimisation of KRP and the management of ourResearch and Development activities.At the beginning of 2014 we faced many challenges; thesehave been overcome and the Company is now in itsstrongest position for many years, with KRP generatingpositive EBITDA and demonstrating a breakthroughtechnology that can solve one of the world’s greatesthazardous waste challenges. I would like to thank theshareholders for their loyal support and management forpersevering with the ramp up at KRP and so placing theCompany in the position that it can now realise the fullpotential presented by the “Full Cycle” approach.

Dr Rod BeddowsChairman14 April 2015

1 KRP earnings before interest, tax, depreciation and amortisation (adjustedto exclude foreign exchange gains and losses).

Korean Recycling PlantEBITDA – USD

The graph shows an improving EBITDA trend during half 1 and half 2 in2013, half 1 and half 2 in 2014 and quarter 1 2015.

KRP showed an improving EBITDA trendthrough the year… the first quarter of 2015showed an EBITDA profit of US$0.8 million.

H12013

H22013

H12014

H22014

Q12015


Chief Executive’s Review

The performance improvements made in the latter part of2014 at KRP have begun the transformation of the Group.These improvements have been the result of bettercombustion in the furnace and the implementation ofchanges to the heat exchangers which have protected themfrom corrosion, and so avoid unscheduled repairs. In thefirst half of 2014, however, these repairs severely restrictedproduction and it was not until the major remediation inAugust that the reliability improved.

The plant is currently operating at about 90% of targetedweekly performance and this is expected to increase to100% within the next six months as the plant undergoesfinal debottlenecking and optimisation.

The changes to the heat exchangers made during 2014provide a permanent solution, but one which will still requiremaintenance every three to four months that, in turn, willreduce annual capacity by about 10%. In order to avoid thisreduction and the cost of their maintenance, an alternativeto the heat exchangers is being engineered. This alternativewill have the added benefit of reduced energy costs, ascheaper coal can replace a high proportion of the naturalgas we are currently using, which constitutes the singlegreatest cost in the operation because it is very expensivein Korea. Taken as a whole, the removal of the heatexchangers could increase EBITDA by over US$6 millionper annum (zinc price US$2,250/t).

Korea Zinc has recently agreed to restructure theDevelopment Loan. Under this restructuring, outstandinginterest has been rolled into the Development Loan, therepayment of which, has now been spread over two and a half years starting in February 2016. Furthermore, theinterest rate on the loan has been reduced from 15% to9.5%. Consequently KRP’s weighted interest rate, includingthe long term Offtake Loan, is today only about 6.2%. Inconsideration of this restructuring, the offtake agreement for zinc concentrate is being extended to a total of1,050,000 tonnes.

In December, certain quite subtle changes to the furnaceoperating conditions had a very positive impact on ourcapacity and daily throughput substantially increased. Thisled to improved operational performance and in addition,the EAFD stockpiled in the mega-silo was drawn down very much more rapidly than foreseen. This, together withmill suspensions during the lunar new year holiday period,resulted in a shortfall of EAFD in February and March thisyear. EAFD deliveries continued through the Marchmaintenance period and these have re-stocked the mega-silo. Draw-down from the mega-silo will enable the plant tooperate at full throughput into June, by which time, additionalEAFD should be delivered under new supply contractscurrently under negotiation. The EAFD that is beingconsidered under the new contracts has a grade above the plant’s average target feed grade and so deliveries underthese new contracts should help to increase the averagezinc grade of the feed to the plant.

The performance improvements madein the latter part of 2014 at KRP havebegun the transformation of the Group.

Andrew Woollett, Chief Executive.




ENTSOTHER INFORM

ATIONOTHER INFORM

ATION

While management has remained focused on the ramp upat KRP, there have been resources available to consider thenext project and particularly the technology required toupgrade the products of the RHF. The process for upgradingthe zinc concentrate has now been optimised using a newhydrometallurgical approach designed by the Company’stechnical team in Belgium. The product generated by thisprocess has been tested by internationally recognisedorganisations which have confirmed its suitability for use inglazes and rubbers, the two largest markets for this importantzinc chemical. These applications should double the valueof the zinc that will be produced by new projects and solead to a very significant increase in profitability. Since thezinc concentrate produced at KRP is already contracted for sale to Korea Zinc as part of the loan agreements, thisupgrading will not be immediately possible in Korea. TheRHF’s iron product will be melted in a Submerged ArcFurnace (“SAF”).

The new plants will incorporate a rotary hearth furnace andupgrading processes for both zinc and iron. This is referredas a “Full Cycle” plant as it represents the completetransformation of the feed to final products. The upgradinguses standard equipment and well known chemicalprocesses and this year we plan to undertake piloting orcommercial trials to evaluate the reagent and energyconsumption and create samples for test marketing.Preliminary studies indicate a plant treating 100,000 tonnesof EAFD per annum should have an internal rate of return in excess of 25% (pre-tax, ungeared, at a zinc price ofUS$2,250/t).

At the higher zinc prices expected over the next few years,even the traditional EAFD processing technology employedby competitors can work profitably, albeit much less so thanour Full Cycle approach. For this reason, there are competitorsvying for EAFD in many countries across the world. In ordernot to lose out on the exceptional opportunity created bythe Full Cycle approach we need to move fast to securefeed supply ahead of the competition.

Over the next year or so the cash flow from KRP is unlikelyto contribute sufficiently to advance the development of thenew projects. In order to progress these exciting newprojects, a search for a strategic partner was initiated withHCF International and we continue to talk to interestedparties that share our vision for the future and which couldsupport our ambitious roll out plans.

2015 has started very positively with KRP running well andcontinuously so that ongoing improvements can be testedand implemented. We are now looking forward to beingable to roll this breakthrough technology out to other partsof the world.

Andrew WoollettChief Executive14 April 2015

Zinc Concentrate

The Company is now in a positionwhere the technology has beensufficiently demonstrated to beable to plan the development ofthe next plant.


The directors of the Company and its subsidiary undertakings(which together comprise “the Group”) present their StrategicReport, as approved by the whole Board, for the year ended 31 December 2014.

The Strategic Report is a statutory requirement under theCompanies Act 2006 (Strategic Report and Directors’ Report)Regulations 2013 and is intended to provide fair and balancedinformation that enables the Directors to be satisfied that they havecomplied with s172 of the Companies Act 2006 which sets out theDirectors’ duty to promote the success of the Company.

Principal ActivitiesThe principal activity of the Group is the production of high gradezinc concentrate by the recycling of electric arc furnace dust. TheCompany acts as a recycling, development and holding company.A detailed review of the business and future developments isincluded in the Chief Executive’s Review (pages 4-5) and theOperational Review section of the Strategic Report (pages 6-9).

Business ModelScrap iron and steel is mostly recycled in electric arc furnaces(EAF) where the volatile constituents (Zn, Pb, Cl, Na etc) are drivenoff as fine particles and gasses. This electric arc furnace dust, EAFD,needs to be filtered from the flue gases. Steel is generally protectedfrom corrosion by galvanising, a process whereby a thin coating ofzinc is applied to the surface of the steel. This coating insulates thesteel from reaction with air and so prevents corrosion. Steel scrapis becoming increasingly galvanised and since zinc is a volatileelement, it constitutes part of the EAFD. The zinc content of theEAFD is generally between 20% and 25%, and also contains 25%to 30% iron, both of which occur largely as oxides. In addition, theEAFD contains lead, cadmium and arsenic, all these toxic elementsare to some extent soluble in water, which therefore makes EAFD a hazardous waste. EAFD is probably the world’s largest inorganichazardous waste problem.

The steel mills need to dispose of the EAFD either in landfill or toprocessors which recover the zinc. Process plants based onexisting technology have never been developed unless a significantdisposal fee has been paid by the steel mills.

The breakthrough technology used by ZincOx recovers the zincusing a rotary hearth furnace (RHF). The zinc forms a unique highquality zinc oxide concentrate (HZO), an iron intermediate product(ZHBI). This means that there will be no waste.

The ZHBI can be further processed into pig iron and a clean slagthat can be used by the cement industry. It has recently beendemonstrated that the exceptional quality of the HZO will enable it to be upgraded to a zinc oxide chemical. The upgrading wouldgreatly enhance revenue and profitability. When developed with the rotary hearth furnace as an integrated operation, together withZHBI upgrading the technology is referred to as the “Full Cycle”approach.

In 2012, ZincOx commenced production at its first EAFD recyclingplant (KRP), in South Korea. Following the resolution of a numberof teething problems, it is now operating close to full capacity.

ZincOx plans to roll out Full Cycle plants around the world. Preliminarywork in a number of countries is well underway. The developmentof additional plants should enable ZincOx to realise its ambition ofbecoming one of the world’s largest zinc recycling companies.

Operational Review

Korean Recycling Plant (KRP)The Korean Recycling Plant, KRP is one of the world’s largestEAFD recycling facilities, having a nominal capacity of 200,000 tpaEAFD for the production of about 70,000 tpa zinc concentrate (HZO)and 100,000 tpa of iron product (ZHBI). KRP has exclusive longterm EAFD supply agreements with eight steel companies that havetargeted output of 175,000 tpa. The plant commenced productionin April 2012.

All the zinc concentrate (HZO) produced during 2014 has been highgrade (64-68% zinc) and of exceptional quality, having less than0.03% iron and with a very high washability of salts. All the productionis sold to Korea Zinc under a long term offtake contract.

The ramp up to full production in the first half of 2014 was hamperedby several stoppages, required to repair corrosion in the radiantheat exchangers. During this period, a special refractory wastested on parts of the walls of their inner tubes. These tests weresuccessful and in August all four heat exchangers were lined withthis material.

Strategic Report

ZincOx Resources plc, whose headquartersare in Surrey, UK, has received a Mover &Shaker award after being recognised as acompany which has made a significant impactinternationally on its market sector.

What makes the award unique is that nocompany was able to put itself forward or benominated. Instead, more than 5,000companies in the south of England wereresearched and independently assessedagainst a set of measures.

“The criteria include being a ‘game changer’in terms of developing new techniques andstandards,” explained Sean Wright, partner atShoosmiths and a co-presenter of the Award.

Left: Simon Hall, Finance Director, receivesThe South’s Movers & Shakers award from(left to right) Toby Wright (Deloitte), SeanWright (Shoosmiths), Martyn Begbour (UBS),Richard Dibden (CMA), and Matt Fleming(Emerge Group).



ENTSOTHER INFORM

ATIONOTHER INFORM

ATION


Production continued uninterrupted until November when the plantwas stopped to repair fallen refractory. Unfortunately the numerousstoppages for heat exchanger repairs over the previous two yearswill have weakened the refractory lining in the RHF and gas handlingsystem. Several areas of refractory were repaired in August butsome new areas showed weakness in November and were entirelyrebuilt, including the drop boxes. An inspection of the new refractorylining of the heat exchangers showed that, whilst generally good,some areas had degraded and both refractory and underlying metalneeded to be replaced. This degradation was probably due to poorinstallation procedures which have now been reviewed and improved.

A small failure of refractory near the offtake of the furnace had tobe repaired in December and special care was taken in its rebuild.It is now believed to be stable. The heat exchangers’ lining wasagain inspected but only very small repairs were necessary andthese too are believed to have resulted from the poor practicesemployed during the August remediation.

A new configuration of burners tested in December proved veryeffective and recovery and throughput increased while gasconsumption dropped. Energy and other reagents are close totarget consumptions, and whilst the unit cost of both gas andelectricity are significantly above the levels anticipated beforedevelopment, the cost of the coal has fallen.

The maintenance of the heat exchangers was planned for February2015, but as there was no sign of degradation, the plant was notclosed. Plant throughput was restricted due to a shortage of EAFDin March, and production was suspended so that the heatexchangers could be inspected. This showed very little damage tothe steel inner tubes of the heat exchangers so that the linings hadprovided an efficient barrier to corrosive gasses. The specialrefractory lining was refurbished and other minor repairs undertakenso that the plant recommenced operation after 14 days on the 4th April.

The plant is ramping up to full capacity and is currently operating atabout 93% of targeted throughput and 96% of targeted recovery sothat the overall performance of the plant is at about 90% of target.

The graphs show weekly production at KRP excluding weeks when theplant was fully or partially closed.

Korean Recycling Plant view from South West

KRP Plant Performance(Recovery x throughput as % of targets)

EAFD Zinc grade as % of target(27.2% zinc)

Zinc in concentrate produced as % of target(1,052t/week)

KRP Daily Meeting and Daily Briefing

120%

100%

80%

60%

40%

20%

0%

120%

100%

80%

60%

40%

20%

0%

120%

100%

80%

60%

40%

20%

0%

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15



Strategic ReportContinued


The refractory lining of the radiant heat exchangers has been shownto provide an effective barrier to corrosion, and so provides apractical solution to the problem. If it’s assumed that the refractorylining will need some attention every three to four months, annualrunning time and annual throughput will be reduced by about 10%(180,000 tpa EAFD).

In order to avoid heat exchanger maintenance stoppages and attainthe planned single three week closure per annum, a permanentsolution to the heat exchangers has been designed. This involvesthe removal of the heat exchangers and the installation of a coalfired air heater that will provide pre-heated combustion air for usein the furnace. Since coal is a very much cheaper source of energythan gas in Korea, the new configuration will have a lower totalenergy cost. The savings in the cost of refractory repair and energyand the ability to operate at the full nominal throughput are estimatedto create a combined benefit amounting to over US$6 million inEBITDA per annum

Efforts to sell the iron product have, to date, been unsuccessful andit has been sent mostly to landfill. Testing in some integrated steelworks is expected to start shortly. In order to realise the value ofthe iron in the ZHBI, a scoping study for its melting in a submergedarc furnace (SAF) has been completed.

The steel industry in Korea and in other Asian countries has beenseverely affected by cheap Chinese exports. Towards the end ofthe year, the amount of EAFD generated by the contracted millsdiminished by about 15% and the zinc grade of the EAFD also fell.The average zinc grade in the first half of the year was 5-10%greater than the target grade (27.2%). Since the major remediationin August, however, the grade has only averaged 25.6%. Theshortfall in EAFD being experienced in 2015 should be balanced bynew contracts commencing in the second quarter of the year, anddiscussions are underway with several potential suppliers of highergrade EAFD that should help to raise the average grade of thematerial being treated.

Technology

Zinc Concentrate (HZO) UpgradingDuring 2014, testwork on KRP’s zinc concentrate was undertakento confirm the best way to upgrade it to an industrial zinc oxideand several processes were tested. The best process was designedby ZincOx’s technical team and is called Consecutive MetalLeaching (“CML”). CML comprises a combination of existingtechnologies specifically configured to remove the halides,sulphates and deleterious base metals from the concentrate. Thezinc oxide that remains after this treatment has a grade of about99.7% zinc oxide, high enough to qualify for most industrial uses.

Laboratory scale CML testwork has provided samples of the zincoxide. These samples have been used to make glazes for theceramics industry and rubber samples, by laboratories thatspecialize in the technical qualification of raw materials. In bothcases the zinc oxide produced by upgrading the HZO was shownto be equally effective as leading market brands.

Iron Product UpgradingRepresentative ZHBI samples have been analysed and the resultsused to undertake sophisticated computer simulation of thesubmerged arc furnace (SAF) technology. The simulation wascarried out by Mintek, an internationally recognised metallurgicalengineering company. The computer modelling gives likely energyand reagent consumptions as well as iron, slag and fumecompositions. This information has been used in the scoping studyfor the installation of a melter at KRP, which indicates that KRP’sEBITDA could be increased by about US$10 million per annum(zinc price: US$2,250/t, scrap price: US$350/t). Melting trials areplanned for 2015.

New ProjectsThe Full Cycle approach, combining the RHF, CML and SAFtechnologies has been modelled financially. At a zinc price ofUS$2,250 per tonne, new Full Cycle developments should haverates of return in excess of 25% (pre-tax, ungeared).

ZincOx has been actively researching potential sites for Full Cycleplants over the past eight years. Thailand is likely to be the nextdevelopment but considerable work has been undertakenelsewhere so that a series of developments is envisaged.

Reviewing samples of briquettes on conveyor belt

At a zinc price of US$2,250 per tonne,new Full Cycle developments shouldhave rates of return in excess of 25%(pre-tax, ungeared).




ENTSOTHER INFORM

ATION

OtherIn the USA, the Group’s Big River Zinc facility continues to provideservices to third parties distributing sulphuric acid and dieselemission fluid. The possibility of using the facility to upgrade HZOgenerated by recycling activities would be feasible at Big River, but the cost of transporting feed material would be prohibitivelyexpensive. The use of the facility for piloting the CML upgradingprocess has been investigated; it would, however, be more expensivethan alternative piloting options available to the Company. Sincethe capacity of EAFD recycling facilities in North America is broadlyin balance with the generation of EAFD, the Company considersthe USA to be a low priority target.

In Turkey, the Company has carried out a review of the availabilityof EAFD taking into account generation and treatment facilities.New facilities, either under construction or being planned by steelmills, will result in surplus treatment capacity and ZincOx does notfeel an additional treatment facility is warranted.

In Russia, the Company has a joint venture with the Magnezit Group,for the investigation of an EAFD recycling plant to service steel millsin the former Soviet Union. The investigation, which is at earlystage, is being led by the Magnezit Group.

Performance Review

Financial

Group Results OverviewThe Group improved revenues by US$10.7millon (+39%) in the yearwhich resulted in revenues of US$38.2 million (2013: US$27.5 million).This helped the Group make a reduced gross loss figure in the yearof US$5.3 million (2013: US$12.8 million).

However, a one off impairment charge of US$14.0 million, includedin administrative expenses, has been made in the year, relatingmainly to Big River Zinc, a non-core asset in the USA.

When this one off charge is excluded, the Group made an underlyingEBITDA loss of US$6.0 million for the year to 31 December 2014(2013: US$15.4 million). This significant improvement was largelydue to the turnaround at KRP as the plant continued to showimproved financial performance month on month, finishing the yearwith an EBITDA loss at KRP of US$1.3 million (2013: US$9.2 million).

The impairment charge is the key reason why the result for the yearhas worsened even though the Group’s underlying EBITDA hasimproved by US$9.4million. The result for the year attributable toshareholders of the parent company was a loss of US$33.2 million(2013: US$26.3 million).

Key Performance Indicators Building on the physical throughputs and performance of 2013, theGroup sold 28,564 tonnes of zinc contained in concentrate in theyear from KRP (2013: 24,577 tonnes). This was the plant’s secondfull year in production and although the plant had various heatexchanger and refractory issues in the year, it has showed goodimprovements in key production metrics. These metrics (“KPIs”)continue to be monitored as well as other key economic operatingfactors through regular management meetings.

%KRP 2014 2013 change

Zinc in concentrate sold (tonnes) 28,564 24,577 +16Average zinc price (US$/tonne) 2,164 1,910 +13Zinc revenue billed (US$ millions) 37.5 27.1 +38Underlying EBITDA (US$ millions)* (1.3) (9.2) +86EAFD processed (tonnes) 119,124 103,420 +15* before any foreign exchange impact

The directors monitor any hazards that are reported on operationalsites and review any accidents and incidents as part of the ongoingenvironmental health and safety procedure. During the year, thetotal number of man hours worked across the Group was 182,000,with one lost time incident (2013: 208,000 hours and one lost timeincident). The lost time incident in the year involved an operator atKRP who suffered an injury to his ring finger when an accumulationof HZO became detached and fell onto his right hand.

At the Group level, the directors continue to monitor the cashrequirements of the business when compared to cash requirementsespecially to maintain development progress on the various projectsuntil a steady state production is achieved in Korea. Thenconsideration is given to any financing opportunities which need tobe pursued. As a result a strategic partner is being sought for newproject developments.

Thailand



Funding The Group completed a fundraising of £2.9 million (equivalent toUS$4.9 million) after expenses in April 2014. These funds wereraised for further optimisation of the plant during the ramp up, andongoing working capital requirements.

The initial development of KRP was funded through equity from the Group and two external loans from Korea Zinc. The Korea Zinc“Offtake Loan” for US$37.8 million and the Korea Zinc “DevelopmentLoan” for US$15 million.

Interest charges for the year, in relation to the Offtake Loan at USD6 month LIBOR +5%, were US$2.1 million (2013: US$2.1 million)and in relation to the Development Loan at an interest rate of 15%,were US$2.4 million (2013: US$2.3 million).

In order to assist KRP with its ongoing working capital management,it was agreed with Korea Zinc that any interest payments due underboth loan agreements could be deferred by twelve months in orderto assist KRP with its ongoing working capital management duringthe first half of 2014.

As a result, although the total Group interest of US$5.3 million hasbeen charged as an expense to the income statement in accordancewith Group policy, the actual interest paid in 2014 by the Group wasUS$2.6 million against the two Korea Zinc loans and US$0.7 million(£420k) against the £4.2 million of secured loan notes.

In September 2014 the Korea Zinc Development Loan ofUS$15 million was renegotiated to delay the capital repayment bytwelve months so that it now falls due in February 2016. In addition,further negotiations have subsequently taken place with Korea Zincduring March 2015 to amend the repayment schedule so that insteadof a bullet repayment of US$15 million in February 2016, therepayments have been split over six equal payments of US$3.1 million,beginning in February 2016, which includes the deferred interestthat Korea Zinc has previously agreed to roll up. In recognition of this,the offtake agreement with Korea Zinc has been increased to1,050,000 tonnes during these renegotiations.

In Korea, the Group also makes use of a rolling “receivables purchaseagreement” with Standard Chartered Bank Korea (“SCBK”), wherebyit can receive funds in between the monthly receipts that arereceived from Korea Zinc.

LiquidityThe cash funds of the Group at 31 December 2014 were US$1.2 million (2013: US$4.8 million). These cash funds were heldin a range of currencies at the year end, the most significant of whichwere US Dollars 0.7 million (2013: US$3.4 million), Korean Won355 billion (2013: KRW 2 billion), and Pounds Sterling 0.1 million(2013: £0.7 million).

Going ConcernThe directors consider various scenarios in reviewing the budgetsand projections for 2015 and for a period of at least twelve monthsfrom the date of this report. These scenarios review the financialmodelling of various throughput scenarios at KRP over the nexttwelve months including (but not limited to) sensitivity on the zincprice, recovery of zinc from EAFD, tonnes of zinc sold and keyoperating costs.

The zinc price assumption started with a review of the actual priceover the last twelve months and predictions of analysts for the next12-18 months. These predictions continue to be above today’sprices, due to a supply side deficit expected in the zinc market inthe coming 12-24 months. In light of these parameters, the directorshave made a price assumption that the zinc prices will rise toUS$2,200 per tonne through the second half of 2015 up fromtoday’s levels of US$2,150 per tonne. The ramp up profile isexpected to achieve a throughput at target production by the lastquarter of 2015. There are two further planned maintenance periodsalso assumed during the remainder of 2015. The zinc tonnes soldassume a rising zinc recovery up to target levels through theremainder of 2015. As throughput rises, so the operating costmetrics (i.e. measured in consumptions per tonne of EAFD), areexpected to fall through the remainder of the year.

Because of the continued focus on the performance of the KRPplant in any going concern forecast, the directors entered into therecent agreement regarding the Development Loan with Korea Zincto ensure that the project would have generated sufficient cash torepay the loan when it falls due. As a result, the capital repaymentrequired in February 2016 has been reduced to US$3.1 million, asopposed to US$15 million, which was the case prior to this agreement.

2015 has started very positively withKRP running well and continuously.

Zinc Analysis, Sampler S D Kim




ENTSOTHER INFORM

ATION

It should also be noted that discretionary spending is regularlyscrutinised and scheduled according to its impact on the Groupduring this critical period while completing the ramp up of KRP.Another factor that may impact the Group is the repayment of the£4.2 million loan notes, due in July 2015. These are secured againstthe assets held in Turkey and the directors believe that, either theremaining land in Turkey will be sold before July to meet thisliability, or that the term of the loan notes can be successfullyrenegotiated.

The directors have assessed the material uncertainties concerningthe future funding requirement of the Group which may cast doubtupon the Group’s ability to continue as a going concern and comparedthem with the levels of expected finance available at a corporate andproject level and in consideration of the expected ramp up, have areasonable expectation that the Group has adequate financialresources to manage its business risks and continue in operationalexistence for the next twelve months from the date of this report.

Financial Review of Operations

Korean Recycling Plant (KRP)KRP sold 28,564 tonnes of zinc in concentrate to Korea Zinc in theyear to 31 December 2014 (2013: 24,577 tonnes). All of the materialwas sold to Korea Zinc under the offtake agreement which hadbeen signed in April 2011 as part of the financing of the project. Thisresulted in revenues of US$37.5 million (12 months to 31 December2013: US$27.1 million). The quality of the product was higherduring 2014 with an average zinc grade of 65.6% compared to65.0% during 2013.

The product sold by KRP is a zinc oxide concentrate sold under an international formula and, as a result, the monthly revenues arealways dependent on the LME zinc price. The LME zinc price canbe volatile and during the year had an average of US$2,164 pertonne (2013 US$1,908 per tonne), with a maximum over the sameperiod of US$2,419 per tonne (2013: US$2,187 per tonne) and aminimum of US$1,941 per tonne (2013: US$1,783 per tonne).

The sales of zinc concentrate are made in US Dollars and themajority of costs incurred at KRP are incurred in KRW, the highpoint for this exchange rate in the year was 1,135 KRW per US$(2013:1,170 KRW per US$) and the low point was 1,010 KRW perUS$ (2013: 1,054 KRW per US$) with an average for the year of1,055 KRW per US$ (2013: 1,101 KRW per US$).

The analysts and forecasters who watch the zinc market continue tosuggest that as certain key mines become exhausted over the next12-24 months, the zinc market will go into a deficit on the supply sidewhich is expected to have a positive impact on the zinc price. Onekey measure for this is the zinc stocks, which were 931,175 tonnes at the start of 2014 and dropped by 26% to 691,600 tonnes by theyear end. This has continued since the year end such that by the endof March 2015 the stock had fallen a further 26% to 513,125 tonnes.

The underlying EBITDA loss for KRP, prior to any foreign exchangemovements, was US$1.3 million during the year (2013: US$9.2 million).

EAFD is a waste which we receive from the Korean steel mills thequality of which is dependent upon the scrap buying policies of thesteel mills. The incremental revenues in the year were achieved inspite of the zinc grade in the EAFD reducing to an average of 27.2%from an average of 28.2% during 2013. This is really due to theimprovement in average recovery in the year to 88% from 84%during 2013, and the improving zinc price.

As has been noted, the plant had various stoppages through theyear to remediate both the heat exchangers and the refractory in thefurnace. These stoppages severely limited the plant’s capacity in2014. Despite this, the plant still managed to process 119,000 tonnesof EAFD in the year compared to 103,000 tonnes the year before.The impact of running the KRP below its capacity of 200,000 tonnesper annum was that certain operating parameters were not yet atthe target levels and additional costs were incurred for remediation.

The remediation and maintenance costs required to fix the issuesamounted to US$5.2 million in the year, (2013: US$5.4 million) andwere charged to cost of sales during the year. In addition landfillcosts for EAFD not processed in the year during the remediationstoppages, amounting to US$1.1 million (2013: US$1.8 million) hasbeen charged to cost of sales. With stop/start production the qualityof the DRI produced was extremely variable and the DRI whichwas produced in the year was landfilled at a cost of US$1.7million(2013: US$1.7million). The impact of the stoppages at KRP resultedin the operation not achieving target cost levels for utilities and otherconsumables, notably the gas consumption and associated cost.Oxygen injection was introduced to the plant early in the year tohelp reduce the gas consumption. Since the December remediationthe gas consumption, which is the largest cost on the plant, hasbeen on target in terms of consumption per tonne EAFD. When theplant is operating at full capacity however, it is still expected thatthe other main operating costs will be close to planned levels.

We are now looking forward to beingable to roll this breakthrough technologyout to other parts of the world.

Sampling Station



A depreciation charge of US$6.1 million (2013: US$5.9 million) hasbeen included in cost of sales for KRP, in arriving at the result forthe year.

Other Projects

USAIn 2007 the Group purchased a 17 acre site in Ohio which wasintended to be the site of the first RHF plant. KRP, however, hassince become the first RHF for the Group and the land in Ohio willonly be required when the Group develops an RHF in the USA. TheEAFD supply agreements in the USA are under relatively long termarrangements between the mills and existing recyclers and, as aresult, the land in the USA is currently surplus to requirements. Thedirectors took the decision to put the land up for sale and, as aresult, the land is shown as an asset held for sale on the balancesheet with a value of US$0.4 million.

The Big River Zinc smelter in USA has been integral to all the Groupconsiderations for development of a recycling facility in the USA.Because of the uncertainty of the timing of a future recycling plantin the USA, the decision has been taken to financially impair theinvestment of the USA related assets (US$13.7 million). The Grouphas been seeking alternative activities at BRZ but, in the immediateabsence of firm plans, the directors feel the asset should be impaired.

TurkeyThe Group’s land in Turkey in the Light Industrial Zone, which waspurchased in 2006, was split into smaller plots to facilitate sales.These plots have been marketed over the last three years which hasresulted in the sale of 21 plots (55 in total) during 2014 (2013: 34plots sold) generating total cash of US$5.2 million (YTL 11.4 million).Since the end of the year all the remaining plots have been sold.

The income from the sale of the land in the Light Industrial Zone, isbeing used to pay the interest on the £4.2 million loan notes whichthe Group borrowed in August 2013. These proceeds are held inescrow for the loan note subscribers. At the end of December thebalance in the escrow account was £947k.

The £4.2 million was borrowed using the land assets held in Turkeyas collateral. In addition to the funds held in escrow, the land insidethe Heavy Industrial Zone is also being used as collateral to coverthe loan notes. The loan notes have an interest rate of 10% and arepayment date of July 2015.

The requirement to repay these loan notes in July has meant thedirectors need to fully appraise the likelihood of an RHF project inTurkey. The Turkish EAFD market was re-evaluated during the latterpart of 2014 to determine the availability of material. This concludedthat existing and processing capacity would not leave sufficient dustfor the development of a plant by ZincOx in Turkey. As a result, theGroup has taken the decision to actively market the land in the HeavyIndustrial Zone so that it may be sold to repay the loan notes.

Environmental, Health, Safety & QualityThe Group believes that what is good for the planet is good forbusiness and good for the communities in which ZincOx operates.There is an overriding commitment to Sustainable Developmentwhich is pursued through the effective management of Environment,Health, Safety and Quality (“EHSQ”) using best practices fromZincOx and other third parties.

As the projects are progressed internationally, the directors remainrelentless in their pursuit of an injury-free environment for all employeesand others who come onto ZincOx sites and the Group seeks toensure that its business contributes lasting benefits to societythrough the consideration of health, safety, social, environmental,ethical and economic aspects in all decisions and activities.

During 2014, some one hundred and eighty two thousand hourswere worked in ZincOx worldwide, including projects, with nosignificant environmental incidents and only one lost time incidentinvolving one of our employees at KRP. ZincOx’s managementbelieve that all incidents and injuries are preventable and strives tocreate a workplace culture where all employees and contractorsshare these beliefs.

RisksSet out below are certain risks which may affect performance.Such risks are not intended to be presented in any order of priority.Although the directors and senior management have significantexperience and take steps continually to mitigate and review risksas far as possible and reasonably practicable, any of the risks setout on page 13, as well as any other risks referred to in this annualreport, could have a material adverse effect on business performance.In addition, the internal and external risks set out on page 13 arenot exhaustive and additional risks, not presently known to thedirectors, or which the directors currently deem immaterial, mayarise or become material in the future.

The directors remainrelentless in their pursuit ofan injury-free environment for all employees and otherswho come onto ZincOx sites.




ENTSOTHER INFORM

ATION

Operational risks• Failure of equipment, • Failure of third party services,• Unavailability of materials and equipment is managed through

regular dialogue with external suppliers and monitoring ofequipment on the site by the maintenance team,

• Further remediation at KRP which may impact future cashgeneration of the plant,

• Environmental incidents are managed by routine monitoring and training of staff,

• Health and safety incidents, and nil returns are reported on amonthly basis,

• Single project dependence,• Reduced availability of EAFD in Korea, which is being mitigated

by finding new sources of dust, and • Loss of key personnel.

Financial risks• Zinc price movements and its associated volatility will affect the

monthly profitability of KRP, • Zinc price movements will affect the amount of finance which

may be available for the development of other projects within theGroup. Any decline in zinc prices will therefore have an adverseimpact on the business. No hedging is currently undertaken tomitigate this risk,

• Unscheduled loss of production at KRP will impact timing ofcash receipts and payments and further this will impact ongenerating surplus cash to fund the Group and repay the debts,

• Foreign exchange movements, notably between US Dollars andKorean Won (KRW) has a particular effect on the Group’s resultas the revenues are received in US Dollars (matching theborrowings of the Group) and the critical costs at KRP are inKRW. This is continuously monitored and no hedging is currentlyundertaken to mitigate this risk,

• Cost inflation is managed by reviewing alternative supplierswhere appropriate,

• Renewal of a suitable receivable purchase agreement, • Insurances may not cover all liabilities. Insurance policies are

held both at the Group level and at the project level, and arereviewed annually,

• Sale of land in Turkey,• Maintaining debt equity ratios in respect of borrowings,• Negotiation with authorities regarding spend commitment in

Korea, and• Any legal proceedings.

All of these risks could materially affect the Group, its business,results of future operations or financial condition. Policies and impactsrelating to financial risk management are set out in note 19 to thefinancial statements.

UncertaintiesSet out below are certain principal uncertainties which may affectpotential growth across the Group.• Dependence on the EAFD supply contracts, which is why the

Group is aiming to sign up long term EAFD agreements withsuppliers of EAFD within target territories for expansion,

• Availability of capital to fund other recycling projects. Thedirectors continue to maintain a good relationship withprospective suppliers of finance,

• Any unplanned stoppages at KRP,• Ensuring intellectual property and know how is protected, and• Competing technology.

The Group is further exposed to uncertainty connected with thepolitical, fiscal and legal systems, including taxation and currencyfluctuations in the territories in which the Group operates.

On behalf of the Board

Andrew WoollettChief Executive

14 April 2015

Head Office

United

Kingdo

m

Technical Office

Belgiu

m

South East Asia Recycling Project

Thailan

d

Korean Recycling Plant

South K

orea

Joint Venture

Russia

Directors


Simon HallFinance Director

Simon Hall is a Chartered Accountant andengineer with experience of businessdevelopment across a range of sectorsover the last 20 years. He was formerlyhead of finance in BT Consumer Mobilebefore joining ZincOx. Simon wasappointed to the Board in January 2006and is responsible for all financial mattersacross the Group.

Andrew WoollettChief Executive Officer

Andrew Woollett is a geologist with over 30years of international experience in mineralexploration and development. He began hiscareer with RTZ in Saudi Arabia and thenworked in Greenland for the EU. Uponcompletion of an MSc in mineral explorationfrom the Royal School of Mines in 1981 hejoined Cluff Resources plc and worked inthe UK, Eire, Zimbabwe, and Shanghai. Hewas a founder director of Ivernia West plcand in 1989 set up Reunion Mining plc, amulti-commodity African exploration andmining company where he was ExecutiveChairman until the company was taken overby Anglo American plc. In 1999 he set upZincOx with Noel Masson.

Jacques DewalensTechnical and Production Director

Jacques Dewalens is responsible for allprocess research and development andultimately for the Group’s productionoperations. Jacques joined ZincOx inSeptember 2007 as head of technicalservices and production manager. He has a PhD in Sciences with over 35 years ofexperience in the zinc industry, mostlyspent at Umicore and its precursor zincsubsidiaries. Jacques was appointed to the Board in July 2008.


Rod BeddowsNon-Executive Chairman

Rod Beddows has over 25 years ofexperience as a strategy consultant andfinancial adviser to mining and metalscompanies. He was the co-founder ofHatch Corporate Finance (now HCFInternational Advisers) and was its CEO for7 years. He is now a director and SeniorAdviser for Mining. Before that, he foundedand was Chairman and CEO of Beddowsand Co, one of the steel industry’s foremostconsultancy groups. He is also a SeniorAdviser for Steel with RBC (Royal Bank ofCanada). Rod was appointed to the Boardof ZincOx in February 2008, now chairs theNomination Committee and also sits on theRemuneration Committee.

Guy LaffertyNon-Executive Director

Guy Lafferty is a partner of Höegh CapitalPartners Limited, whose clients own10.01% of the Company’s issued sharecapital. Guy established Höegh CapitalPartners in 1990 as a specialist corporatefinance company and has been advisingthe Höegh family on its oil, gas and otherdirect investments since then. Guy wasappointed to the Board in May 2009, isChairman of the Remuneration Committeeand also sits on the Audit Committee.

Gautam DalalNon-Executive Director

Gautam Dalal, Chairman of the AuditCommittee and a member of theNomination Committee, is a CharteredAccountant with over 30 years of experiencewith KPMG. He was responsible for thecommencement of its business in Indiafrom 1993 to 1998 after which he spenttwo years in the UK managing the accountof a major industrial conglomerate globally.In 2000 he returned to India as Chairmanand CEO of KPMG’s Indian operations,growing the business to more than 1,000employees. In 2003 he returned to the UKand in 2008 he took over as Head of theDiversified Industrials market sector wherehe was involved with delivering businesschange agendas in major multinationalcorporations. Gautam was appointed to the Board in January 2011.



ENTSOTHER INFORM

ATION

Group information


Registered Company Number 3800208

Registered Office Knightway HousePark StreetBagshotSurrey GU19 5AQ

Nominated Adviser andJoint Broker Peel Hunt LLPMoor House120 London WallLondon EC2Y 5ET

Joint Broker finnCap60 New Broad StreetLondon EC2M 1JJ

Bankers HSBC Bank plcApex PlazaReadingBerkshire RG1 1YE

Auditors Grant Thornton UK LLPGrant Thornton HouseMelton StreetLondon NW1 2EP

Investor Relations Tavistock Communications131 Finsbury PavementLondon EC2A 1NT

SolicitorsEversheds LLPOne Wood StreetLondon EC2V 7WS

RegistrarsCapita RegistrarsThe Registry34 Beckenham RoadBeckenhamKent BR3 4TU

The Company’s share price listing can be found at www.zincox.com

Ian HalliwellCompany Secretary

Ian Halliwell qualified as an accountant in1994 and has over 20 years of experiencein the energy sector. His early experiencewas working on large oil and gasconstruction projects in the North Sea. Ianheld the role of Group Financial Controllerat both Reunion Mining plc and RidgeMining plc.


Corporate Governance

The Board of Directors

The Role of the BoardDuring the year, the Board comprised three executive directors andthree non-executive directors. The details of those directors are setout on pages 14 and 15. Gautam Dalal and Rod Beddows areconsidered independent with Rod Beddows being Chairman.

The Board meets at least five times a year and in 2014 met eighttimes. A summary of matters requiring action/approval by the Boardtypically includes determination and approval of the corporatestrategy, approval of interim and full year financial statements andreports, ensuring processes are in place to manage major risks,corporate governance and reporting to shareholders. The executivemanagement team make day-to-day operating decisions to ensureproper management of the Company’s business and for implementingthe Board’s approved strategy.

To enable the Board to discharge its duties all directors receiveappropriate and timely information. Briefing papers are distributedby the Company Secretary to all directors in advance of Boardmeetings. The Chairman ensures that all directors are properlybriefed on issues arising at Board meetings.

All directors are encouraged to bring an independent judgement tobear on issues of strategy, performance, resources and standardsof conduct. The non-executive directors have a particularresponsibility to ensure that the strategies proposed by theexecutive directors are fully considered. The Chairman ensures thatdirectors have access to independent professional advice asrequired in order to fulfil their duties. All directors have access tothe Company Secretary who is responsible for ensuring the Boardprocedures are followed and that the Board complies withapplicable rules and regulations. Relevant and appropriate trainingis available to every director.

Performance EvaluationThe Chairman is committed to ensuring that formal evaluation ofthe performance of the Board, its committees and individualdirectors is undertaken annually.

Internal ControlThe directors are responsible for the Group’s system of internalcontrol and for reviewing its effectiveness. The risk managementprocess and system of internal control are designed to managerather than eliminate the risk of failure to achieve the Group’sobjectives. Any such system of internal control can only providereasonable, but not absolute, assurance against materialmisstatement or loss.

Full Board meetings are held frequently to review Group strategy,direction and financial performance. The executive directors meetmonthly to review operational reports from all the Group’s areas ofoperations. This process is used to identify major business risksand evaluate their financial implications and ensures an appropriatecontrol environment. Certain control over expenditure is delegatedto on site managers subject to Board control by means of monthlybudgetary reports. Internal financial control procedures include: • Preparation and regular review of operating budgets and

forecasts,• Prior approval of all capital expenditure,• Review and debate of treasury policy, and• Unrestricted access of non-executive directors to all members

of senior management.

In addition, the processes used by the Board to review theeffectiveness of its system of internal control include: • The Audit Committee reviews the effectiveness of the risk

management process and significant risk issues are referred tothe Board,

• The Chairman of the Audit Committee reports the results ofAudit Committee meeting to the Board and the Board receivesminutes of all such meetings,

• The Audit Committee maintains close contact with the FinanceDirector and periodically instigates investigations into theeffectiveness and other aspects of internal control, and

• A register of the risks facing the Group together withcompensating internal controls is maintained and reviewed ona regular basis, with risk weightings assigned to ensure thatpriority is given to the major risks faced by the Group.

The Board has reviewed the effectiveness of the system of internalfinancial control for the period from 1 January 2014 to the date ofthis report.

Board Committees

Report of the Audit CommitteeThe Chairman of the Audit Committee is Gautam Dalal. TheCommittee is formally constituted with written terms of reference.Under these terms of reference, the Audit Committee may examineany matters relating to the financial affairs of the Group and theGroup’s audits, including reviews of the financial statements andannouncements, internal control and risk management procedures,accounting policies, the independence, appointment and fees ofexternal auditors and such other related functions as the Board mayrequire. During the year the Committee completed such reviews.

The Company currently has no internal audit function due to itsrelatively small size. The Audit Committee regularly reviews whetherit is appropriate for the Company to establish an internal auditfunction. A risk report is provided to the Audit Committee threetimes a year.



ENTSOTHER INFORM

ATION

As the Company’s shares are traded on AIM, the Company is not required to comply with the UK Corporate Governance Code (“the Code”).However, the maintenance of effective corporate governance remains a key priority for the Board of ZincOx and it therefore broadly followsthe principles of corporate governance as set out in the QCA (Quoted Companies Alliance) guidelines for an AIM Company.

Corporate GovernanceContinued


During the year, the membership of the Audit Committeecomprised two non-executive directors, Gautam Dalal (Chairman)and Guy Lafferty, with the Finance Director in attendance. TheChief Executive Officer is not a member, but may be invited toattend meetings of the Committee. The external auditors alsoattend for part of three meetings per annum and they have directaccess to the members of the Committee without the presence ofthe executive directors for independent discussions. The AuditCommittee met three times during 2014.

Report of the Remuneration CommitteeDuring the year, the membership of the Remuneration Committeecomprised Guy Lafferty (Chairman) and Rod Beddows. It determinesthe policy of the overall annual remuneration of the executivedirectors in consultation with the Chief Executive Officer and takesinto consideration external data and comparative third partyremuneration. The Committee has access to professional advicefrom inside and outside the Company and had one meeting in 2014.

Remuneration PolicyThe Group’s policy is to attract, retain and motivate high qualityexecutives capable of achieving the Group’s objectives and to offera remuneration package which is competitive with the sector inwhich the Group operates.

Share Option and Incentive PlansThe Company has the following share incentive schemes inoperation:• HMRC approved share option scheme for UK employees

(Company Share Option Plan),• An executive share option scheme on the same terms as

above for overseas employees and those UK employees whohave exceeded the £30,000 HMRC limit (Executive ShareOption Plan), and

• A performance share plan offering shares for no considerationfor incentivising directors and senior management (PerformanceShare Plan).

Options granted under the above schemes are subject toperformance criteria and generally cannot be exercised within threeyears. The Company’s remuneration policy with regard to options isto maintain an amount equivalent to 10% of the issued share capitalin options to the Company’s management and employees.

Details of directors’ emoluments are disclosed in note 3(b) to thefinancial statements and the directors’ options are disclosed above.

Directors and their InterestsIn accordance with the Company’s Articles of Association, SimonHall and Rod Beddows retire at the Annual General Meeting and,being eligible, offer themselves for re-election. Simon Hall enteredinto a service agreement with the Company on 10 January 2006.This agreement can be terminated on twelve months’ notice. RodBeddows entered into a letter of appointment with the Companyon 25 February 2008. This appointment can be terminated onthree months’ notice.

The directors in office as at the end of the year and their shareholdingsare shown in the table above.

Report of the Nomination CommitteeDuring the year, the membership of the Nomination Committeecomprised Rod Beddows (Chairman) and Gautam Dalal, with theCompany Secretary in attendance. The Chief Executive Officer isnot a member, but may be invited to attend meetings of theCommittee. The Committee is formally constituted with writtenterms of reference. The purpose of the Nomination Committee is to lead the process for Board appointments and to makerecommendations to the Board. The Committee met three times in 2014.

1 January 2014 or31 December 2014 subsequent date of appointment

Ordinary Shares Ordinary Sharesat £0.01 Options at £0.01 Options

Andrew Woollett 5,294,223* 4,514,854 4,175,596* 1,415,854Simon Hall 163,100 1,731,318 85,000 931,318Jacques Dewalens 253,445 1,500,000 71,445 700,000Rod Beddows 822,500 – 522,500 –Guy Lafferty – – – –Gautam Dalal 710,000** – 560,000** –Total 7,243,268 7,747,172 5,414,541 3,047,172

* 800,000 of the shares of Andrew Woollett are registered in the name of EFG Trust Company Limited, 429,108 are held in his pension fund and a further 187,787 areheld in the name of his children.

** held by Gautam Dalal and his immediate family.

In addition, 2,193,750 warrants are held by Andrew Woollett as at 31 December 2014 (2013: 2,193,750) and 1,125,000 warrants are held by Gautam Dalal as at 31 December 2014 (2013: 1,125,000).


Directors’ Report

The directors submit their report and the audited financial statementsof the Company and Group for the year ended 31 December 2014.

Directors’ Responsibilities StatementThe directors are responsible for preparing the Strategic Report, theDirectors’ Report and the financial statements of the Group and theCompany in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statementsfor each financial year. Under that law the directors have elected toprepare the Group financial statements in accordance withInternational Financial Reporting Standards as adopted by theEuropean Union (IFRSs) and parent company financial statementsin accordance with United Kingdom Accounting Standards (UnitedKingdom Generally Accepted Accounting Practice or UK GAAP).Under company law the directors must not approve the financialstatements unless they are satisfied that they give a true and fairview of the state of affairs and profit or loss of the Company and ofthe Group for that period. In preparing these financial statements,the directors are required to:• select suitable accounting policies and then apply them

consistently,• make judgements and estimates that are reasonable and

prudent,• state whether applicable IFRSs have been followed in the

Group financial statements, subject to any material departuresdisclosed and explained in the financial statements,

• state whether applicable UK GAAP standards have beenfollowed in the parent company’s financial statements, and

• prepare the financial statements on the going concern basisunless it is inappropriate to presume that the Company and theGroup will continue in business.

The directors are responsible for keeping adequate accountingrecords that are sufficient to show and explain the Company’stransactions and disclose with reasonable accuracy at any time thefinancial position of the Company and the Group and to enable themto ensure that financial statements comply with the Companies Act2006. They are also responsible for safeguarding the assets of theCompany and the Group and hence for taking reasonable steps forthe prevention and detection of fraud and other irregularities. Thedirectors confirm that: • so far as each director is aware, there is no relevant audit

information of which the Group’s auditor is unaware, and• the directors have taken all steps that they ought to have taken

as directors in order to make themselves aware of any relevantaudit information and to establish that the auditors are aware ofthat information.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the ZincOxResources plc website. Legislation in the United Kingdom governingthe preparation and dissemination of the financial statements maydiffer from legislation in other jurisdictions.

Results and DividendsThe Group’s consolidated loss for the year is disclosed in thePerformance Review (Financial) section of the Strategic Report onpage 9. The directors do not recommend the payment of a dividend,and the consolidated loss for the period will be transferred to theaccumulated retained losses in the financial statements.

Principal Risks and UncertaintiesThese are disclosed in the Strategic Report on pages 12 and 13.Policies and impacts relating to financial risk management are setout in note 19 to the financial statements.

Substantial ShareholdingsAs at 31 March 2015, the directors, in addition to their own holdings,have been notified of the following substantial interests equal to orgreater than 3% of the issued share capital of the Company.

Going ConcernThe Group’s business activities, together with any factors whichmay affect its future development, performance and position havebeen set out in the Strategic Report (pages 6 to 13). Additionally,the risk factors and uncertainties affecting the future success havebeen described in the Strategic Report. The directors have areasonable expectation that the Group has adequate financialresources to manage its business risks and continue in operationalexistence for the next twelve months from the date of this report.For these reasons they continue to adopt the going concern basisin preparing these financial statements.

Post Balance Sheet EventsThe post balance sheet events are covered in detail in note 21 tothe financial statements.

AuditorGrant Thornton UK LLP have signified their willingness to continuein office in accordance with Section 489 of the Companies Act2006. A resolution to reappoint them will be proposed at theforthcoming Annual General Meeting.

During the year ended 31 December 2014, the Board and the AuditCommittee approved an extension to the engagement term of theSenior Statutory Auditor responsible for the audit opinion in relationto ZincOx Resources plc. The term was extended from 5 to 6 yearsand is a reflection of operational issues that needed to be resolvedby the business during the year ended 31 December 2014. TheAudit Committee is satisfied that this extension does not in any wayprejudice the objectivity and independence of the auditor.

On behalf of the Board

Ian HalliwellCompany Secretary

14 April 2015



ENTSOTHER INFORM

ATION

PercentageNumber of of Issued

Substantial shareholdings Ordinary Shares Share Capital

Höegh Capital Partners Ltd 16,639,375 10.01IFC 15,963,412 9.60Sloane Robinson Global Fund 14,074,357 8.46Majedie Asset Management 10,759,693 6.47Teck Resources Ltd 5,520,491 3.32Andrew Woollett 5,294,223 3.18


We have audited the Group financial statements of ZincOx Resources plc for the year ended 31 December 2014 which comprise theconsolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidatedcash flow statement, the consolidated statement of changes in shareholders’ equity and the related notes. The financial reportingframework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adoptedby the European Union.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them inan auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyoneother than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorAs explained more fully in the Directors’ Responsibilities Statement set out on page 19, the directors are responsible for the preparation ofthe Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express anopinion on the Group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website atwww.frc.org.uk/auditscopeukprivate.

Opinion on financial statementsIn our opinion the Group financial statements:• give a true and fair view of the state of the Group’s affairs as at 31 December 2014 and of its loss for the year then ended; • have been properly prepared in accordance with IFRS as adopted by the European Union; and• have been prepared in accordance with the requirements of the Companies Act 2006.

Emphasis of matterIn forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note2(c) to the financial statements concerning the Group’s ability to continue as a going concern.

As explained in note 2(c), the zinc price, the recovery of zinc from EAFD, tonnes of zinc sold and key operating costs are critical to thefuture cash flow of the Group. In addition, another factor that may impact the Group, is the repayment of the £4.2 million loan notes due in July 2015, which will be funded by either the sale of the remaining land in Turkey or by the successful renegotiation of the terms of theloan notes.

These conditions, along with the other matters explained in note 2(c) to the financial statements, indicate the existence of a materialuncertainty which may cast significant doubt about the Group’s ability to continue as a going concern. Nevertheless, after making enquiriesand considering the uncertainties described above, the directors have a reasonable expectation that the Group has adequate resources tocontinue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis ofaccounting in preparing the annual financial statements. The financial statements do not include the adjustments that would result if theGroup was unable to continue as a going concern.

Opinion on other matter prescribed by the Companies Act 2006In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the Group financialstatements are prepared is consistent with the Group financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following where the Companies Act 2006 requires us to report to you if, in our opinion:• certain disclosures of directors’ remuneration specified by law are not made; or• we have not received all the information and explanations we require for our audit.

Other matterWe have reported separately on the parent company financial statements of ZincOx Resources plc for the year ended 31 December 2014.

David MillerSenior Statutory Auditorfor and on behalf of Grant Thornton UK LLPStatutory Auditor, Chartered AccountantsLondon

14 April 2015

Independent Auditor’s ReportTo the members of ZincOx Resources plc




ENTSOTHER INFORM

ATION

Consolidated Income StatementFor the year ended 31 December 2014

2014 2013Notes $’000 $’000

Revenue 22 38,151 27,522Cost of sales (43,413) (40,292)Gross loss (5,262) (12,770)Administrative expenses (net of gains and impairments) 3 (22,648) (8,912)Operating Loss (27,910) (21,682)

Underlying EBITDA Loss (5,975) (15,366)Other gains 4 1,119 1,228Impairment provisions 2 (13,970) (597)Foreign exchange (loss)/gain (1,257) 676Depreciation and amortisation (7,827) (7,623)Operating Loss 3 (27,910) (21,682)

Finance income 5 3 10Finance costs 5 (5,322) (4,661)Loss before tax (33,229) (26,333)Taxation 6 – 2Net Loss (33,229) (26,331)

Basic and diluted loss per ordinary share (cents) 7 (21.11) (24.75)Adjusted loss per ordinary share (cents)* 7 (12.24) (24.19)

* adjusted loss per ordinary share calculation excludes impairment provisions

The notes on pages 26 to 47 form an integral part of these financial statements.


2014 2013$’000 $’000

Loss for the year (33,229) (26,331)

Other comprehensive incomeItems that will be subsequently reclassified to profit or lossExchange differences on translating foreign operations (3,068) (289)Total comprehensive income for the year (36,297) (26,620)


Consolidated Statement of Comprehensive IncomeFor the year ended 31 December 2014




ENTSOTHER INFORM

ATION

Consolidated Balance SheetAs at 31 December 2014

2014 2013 2012Notes $’000 $’000 $’000

AssetsNon-Current AssetsIntangible assets 8 8,615 16,352 15,302Property, plant and equipment 9 115,681 134,078 137,519Investments 30 100 106 –Trade and other receivables 11 10 – –

124,406 150,536 152,821

Current AssetsInventories 12 1,651 1,403 2,011Trade and other receivables 11 4,405 3,540 5,199Restricted cash 14 1,476 667 –Cash and cash equivalents 1,195 4,752 10,617

8,727 10,362 17,827

Assets held for sale 13 3,107 1,484 3,138

Total Assets 136,240 162,382 173,786

LiabilitiesCurrent LiabilitiesTrade and other payables 15 (14,368) (13,640) (15,959)Loans and borrowings 16 (12,238) (2,026) (959)

(26,606) (15,666) (16,918)

Non-Current LiabilitiesTrade and other payables 15 (4,598) (3,730) (2,751)Loans and borrowings 16 (52,739) (59,664) (52,035)

(57,337) (63,394) (54,786)

Total Liabilities (83,943) (79,060) (71,704)

Net Assets 52,297 83,322 102,082

EquityShare capital 17 46,310 45,795 45,271Share premium 181,371 176,944 169,985Retained losses (153,491) (120,592) (94,638)Foreign currency reserve (21,893) (18,825) (18,536)Total Equity 52,297 83,322 102,082


Approved by the directors on 14 April 2015.

Simon HallDirector

Consolidated Cash Flow StatementFor the year ended 31 December 2014


2014 2013Notes $’000 $’000

Loss before taxation (33,229) (26,333)

Adjustments for:Depreciation and amortisation 7,827 7,623Interest received (3) (10)Interest expense 5,322 4,661Impairment of intangible assets 8 7,503 513Impairment of property, plant and equipment 9 6,467 –Impairment of trade and other receivables 11 – 84Loss on disposal of property, plant and equipment – 39Share based payments 23 330 377Increase/(decrease) in trade and other payables 2,130 (1,340)(Increase)/decrease in trade and other receivables (875) 1,575(Increase)/decrease in inventories (248) 608Foreign exchange losses/(gains) 1,257 (676)Other gains (1,119) (1,228)Cash utilised in operations (4,638) (14,107)Interest paid (2,571) (3,932)Taxation – 2Net cash flow from operating activities (7,209) (18,037)

Investing activitiesNet proceeds from disposal of assets 1,895 2,688Net proceeds from disposal of scrapped assets 10 69Purchase of intangible assets (596) (1,694)Purchase of property, plant and equipment (2,639) (3,233)Investment in Russian joint venture – (106)Interest received 3 10Net cash used in investing activities (1,327) (2,266)

Financing activitiesProceeds from borrowings 1,270 7,967Restriction of cash 14 (809) (667)Net proceeds from issue of ordinary shares 4,942 7,483Net cash received from financing activities 5,403 14,783

Net decrease in cash and cash equivalents (3,133) (5,520)Cash and cash equivalents at start of year 4,752 10,617Exchange differences on cash and cash equivalents (424) (345)Cash and cash equivalents at end of year 1,195 4,752





ENTSOTHER INFORM

ATION

Consolidated Statement of Changes in Shareholders’ EquityFor the year ended 31 December 2014

Totalattributable

to equity Non-Share Share FX Retained holders of controlling Totalcapital premium reserve losses parent interest equity$’000 $’000 $’000 $’000 $’000 $’000 $’000

Balance at 1 January 2012 39,525 165,850 (25,279) (85,451) 94,645 (8,931) 85,714Share based payments – – – 219 219 – 219Issue of share capital 5,746 4,135 – – 9,881 – 9,881Capital increase from non-controlling interest – – – – – 1,333 1,333Loss of control of subsidiary – – – – – 8,238 8,238Transactions with owners 5,746 4,135 – 219 10,100 9,571 19,671Loss for the year – – – (9,406) (9,406) (640) (10,046)

Other comprehensive incomeItems that will be subsequentlyreclassified to profit or lossExchange differences on translating foreignoperations – – 6,743 – 6,743 – 6,743Total comprehensive income for the year – – 6,743 (9,406) (2,663) (640) (3,303)

Balance at 31 December 2012 45,271 169,985 (18,536) (94,638) 102,082 – 102,082

Share based payments – – – 377 377 – 377Issue of share capital 524 6,959 – – 7,483 – 7,483Transactions with owners 524 6,959 – 377 7,860 – 7,860Loss for the year – – – (26,331) (26,331) – (26,331)

Other comprehensive incomeItems that will be subsequentlyreclassified to profit or lossExchange differences on translating foreignoperations – – (289) – (289) – (289)Total comprehensive income for the year – – (289) (26,331) (26,620) – (26,620)


Share based payments – – – 330 330 – 330Issue of share capital 515 4,427 – – 4,942 – 4,942Transactions with owners 515 4,427 – 330 5,272 – 5,272Loss for the year – – – (33,229) (33,229) – (33,229)

Other comprehensive incomeItems that will be subsequentlyreclassified to profit or lossExchange differences on translating foreignoperations – – (3,068) – (3,068) – (3,068)Total comprehensive income for the year – – (3,068) (33,229) (36,297) – (36,297)



Notes to the Financial StatementsFor the year ended 31 December 2014


1 Accounting Policies

(a) Accounting Convention and Basis of Preparation ofFinancial StatementsThe Company is a public limited liability company incorporated inthe United Kingdom. The principal accounting policies applied inthe preparation of these consolidated financial statements are setout below. These policies have been applied consistently to all theyears presented, unless otherwise stated.

The Group financial statements have been prepared in accordancewith International Financial Reporting Standards (“IFRS”) as adoptedby the EU. The Group has adopted all of the standards andinterpretations issued by the International Accounting StandardsBoard and the IFRS Interpretations Committee that are relevant toits operations.

Changes in accounting policies and disclosuresNo material changes to accounting policies arose as a result ofnew and amended standards adopted by the Group. Newstandards and interpretations currently in issue (as at 2 February2015) but not effective, based on EU mandatory effective dates, for accounting periods commencing on 1 January 2014 are:

• IFRS 9 Financial Instruments (IASB effective date 1 January2018 – not yet adopted by the EU)

• IFRS 14 Regulatory Deferral Accounts (effective 1 January2016 – not yet adopted by the EU)

• IFRS 15 Revenue from Contracts with Customers (effective 1 January 2017 – not yet adopted by the EU)

• IFRIC Interpretation 21 Levies (17 June 2014)• Defined Benefit Plans: Employee Contributions (Amendments

to IAS 19) (1 February 2015)• Amendments to IFRS 11: Accounting for Acquisitions of

Interests in Joint Operations (IASB effective date 1 January2016 – not yet adopted by the EU)

• Clarification of Acceptable Methods of Depreciation andAmortisation – Amendments to IAS 16 and IAS 38 (IASBeffective date 1 January 2016 – not yet adopted by the EU)

• Annual Improvements to IFRSs 2010-2012 Cycle (1 February2015)

• Annual Improvements to IFRSs 2011-2013 Cycle (1 January2015)

• Annual Improvements to IFRSs 2012-2014 Cycle (effective 1 January 2016 – not yet adopted by the EU)

• Amendments to IAS 16 and IAS 41: Bearer Plants (effective 1 January 2016 – not yet adopted by the EU)

• Amendments to IAS 27: Equity Method in Separate FinancialStatements (effective 1 January 2016 – not yet adopted by the EU)

• Sale or Contribution of Assets between an Investor and itsAssociate or Joint Venture – Amendments to IFRS 10 and IAS28 (effective 1 January 2016 – not yet adopted by the EU)

As far as can be determined at this stage, the directors anticipatethat the adoption of these Standards and Interpretations in futureperiods will have no material impact on the financial statements ofthe Group. The Group does not intend to apply any of thesepronouncements early.

Presentational currencyNotwithstanding that the Group continues to be managed from theUK, the directors recognise that its current and future operationswill be overseas. In addition, the Group receives sales revenuespredominantly in US Dollars and for this reason has reported itsfinancial results in US Dollars.

The Group has applied the principles of IAS 21 ‘The Effects ofChanges in Foreign Exchange Rates’ in preparing these financialstatements and has applied them to all periods in these financialstatements.

The Group has elected to translate its income statement at averageexchange rates for the period and to translate its assets andliabilities at period end exchange rates. Share capital and sharepremium reserves of the parent company have been translated athistoric exchange rates with any differences between the historicrates and the period end rates being charged to the foreignexchange translation reserve.

(b) Basis of Consolidation and Presentation of FinancialInformationWith the exception of certain items noted below, which are carriedat fair value, the consolidated financial statements have beenprepared under the historical cost convention.

The consolidated financial statements comprise the financialstatements of the Group and its subsidiaries as at 31 December2014. Control is achieved when the Group is exposed, or hasrights, to variable returns from its involvement with the investee andhas the ability to affect those returns through its power over theinvestee. Generally, there is a presumption that a majority of votingrights result in control. To support this presumption and when theGroup has less than a majority of the voting or similar rights of aninvestee, the Group considers all relevant facts and circumstancesin assessing whether it has power over an investee.

Consolidation of a subsidiary begins when the Group obtains controlover the subsidiary and ceases when the Group loses control of thesubsidiary. Assets, liabilities, income and expenses of a subsidiaryacquired or disposed of during the year are included in theconsolidated financial statements from the date the Group gainscontrol until the date the Group ceases to control the subsidiary.

All intra-group assets, liabilities, income and expenses and cashflows relating to transactions between members of the Group areeliminated in full on consolidation.

(c) Segmental ReportingReported segments are those components of the business where results are regularly reviewed by the Board to assess theirperformance and to make resource allocation decisions. Thereported segments are identified separately as ‘recycling operations’or ‘other segments’ due to the similarity of their economiccharacteristics and not by their geographical area of operation.




ENTSOTHER INFORM

ATION

(d) RevenueThe Group recognises revenue for the sale of goods when title andthe associated risks and rewards of ownership have passed to itscustomers. Revenues are measured at the fair value of theconsideration received or receivable, net of applicable sales taxes.In the case of zinc concentrate sales, the revenue is recognised atthe point of delivery and is priced at the end of each calendarmonth according to the price at the end of the month of delivery.An adjustment is then subsequently made between the month endprice and the month after month of arrival price using the zinc priceas published by the London Metal Exchange (“LME”).

The Group recognises revenue for the rendering of services when it is probable that the economic benefits associated with thetransaction will flow to the customer and that the stage ofcompletion of any such transaction is clearly measurable.

(e) Property, Plant and EquipmentProperty, plant and equipment is stated at cost, net of depreciationand any provision for impairment. Property, plant and equipment isdepreciated over their useful life. The major categories of property,plant and equipment which are depreciated on a straight-line basisdown to their residual values are;

Buildings up to 40 years or life of leaseComputer Equipment 4 to 5 yearsFixtures and Fittings 4 to 5 yearsPlant and Machinery 4 to 30 years Motor Vehicles 4 to 5 years

Any gain or loss arising on a disposal of an asset is determined asthe difference between the disposal proceeds and the carryingamount of the asset and is recognised in the income statement.

Residual values, useful economic lives and depreciation methodsare annually assessed.

Construction in Progress is an asset class in which project costsincurred during the construction of projects, which may take anextended period to complete, are capitalised. Upon satisfaction ofcertain completion tests at the end of the construction cycle, theconstruction in progress will be transferred to the asset classesstated above following which depreciation will commence.

The value of land is only tested when there is an indication ofimpairment.

The carrying values of depreciated property, plant and equipmentare assessed for impairment when indicators of impairment arisewith any impairment charged to profit or loss.

(f) Impairment Reviews of Intangible Assets and Property,Plant and EquipmentFor the purposes of assessing impairment, assets are grouped atthe lowest levels for which there are separately identifiable cashflows (cash-generating units). As a result, some assets are testedindividually for impairment and some are tested at cash-generatingunit level.

Other individual assets or cash-generating units are tested forimpairment whenever events or changes in circumstances indicatethat the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which theassets or cash-generating unit’s carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher of fairvalue, reflecting market conditions less costs to sell, and value inuse based on an internal discounted cash flow evaluation wherefuture cash flows are based on expected useful life, together withestimates of future zinc prices and costs. Any impairment loss ischarged to the assets in the cash-generating unit. All assets aresubsequently reassessed for indications that an impairment losspreviously recognised may no longer exist.

(g) InventoriesInventories are stated at the lower of cost and net realisable value.Cost is determined using the First-In-First-Out method.

(h) Foreign CurrencyThe functional currency of the parent company is Pounds Sterling.The amounts in the financial statements and accompanying notesfor the current year have been translated at 1.55728 US$/£ yearend rate where they relate to the Company or consolidated balancesheet and at 1.65274 US$/£ average rate for the year where theyrelate to the Company or consolidated income statement.

The comparative amounts in the financial statements andaccompanying notes for 2013 have been translated at 1.64880US$/£ year end rate where they relate to the Company orconsolidated balance sheet (2012: 1.61862 US$/£) and at 1.56353US$/£ average rate for the year where they relate to the Companyor consolidated income statement (2012: 1.58758 US$/£).

Transactions in foreign currencies are translated at the exchangerate ruling at the date of the transaction. Monetary assets andliabilities in foreign currencies are translated at the rates of exchangeruling at the balance sheet date. Non-monetary items that aremeasured at historical cost in a foreign currency are translated atthe exchange rate at the date of the transaction. Non-monetaryitems that are measured at fair value in a foreign currency aretranslated using the exchange rates at the date when the fair value was determined.

Any exchange differences arising on the settlement of monetaryitems or on translating monetary items at rates different from thoseat which they were initially recorded are recognised in profit or lossin the period in which they arise. Exchange differences on non-monetary items are recognised in other comprehensive income tothe extent that they relate to a gain or loss on that non-monetaryitem taken to other comprehensive income, otherwise such gainsand losses are recognised in profit or loss.

The assets and liabilities in the financial statements of foreignsubsidiaries and the parent company are translated at the rate ofexchange ruling at the balance sheet date. Exchange differencesthat arise from the re-translation of a net investment in subsidiariesor from re-translating intra-group balances, which are in substancepart of the net investment, are recognised in other comprehensiveincome and accumulated in the foreign currency reserve in equity.

Notes to the Financial StatementsContinued


1 Accounting Policies continued

The Group took advantage of the exemption in IFRS 1 and deemedthe cumulative translation differences for all foreign operations to benil at the date of transition to IFRS.

(i) Intangible Assets

i) Computer SoftwareAs per IAS 38, purchased computer software that will generateeconomic benefit beyond one year is capitalised as an intangibleasset and amortised over its expected useful economic life of fouryears on a straight line basis.

ii) Deferred Development Costs and Related OverheadsDevelopment costs incurred on specific projects are only capitalisedin accordance with IAS 38 when recoverability can be assessedwith probable economic certainty. The directors review each projecton a technical and commercial basis in line with the impairmenttesting noted in note 1(f). In the event that it becomes evident thatcapitalised costs are unlikely to be recovered from future revenues,they are either written off immediately to the profit or loss, amortisedor an impairment provision is made.

Capitalised development costs relating to the Group in general, andthat satisfy the provisions of IAS 38, are amortised over their usefuleconomic life of 20 years on a straight line basis and subject to thesame impairment testing noted in note 1(f).

(j) TaxationIncome tax expense represents the sum of tax currently payableand deferred tax.

Current tax is the tax currently payable based on taxable profit forthe year using tax rates enacted or substantively enacted at thebalance sheet date.

Deferred tax is recognised on the difference between carryingvalues of assets and liabilities in the financial statements and thecorresponding tax bases used in the computation of taxable profitand is accounted for using the liability method. However, deferredtax is not provided on the initial recognition of goodwill or on theinitial recognition of an asset or liability unless the relatedtransaction is a business combination or affects tax or accountingprofit. Deferred tax liabilities are generally recognised for all taxabletemporary differences and deferred tax assets are recognised tothe extent it is probable that taxable profits will be available againstwhich deductible temporary differences can be utilised.

Tax losses which are available to be carried forward as well asother income tax credits to the Group are assessed for recognitionas deferred tax assets.

Deferred tax assets and liabilities are calculated at tax rates thathave been enacted or substantively enacted. Deferred tax ischarged or credited to the profit or loss, except when it relates toitems charged directly to equity, in which case the deferred tax isalso dealt with in equity. Deferred tax relating to items recognised inother comprehensive income is recognised in other comprehensiveincome.

Deferred tax assets relating to brought forward tax losses are notyet recognised by the Group, but they will be recognised to theextent that taxable profit will be available in the future.

(k) PensionsThe pension costs charged to the profit or loss represent thecontributions payable during the period to defined contributionschemes.

(l) Leased AssetsIn accordance with IAS 17, the economic ownership of a leasedasset is transferred to the lessee if the lessee bears substantially allthe risks and rewards related to the ownership of an asset. Therelated asset is recognised at the time of inception of the lease atthe fair value of the leased asset, or, if lower, the present value ofthe minimum lease payments to be borne by the lessee. Acorresponding amount is recognised as a finance leasing liability.

The interest element of leasing payments represents a constantproportion of the capital balance outstanding and is charged toprofit or loss over the period of the lease.

All other leases are regarded as operating leases and the paymentsmade under them are charged to profit or loss on a straight linebasis over the lease term.

(m) Financial AssetsAll financial assets are recognised when the Group becomes aparty to the contractual provisions of the instrument. Financialassets, other than those categorised as at fair value through profitor loss, are recognised at fair value plus transaction costs. Financialassets categorised as at fair value through profit or loss arerecognised initially at fair value with transaction costs expensed inprofit or loss.

Cash and cash equivalents comprise cash on hand, deposits heldon call with banks and short term, highly liquid investments that arereadily convertible into known amounts of cash and which aresubject to insignificant risk of changes in value. For the purposes ofthe cash flow statement, cash and cash equivalents are adjusted toreflect bank overdrafts which are repayable on demand.

Trade receivables and loans are measured subsequent to initialrecognition at amortised cost, less provision for impairment.




ENTSOTHER INFORM

ATION

(n) Financial LiabilitiesFinancial liabilities are obligations to pay cash or other financialassets and are recognised when the Group becomes a party to thecontractual process of the instrument. Financial liabilitiescategorised as at fair value through profit or loss are recordedinitially at fair value, all transaction costs are recognisedimmediately in profit or loss.

Financial liabilities categorised at fair value through profit or loss arere-measured at each reporting date at fair value, with changes infair value being recognised in profit or loss. All other financialliabilities are recorded at amortised cost, using the effective interestmethod, with interest-related charges recognised as an expense infinance cost in the income statement. Finance charges, includingpremiums payable on settlement or redemption and direct issuecosts, are charged to the income statement on an accruals basisusing the effective interest method and are added to the carryingamount of the instrument to the extent that they are not settled inthe period in which they arise.

(o) Share Based PaymentsAll share based payment arrangements granted after 7 November2002 are equity-settled transactions that are recognised in thefinancial statements.

The fair value of any share options or warrants granted toemployees and directors, or in exchange for goods and services,are recognised as an expense in the income statement with acorresponding entry to retained earnings. This fair value isappraised at the grant date.

If vesting periods or other non-market performance conditionsapply, the expense is allocated over the vesting period, based onthe best available estimate of the number of share options orwarrants expected to vest. Estimates are revised subsequently ifthere is any indication that the number expected to vest differsfrom previous estimates. Any cumulative adjustment prior tovesting is recognised in the current period. No adjustment is madeto any expense recognised in prior periods if share options orwarrants that have vested are not exercised.

Upon exercise of share options or warrants, the proceeds receivednet of associated transaction costs are credited to share capitaland where appropriate, share premium.

For share options, fair value is measured by use of the Black-Scholes model. The expected life used in the model has beenadjusted, based on management’s best estimate, for the effects ofnon-transferability, exercise restrictions, and behaviouralconsiderations. For warrants, fair value is measured by use of theMonte Carlo method, and adjusted in the same way as for theshare options.

(p) Borrowing CostsBorrowing costs directly attributable to the construction or productionof qualifying assets, which are assets that necessarily take asubstantial period of time to get ready for their intended use, areadded to the cost of those assets from the commencement ofincurring borrowing costs until such time as the assets aresubstantially ready for their intended use. Investment income earnedon the temporary investment of specific borrowings pending theirexpenditure on qualifying assets is deducted from the borrowingcosts eligible for capitalisation.

All other borrowing costs are reflected in profit or loss in the periodin which they are incurred.

(q) Restricted CashRestricted cash is excluded from cash and cash equivalents and isdescribed as current where it is planned to use the cash in the nexttwelve months and non-current for the remaining balance.

(r) Underlying EBITDAThis is a key measure to assess the underlying financialperformance of the operating divisions and the Group as a whole.The Group has chosen to define this measure as ‘earnings beforeinterest, depreciation and amortisation’ and specifically excludesany impairment provisions, foreign exchange gains and losses orexceptional gains and losses charged or credited to profit or loss.



Other minor TotalORP BRZ projects impairment

Impact on Group Notes $’000 $’000 $’000 $’000

Intangible assets 8 7,330 – 173 7,503Property, plant and equipment 9 101 6,313 53 6,4672014 provision 7,431 6,313 226 13,970

2 Critical Accounting Estimates and JudgementsEstimates and judgements are continually evaluated and are basedon historical experience and other factors, including expectationsof future events that are believed to be reasonable under thecircumstances.

The Group makes estimates and assumptions concerning thefuture, which by definition will seldom result in actual results thatmatch the accounting estimate. The estimates and assumptionsthat have a significant risk of causing material adjustments to thecarrying amount of assets and liabilities within the next financialyear are discussed below:

(a) Impairment ReviewsIn accordance with the accounting policy stated above, the Groupperforms an assessment of the recoverability of intangible assets tosee whether any of the development projects have sufferedimpairment. This assessment is dependent on the future viability of the relevant products and processes. The methodology followedin order to assess the recoverable amount of an individual cash-generating project is to consider a cash flow model over 20 yearsor the life of the plant, whichever is shorter, and with appropriateassumptions for zinc price, operating and capital developmentcosts. In performing any cash flow analysis the Group uses riskadjusted discount rates based on support from third parties.

The Group also performs impairment tests on assets under thecourse of development by estimating the recoverable amount ofthe cash-generating project to which it has been allocated. Thisrecoverable amount is estimated by either discounting future cashflows (value in use) or by considering the fair value less costs to sellof the assets. It should be noted that, where discounting is used,the zinc price and the discount rates have the most significantimpact on the value in use calculations.

Following the decision to make KRP the first RHF project, the Grouphas been seeking alternative uses for its USA assets since 2012and notably for Big River Zinc. In light of the uncertainty about afuture project in USA, specifically due to the non-availability ofEAFD under long term supply agreements, the Group has decidedto make a financial impairment of the US$7,330k intangible assetsin USA, which were previously held for the Ohio Recycling Project.These intangible costs reflect the work which was previously doneto enable an RHF development in USA. BRZ was always intendedto be an integral part of any RHF development in USA because ofits ability to wash the concentrate so, as a result of the impairmentof the intangible assets in USA, the Group has also made thedifficult decision to also impair the property, plant and equipmentassets at BRZ (US$6,313k).

A further US$173k of intangible assets and US$53k of equipment,representing group wide costs previously held against futuredevelopment, have also been impaired following a review of thesecosts

The table below summarises the impairment provisions made inthe year and included in the Group income statement.

For the year ending 31 December 2013, the Group madeimpairments of US$513k against intangible assets and US$84kagainst trade and other receivables.

(b) Share Based PaymentsIn order to calculate the charge for share based payments asrequired by IFRS2, the Group makes estimates principally relatingto the assumptions used in its option or warrant pricing model asset out in note 23. The charge made in the year in respect ofoptions is US$330k (2013: US$8k) and for warrants is US$ nil(2013: US$369k).

(c) Going ConcernThe directors consider various scenarios in reviewing the budgetsand projections for 2015 and for a period of at least twelve monthsfrom the date of this report. These scenarios review the financialmodelling of various throughput scenarios at KRP over the nexttwelve months including (but not limited to) sensitivity on the zincprice, recovery of zinc from EAFD, tonnes of zinc sold and keyoperating costs.

The zinc price assumption started with a review of the actual priceover the last twelve months and predictions of analysts for the next12-18 months. These predictions continue to be above today’sprices, due to a supply side deficit expected in the zinc market inthe coming 12-24 months. In light of these parameters, thedirectors have made a price assumption that the zinc prices willrise to US$2,200 per tonne through the second half of 2015 upfrom today’s levels of US$2,150 per tonne. The ramp up profile isexpected to achieve a throughput at target production by the lastquarter of 2015. There are two further planned maintenanceperiods also assumed during the remainder of 2015. The zinctonnes sold assume a rising zinc recovery up to target levelsthrough the remainder of 2015. As throughput rises, so theoperating cost metrics (i.e. measured in consumptions per tonne of EAFD), are expected to fall through the remainder of the year.


3(a) Operating Loss2014 2013$’000 $’000

Operating loss is stated after charging:Auditors’ remuneration:

Fees payable to the Company’s auditors for the audit of the Group accounts 82 79Fees payable to the Company’s auditors for the audit of subsidiary accounts 26 30Fees payable to the Company’s auditors for other services 17 13Tax services 28 17Fees payable to other external auditors for the audit of subsidiary accounts 5 5

Foreign exchange loss on monetary assets 1,257 –Depreciation of owned property, plant and equipment 7,424 7,252Depreciation of leased property, plant and equipment 19 17Amortisation of intangible assets 384 354Operating leases 781 626

And after crediting:Foreign exchange gain on monetary assets – 676

No depreciation was capitalised as property, plant and equipment (2013: US$ nil, 2012: US$345k).

3(b) Directors and Employees2014 2013$’000 $’000

Wages and salaries 5,481 5,554Social security costs 558 556Pensions 205 204Share based payments on options (note 23) 330 8

6,574 6,322

The monthly average number of persons employed by the Group (including directors) during the year was 79 (2013: 87).



ENTSOTHER INFORM

ATION

Because of the continued focus on the performance of the KRPplant in any going concern forecast, this was the reason thedirectors made the recent agreement regarding the DevelopmentLoan with Korea Zinc to ensure that the project would havegenerated sufficient cash to repay the loan when it falls due. As aresult, the capital repayment required in February 2016 has beenreduced to US$3.1 million, as opposed to US$15 million, whichwas the case prior to this agreement.

It should also be noted that discretionary spending is regularlyscrutinised and scheduled according to its impact on the Groupduring this critical period while completing the ramp up of KRP. Another factor that may impact the Group is the repayment of the£4.2 million loan notes, due in July 2015. These are secured againstthe assets held in Turkey and the directors believe that, either theremaining land in Turkey will be sold before July to meet this liability,or that the term of the loan notes can be successfully renegotiated.

The directors have assessed the material uncertainties concerningthe future funding requirement of the Group which may cast doubtupon the Group’s ability to continue as a going concern andcompared them with the levels of expected finance available at acorporate and project level and in consideration of the expectedramp up, have a reasonable expectation that the Group hasadequate financial resources to manage its business risks andcontinue in operational existence for the next twelve months fromthe date of this report.



3(b) Directors and Employees continued

Directors and key management personnelThe directors, which include both executive and non-executive directors, are the key management personnel of the Group. An amountequivalent to US$106k (2013: US$101k) for employers’ national insurance was incurred by the Group in respect of the key managementpersonnel.

2014 2013Other Total Total Total

Salary Bonus benefits emoluments Pension remuneration remuneration$’000 $’000 $’000 $’000 $’000 $’000 $’000

Andrew Woollett 407 – 12 419 – 419 394Simon Hall 286 – 5 291 28 319 302Jacques Dewalens* 419 – 3 422 – 422 356Rod Beddows 71 – – 71 – 71 67Guy Lafferty – – – – – – –Gautam Dalal 58 – – 58 – 58 55Totals 1,241 – 20 1,261 28 1,289 1,174

* included above are emoluments paid as related party transactions (see note 3(c) below).

Full details of directors share options are included under Corporate Governance (see page 18).

An amount of US$263k has been charged to the income statement for the year (2013: US$2k) in respect of share based payments onoptions for directors.

There were no share options exercised by the directors in the year (2013: nil).

The number of directors who participated in defined contribution pension schemes was one (2013: one).

3(c) Related Party TransactionsDuring the year ended 31 December 2014 the Group paid €316k, equivalent to US$422k (2013: €268k equivalent to US$356k) fortechnical consultancy services to Dew Consulting bvba and Zinc Consult Sprl, companies in which Jacques Dewalens, ZincOx Resourcesplc’s Technical and Production Director, had an interest.

Loan notesDuring the year ended 31 December 2014, the Group paid £97,500, equivalent to US$161k (2013: £36,329, equivalent to US$57k) ofinterest (gross of withholding tax) to Andrew Woollett, ZincOx Resources plc’s Chief Executive, in respect of loan notes taken out in 2013.This cost was charged to the income statement and included within finance costs. The balance outstanding on the loan notes issued toAndrew Woollett at 31 December 2014 was £975,000.

During the year ended 31 December 2014, the Group paid £50,000, equivalent to US$83k (2013: £16,986 equivalent to US$27k) ofinterest (gross of withholding tax) to Gautam Dalal, a non-executive director of ZincOx Resources plc, in respect of loan notes taken out in 2013. This cost was charged to the income statement and included within finance costs. The balance outstanding on the loan notesissued to Gautam Dalal at 31 December 2014 was £500,000.

Further information concerning the loan notes is detailed in note 16 ‘Loans and Borrowings’.

3(d) Administrative Expenses (net of gains and impairments)2014 2013

Notes $’000 $’000

Administrative costs (excluding depreciation/amortisation) (7,262) (8,888)Other gains 4 1,119 1,228Impairment provisions 2 (13,970) (597)Foreign exchange (loss)/gain (1,257) 676Depreciation and amortisation (1,278) (1,331)

(22,648) (8,912)


4 Other Gains2014 2013$’000 $’000

Gain on disposal of scrap equipment 10 69Gain on disposal of property, plant and equipment 1,109 1,159

1,119 1,228

The gain on disposal of scrap equipment in the year relates to the sale of redundant equipment from Big River Zinc Corporation. The gain inthe prior year relates to the sale of equipment at Pearl Zinc SA prior to its disposal in December 2013.

The gain on disposal of property, plant and equipment in the year and for the prior year relates to the ongoing sale of land from ZincOxAnadolu Cinko SVTAS in Turkey.

5 Finance Income/(Costs)2014 2013$’000 $’000

Interest received 3 10Interest paid (5,322) (4,661)

(5,319) (4,651)

6 Taxation2014 2013$’000 $’000

Taxation on loss for the yearOverseas taxation – (2)Current tax credit – (2)

The tax assessed for the year is lower than the standard rate of tax in the UK of 21% (2013: 23%). The differences are explained as follows:

2014 2013$’000 $’000

Loss on ordinary activities before tax (33,229) (26,333)Loss on ordinary activities multiplied by weighted standard rate of corporation tax in the UK of 21.5% (2013: 23.25%) (7,144) (6,122)

Effect of:Disallowed expenses 323 249Non taxable income (230) 97Deferred tax not recognised 7,051 5,774Current tax credit for year – (2)

The Company has deferred tax assets of US$10.9 million that it doesn’t recognise.

The Group has an open tax enquiry in relation to the deferred capital receipts following the sale of Shaimerden. The nature of the enquiryrelates to the value of receipts that were expected and the withholding tax deductions that the Group can make use of. The directors havesought extensive tax advice from leading tax counsel on the specific issues and, as a result, have reached the conclusion that no provisionis required.



ENTSOTHER INFORM

ATION



7 Loss Per ShareThe calculation of the loss per share is based on the loss attributable to ordinary shareholders of US$33,229k (2013: US$26,331k) dividedby the weighted average number of shares in issue during the year of 157,388,897 (2013: 106,370,166).

An adjusted loss per ordinary share for the year has been presented to exclude the impairment provisions made in the year of US$13,970k(2013: US$597k). It has been calculated based on adjusted loss attributable to ordinary shareholders of US$19,259k (2013: US$25,734k).

There is no dilutive effect of the share options in issue during 2014 and 2013.

8 Intangible AssetsDeferred Group Total

development Computer intangiblecosts software assets$’000 $’000 $’000

CostAt 1 January 2012 13,989 530 14,519Additions 679 7 686Foreign exchange 645 23 668Impairment provisions (18) – (18)At 1 January 2013 15,295 560 15,855Additions 1,966 5 1,971Disposals (281) (33) (314)Foreign exchange 242 12 254Impairment provisions (513) – (513)At 1 January 2014 16,709 544 17,253Additions 596 – 596Foreign exchange (488) (35) (523)Impairment provisions (7,503) – (7,503)At 31 December 2014 9,314 509 9,823

Accumulated AmortisationAt 1 January 2012 3 512 515Charge for the year 1 15 16Foreign exchange – 22 22At 1 January 2013 4 549 553Charge for the year 347 7 354Released on disposals (4) (33) (37)Foreign exchange 19 12 31At 1 January 2014 366 535 901Charge for the year 378 6 384Foreign exchange (42) (35) (77)At 31 December 2014 702 506 1,208

Net Book ValueAt 31 December 2014 8,612 3 8,615At 31 December 2013 16,343 9 16,352At 31 December 2012 15,291 11 15,302

Following an impairment review at the year end, of the deferred development costs carried by ZincOx Resources plc, impairment provisions ofUS$7,503k have been made against their carrying value (see note 2(a) for details).

All deferred development costs that have been written off in the year are included in profit or loss in arriving at an operating loss.


9 Property, Plant and EquipmentLand and Plant and Construction Fixtures and Computer Motorbuildings machinery in progress fittings equipment vehicles Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

CostAt 1 January 2012 8,250 21,253 273,287 194 583 1,145 304,712Additions 346 5,017 31,019 – 30 1 36,413Transfers 16,906 102,145 (124,830) – – – (5,779)Disposals (802) (5) (1,853) (4) (91) – (2,755)Reclassify prior year impairment provision (34) 46 (4,300) – (12) – (4,300)Foreign exchange 364 64 7,711 6 17 5 8,167At 1 January 2013 25,030 128,520 181,034 196 527 1,151 336,458Additions 7 164 3,028 – – 34 3,233Transfers – 1,204 (1,204) – – – –Disposals (451) – – – 34 (98) (515)Reclassifications (289) 3,209 (2,920) – – – –De-consolidate ZincOx Yemen subsidiary – (7,395) (155,998) (38) (74) (949) (164,454)Foreign exchange (209) 1,629 36 4 11 8 1,479At 1 January 2014 24,088 127,331 23,976 162 498 146 176,201Additions 9 933 1,692 – 5 – 2,639Transfers – 3,486 (3,486) – – – –Disposals – – – – (3) – (3)Reclassifications (2,714) (2,038) 2,038 – – – (2,714)Foreign exchange (940) (4,207) (188) (12) (36) (16) (5,399)At 31 December 2014 20,443 125,505 24,032 150 464 130 170,724

Depreciation and Impairment ProvisionsAt 1 January 2012 381 15,619 178,155 169 502 1,058 195,884Charge for the year 367 4,805 – 8 46 116 5,342Transfers – – (1,808) – – – (1,808)Impairment provisions/(reversals) – (257) 3,815 (3) (6) (79) 3,470Released on disposals – (4) – (4) (90) – (98)Reclassify prior year impairment provision – – (4,300) – – – (4,300)Foreign exchange 28 259 136 6 16 4 449At 1 January 2013 776 20,422 175,998 176 468 1,099 198,939Charge for the year 519 6,698 – 5 27 20 7,269Released on disposals – – – – 34 (92) (58)Reclassifications – 3,744 (3,744) – – – –De-consolidate ZincOx Yemen subsidiary – (7,395) (155,998) (38) (74) (949) (164,454)Foreign exchange 34 371 – 4 11 7 427At 1 January 2014 1,329 23,840 16,256 147 466 85 42,123Charge for the year 531 6,862 – 5 22 23 7,443Impairment provisions 1,115 1,810 3,540 – 2 – 6,467Released on disposals – – – – (3) – (3)Reclassifications (101) – – – – – (101)Foreign exchange (74) (754) (1) (11) (35) (11) (886)At 31 December 2014 2,800 31,758 19,795 141 452 97 55,043

Net Book ValueAt 31 December 2014 17,643 93,747 4,237 9 12 33 115,681At 31 December 2013 22,579 103,491 7,720 15 32 61 134,078At 31 December 2012 24,254 108,098 5,036 20 59 52 137,519



ENTSOTHER INFORM

ATION



9 Property, Plant and Equipment continuedA full impairment of property, plant and equipment across several asset categories was made at Big River Zinc, amounting to US$6,313k(see note 2(a) for details).

The land held in Ohio was impaired in the year by US$101k down to its market value. This land has subsequently been put up for sale andreclassified as assets held for sale under IFRS 5.

A further impairment of US$53k was made against other minor projects for assets previously capitalised as Construction in Progress.

An amount of US$ nil (2013: US$ nil, 2012: US$345k), representing capitalised depreciation, is included within the property, plant andequipment additions (Construction in Progress) for the year.

The Construction in progress amounts shown above also include capitalised interest during the construction period as follows:• Interest paid and payable on borrowings of US$ nil (2013: US$ nil, 2012: US$1.3 million).• Interest received on the investment of above borrowings US$ nil (2013: US$ nil, 2012: US$33k).

10 Finance Lease Liabilities

Minimum Minimum Minimumlease lease lease

payments Interest Principal payments Interest Principal payments Interest Principal2014 2014 2014 2013 2013 2013 2012 2012 2012$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Finance lease liabilitiesare payable as follows:Less than one year 16 1 15 24 2 22 17 2 15Between one and five years 14 – 14 35 1 34 28 1 27

30 1 29 59 3 56 45 3 42

Assets held within the Group under finance leases had a net book value at 31 December 2014 of US$30k (2013: US$54k, 2012: US$41k).

11 Trade and Other Receivables2014 2013 2012$’000 $’000 $’000

CurrentTrade receivables 3,791 2,479 3,577Deposits 7 12 55Other debtors 324 723 1,368Prepayments 283 326 199

4,405 3,540 5,199

Non-CurrentDeposits 10 – –

10 – –

None of the current receivables are past due.


12 Inventories2014 2013 2012$’000 $’000 $’000

Raw materials 1,204 1,239 2,011Finished goods 447 164 –

1,651 1,403 2,011

The cost of inventory recognised as an expense and included in ‘cost of sales’ amounted to US$8,801k (2013: US$7,286k, 2012:US$2,918k).

There were no write-down of inventories in the period (2013: US$66k, 2012: US$ nil).

13 Assets Held for SaleFollowing the decision to sell the land inside the Heavy Industrial Zone at Aliaga, Turkey, this asset has now been classified as assets heldfor sale. The historic cost of US$2.2 million (YTL 5.2 million) has been applied as the realisable value.

ZincOx also owns land in the Light Industrial Zone at Aliaga, which was originally purchased in 2006 but considered surplus torequirements in 2011. It has subsequently been split into smaller plots to facilitate its sale with the majority of the smaller parcelled plotsnow sold as at the end of 2014. The historic cost of US$0.2 million (YTL 0.6 million) for those plots has been applied as the realisable value.

Subsequent to selling the Group’s mining assets in Yemen and the associated Rubber Grade Plant (“RGP”) in Belgium, the remainingproperty, plant and equipment relating to the RGP has been classified as assets held for sale. The carrying value of these assets has beenassessed at a fair value of US$0.3 million (EUR 0.2 million).

The Board took the decision to sell the land in Ohio which was previously held to develop a recycling project in the USA. This asset hasbeen classified as assets held for sale with a fair value of US$0.4 million.

The Turkish land and the remaining property, plant and equipment at ZincOx Belgium Sprl form part of the Group’s recycling segmentactivity and fall within the geographical region called ‘Rest of Europe’. The land at Ohio forms part of the Group’s recycling segment activityand falls within the geographical region called ‘USA’ (see note 22).

14 Restricted Cash2014 2013 2012$’000 $’000 $’000

CurrentCash held in escrow against loan notes (see note 16) 1,476 667 –

1,476 667 –



ENTSOTHER INFORM

ATION



15 Trade and Other Payables2014 2013 2012$’000 $’000 $’000

CurrentTrade payables 9,003 7,680 8,146Taxation and social security 254 268 246Accruals 4,552 5,104 6,616Other payables 544 566 936Finance lease obligations 15 22 15

14,368 13,640 15,959

Non-CurrentAccruals 3,690 2,795 1,880Employee benefits 8 10 294Other payables 886 891 549Finance lease obligations 14 34 28

4,598 3,730 2,751

16 Loans and Borrowings2014 2013 2012$’000 $’000 $’000

CurrentKorea Zinc Company Limited secured loans 3,413 976 950Standard Chartered Bank Korea Ltd facility 2,260 999 –Secured loan notes 6,541 – –Other bank borrowings 24 51 9

12,238 2,026 959

Non-CurrentKorea Zinc Company Limited secured loans 52,739 52,739 52,035Secured loan notes – 6,925 –

52,739 59,664 52,035

Korea Zinc loansIn 2011, two separate loans were taken out with Korea Zinc Company Limited (“Korea Zinc”) by ZincOx (Korea) Ltd; a long term OfftakeLoan for US$37.8 million and a shorter term Development Loan for US$15 million.

The long term ‘Offtake Loan’ is repayable by 30 June 2022 with interest chargeable at USD 6 month LIBOR plus a 5% margin. The shorterterm ‘Development Loan’ has an interest rate of 15% with a repayment date that was extended in the year by 12 months to February 2016.

In March 2014, an amendment to the loan agreements was reached with Korea Zinc to defer the interest payments on both loans for aperiod of 12 months. At 31 December 2014, total deferred interest of US$3.4 million had been accrued against the loans and is currentlyshown in current liabilities (see note 21 ‘Post Balance Sheet Events’ for further details).

Both loans with Korea Zinc are secured by a debenture over the assets of KRP only.


Standard Chartered Bank Korea Ltd facilityIn April 2013, a US$5 million rolling Receivables Services facility was taken out by ZincOx (Korea) Ltd with Standard Chartered Bank KoreaLtd (“SCBK”). Interest is chargeable at USD 3 Month LIBOR plus a 4% margin and is payable immediately.

Secured loan notesIn July 2013, the Company issued loan notes to a value of £4.2 million (US$6.5 million) together with four year warrants over 9,450,000new ordinary shares of the Company. Interest is 10%, payable on a monthly basis with repayment due in July 2015. The warrantsassociated with this loan are described in note 23.

The loan notes are secured against the shares in ZincOx Anadolu Cinko SVTAS, the Company’s wholly owned subsidiary that owns thefreehold land held at Aliaga, Turkey.

Other loansOther bank borrowings represent an unsecured facility taken out by ZincOx Resources Belgium Sprl to fund short-term working capitalrequirements.

17 Share CapitalThe shares of the Company are denominated in Pounds Sterling but are translated for the Group financial statements at their historic rate.

Share ShareNumber capital premium Totalshares $’000 $’000 $’000

In issue 1 January 2012 89,021,335 39,525 165,850 205,375Ordinary shares issued 14,360,725 5,713 4,109 9,822Issued options exercised 84,656 33 26 59In issue 31 December 2012 103,466,716 45,271 169,985 215,256103,466,716 deferred shares at 24 pence 103,466,716 40,526 – 40,526103,466,716 ordinary shares at 1 pence 103,466,716 4,745 169,985 174,730Ordinary shares issued 32,113,913 524 6,959 7,483In issue 31 December 2013 135,580,629 45,795 176,944 222,739Ordinary shares issued 30,725,149 515 4,427 4,942In issue 31 December 2014 166,305,778 46,310 181,371 227,681

The share capital reserve at 31 December 2014 stated at its historical value in its nominal currency of GBP, is £26,495k (2013: £26,188k,2012: £25,867k) which equates to being translated at an average exchange rate of approximately 1.75 US$/£ (2013: 1.75 US$/£, 2012:1.75 US$/£).

At 31 December 2014, there were options available over 13,151,962 ordinary shares in the Company, 7,747,172 available to directors (seepage 18 within Corporate Governance) and 5,404,790 to eligible persons. The exercise price of each option is between £0.00 and £2.625.Options granted before 2009 cannot be exercised for two years (three years for those granted from 2009) from the date they were granted,and must be exercised within ten years from that date.

At 31 December 2014, there were warrants available over 9,450,000 ordinary shares in the Company, 3,318,750 available to directors (seepage 18 within Corporate Governance) and 6,131,250 to other subscribers of the loan notes. The warrants have a four year life and canbe exercised immediately, with an exercise price of 40p.

The highest and lowest prices of the Company’s shares during the year were 25.88p and 6.00p respectively, and the share price at theend of the year was 6.55p.

The number of shares which would have been in issue at the end of the financial year, had all options and warrants been exercised, was188,907,740. There were no share options or warrants exercised in the year.



ENTSOTHER INFORM

ATION



17 Share Capital continued

Details of the Company Share Options

At 31 December 2014 Exercise price Date from whichDate of issue Number £ exercisable Expiry date

4 May 2005 334,323 1.295 4 May 2007 4 May 20155 January 2006 697,240 1.50 5 January 2008 5 January 2016

27 June 2006 456,442 2.075 27 June 2008 27 June 201616 January 2007 642,501 2.625 16 January 2009 16 January 2017

29 February 2008 421,456 2.60 28 February 2010 28 February 201828 January 2014 5,189,760 0.245 28 January 2017 28 January 202428 January 2014 5,410,240 0.000* 28 January 2017 28 January 2024

13,151,962

* These options were granted under the Performance Share Plan and carry a zero subscription price to option holders upon exercise. The Company iscommitted to providing ordinary shares to option holders at the point of exercise.

18 Operating LeasesNon-cancellable operating lease rentals are payable as follows:

2014 2013 2012$’000 $’000 $’000

Less than one year 484 455 514Between one and five years 3,015 4,116 3,258More than five years 3,477 2,706 4,016

6,976 7,277 7,788

ZincOx (Korea) Limited signed a 50 year lease in December 2010, renewable every ten years, for the site of its Korean Recycling Plant.

19 Financial Instruments

(a) Capital Management Policies and ProceduresThe Group’s capital management objectives are:

• to increase the value of the assets of the business, • to provide an adequate return to shareholders in the future when assets are taken into production, and• to ensure the Group’s ability to continue as a going concern.

These objectives will be achieved by identifying the right development recycling projects, adding value to these projects and ultimatelytaking them through to production and cash flow, either with partners or by our own means.

The Group monitors capital on the basis of the carrying amount of equity, less cash and cash equivalents as presented on the face of theconsolidated balance sheet.


The Group sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Group managesthe capital structure and makes adjustments to it in the light of changes in the economic conditions and the risk characteristics of theunderlying assets. Capital for the reporting periods under review is summarised as follows:

2014 2013 2012$’000 $’000 $’000

Total equity 52,297 83,322 102,082Less: cash and cash equivalents (1,195) (4,752) (10,617)Capital 51,102 78,570 91,465

Total equity 52,297 83,322 102,082Borrowings 64,977 61,690 52,994Overall financing 117,274 145,012 155,076

Capital to overall financing ratio 0.44 0.54 0.59

The disclosures detailed below are as required by IFRS7 Financial Instruments: Disclosures. The Company’s principal treasury objective isto provide sufficient liquidity to meet operational cash flow requirements and to allow the Group to take advantage of new growthopportunities whilst maximising shareholder value. The Company operates controlled treasury policies which are monitored by the Boardto ensure that the needs of the Company are met as they evolve. The impact of the risks, required to be discussed in accordance withIFRS 7, are detailed below, supported by a specific explanation of these risks on pages 12 and 13 of the Strategic Report.

(b) Liquidity and Funding RiskThe objective of the Group in managing funding risk is to ensure that it can meet its financial obligations as and when they fall due asshown below:

Current Non-Current

Within 6 months 6 to 12 months 1 to 5 years Later than 5 years

2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Trade payables 11,335 9,765 12,177 3,032 3,875 3,782 4,598 3,730 2,751 – – –Borrowings* 5,805 2,774 1,389 7,883 880 2,144 46,898 50,490 39,312 17,898 21,266 27,091Totals 17,140 12,539 13,566 10,915 4,755 5,926 51,496 54,220 42,063 17,898 21,266 27,091

* Assumes Korea Zinc Offtake Loan principal (US$37.8 million at 31 December 2014) is repaid on a linear basis across the remaining term from 2016 until itsmaturity in 2022.

(c) Credit RiskThe Group’s principal financial assets are bank balances and cash, trade and other receivables and investments in other Groupcompanies, which represent the Group’s maximum exposure to credit risk in relation to financial assets.

The Group’s credit risk is primarily attributable to its other receivables. It is the policy of the Group to present the amounts in the balancesheet net of allowances for doubtful receivables, estimated by the Group’s management based on prior experience and the currenteconomic environment.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit ratingagencies. The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties andcustomers.



ENTSOTHER INFORM

ATION



19 Financial Instruments continued

(d) Foreign Exchange RiskThe Group’s transactional foreign exchange exposure arises from income, expenditure and purchase and sale of assets denominated inforeign currencies. As each material commitment is made, the risk in relation to currency fluctuations is assessed by the Board andregularly reviewed. The Group does not have a hedging programme in place at this time.

Foreign currency denominated financial assets and liabilities, translated into US Dollars at the closing rate, are as follows:

2014 2013 2012

Financial Financial Financial Financial Financial Financialassets liabilities Exposure assets liabilities Exposure assets liabilities Exposure$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

GBP 1 – 1 3 4 (1) 70 31 39KRW 1 – 1 – – – – – –EUR 29 1,336 (1,307) 20 1,799 (1,779) 60 2,043 (1,983)USD 4,611 59,425 (54,814) 6,143 55,403 (49,260) 5,458 53,508 (48,050)

The following table illustrates the sensitivity of the net result for the year and equity in regards to the Group’s financial assets and financialliabilities that are held in a currency other than the functional currency of the underlying Group entity. The main exposure exists in Koreawhere the functional currency is Korean Won yet sales revenue is charged in US Dollars, borrowings are held in US Dollars and cashbalances are held in a mixture of US Dollars, Euro’s and Sterling, as well as in Korean Won itself.

It assumes a +/-5% change of the US Dollar-Sterling, US Dollar-Euro and US Dollar-Korean Won for the year ended 31 December 2014(2013: 5%, 2012: 5%). The sensitivity analysis is applied to the Group’s foreign currency financial instruments held at balance sheet date. If the US Dollar had weakened by 5% against Sterling, Euro, and Korean Won (the other main functional currencies of the Group entities),this would have had the following impact by currency:

2014 2013 2012

Net result Net result Net resultfor year Equity for year Equity for year Equity

$’000 $’000 $’000 $’000 $’000 $’000

GBP – – – – – 2EUR (20) (65) (59) (89) (94) (99)USD (1,527) 2,610 (1,043) 2,346 999 2,288

If the US Dollar had strengthened against these respective currencies, there would be an equal and opposite effect on the net result for theyear and equity.

Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysisabove is considered to be representative of the Group’s exposure to currency risk.

(e) Interest Rate RiskThe Group is exposed to interest rate risk in respect of the cash balances held with banks and other highly rated counterparties. If theinterest rate the Group received had increased/decreased by 0.1% during the year, the net result for the year would have beenincreased/reduced by US$1k (2013: US$2k, 2012: US$15k). There would have been no impact on other equity.

The trade and other payables, borrowings and the other financial liabilities are carried at amortised cost. All the financial assets areconsidered to be cash and receivables. The fair values of all financial assets and financial liabilities are not considered to be materiallydifferent from their carrying values.


Weighted average Variable Fixed Non-interesteffective interest interest rate interest rate bearing Total

2014 rate $’000 $’000 $’000 $’000

AssetsCash 0.29% 1,195 – – 1,195Restricted cash 1,476 – – 1,476Trade and other receivables – – 4,405 4,405Total Financial Assets 2,671 – 4,405 7,076

LiabilitiesTrade and other payables – (15) (14,353) (14,368)Borrowings – current (1,635) (10,603) – (12,238)Borrowings – non-current (37,739) (15,000) – (52,739)Other non-current liabilities – (14) (4,584) (4,598)Total Financial Liabilities (39,374) (25,632) (18,937) (83,943)

Net Financial Assets/(Liabilities) (36,703) (25,632) (14,532) (76,867)


2013 rate $’000 $’000 $’000 $’000

AssetsCash 0.49% 4,752 – – 4,752Restricted cash 667 – – 667Trade and other receivables – – 3,540 3,540Total Financial Assets 5,419 – 3,540 8,959

LiabilitiesTrade and other payables – (11) (13,629) (13,640)Borrowings – current (51) (1,975) – (2,026)Borrowings – non-current (37,739) (21,925) – (59,664)Other non-current liabilities – (34) (3,696) (3,730)Total Financial Liabilities (37,790) (23,945) (17,325) (79,060)



2012 rate $’000 $’000 $’000 $’000

AssetsCash 0.40% 10,617 – – 10,617Trade and other receivables – – 5,199 5,199Total Financial Assets 10,617 – 5,199 15,816

LiabilitiesTrade and other payables – (15) (15,944) (15,959)Borrowings – current (2,044) (950) – (2,994)Borrowings – non-current (35,000) (15,000) – (50,000)Other non-current liabilities – (28) (2,723) (2,751)Total Financial Liabilities (37,044) (15,993) (18,667) (71,704)




ENTSOTHER INFORM

ATION



19 Financial Instruments continued

(f) Financial AssetsThe Group held the following financial assets:

2014 2013 2012$’000 $’000 $’000

Cash and cash equivalents 1,195 4,752 10,617Restricted cash 1,476 667 –Trade and other receivables 4,405 3,540 5,199

7,076 8,959 15,816

Cash and cash equivalents comprise cash and short-term deposits held by the Group treasury function.

20 Capital CommitmentsAt 31 December 2014, the Group had no capital commitments (2013: nil).

21 Post Balance Sheet EventsOn 28 January 2015, the Company granted 1,919,000 options over its ordinary shares at a subscription price of 10.0 pence per ordinaryshare and issued a further 1,018,500 options under its Performance Share Plan at a zero subscription price (see note 23 for details).

In March 2015, further negotiations took place with Korea Zinc regarding the repayment of the US$15 million Development Loan. Theterms of the renegotiation allow six equal payments of US$3.1 million to be made every six months beginning in February 2016. Inrecognition of the excellent quality of the KRP zinc concentrate, the offtake agreement has been increased to 1,050,000 tonnes duringthese renegotiations of the Korea Zinc loans.

On 14 April 2015, following a re-organisation of the Board, Jacques Dewalens resigned as an executive director and Guy Lafferty as anon-executive director.

22 Segmental AnalysisUp until the end of 2013, the Group considers that its activities are split into the following segments: its recycling operations (currently theKRP in Korea) which is the main activity and all other segments (mainly recycling development). An operating segment is a component ofthe Group engaged in one of these activities. In relation to the recycling operations activity, each operating segment is usually signified by aseparate geographical location for the purposes of making economic decisions.

In addition, UK Head Office costs are disclosed separately and added to the sector result in arriving at an operating (loss)/profit.

The following table analyses the sector revenue and result and reconciles the sector result to the loss after tax.

Revenue Sector result

2014 2013 2014 2013$’000 $’000 $’000 $’000

Recycling – operations 37,546 27,101 (11,192) (14,039)Other segments 605 421 (15,445) (3,549)Sector total 38,151 27,522 (26,637) (17,588)UK Head Office (1,273) (4,094)Operating loss (27,910) (21,682)Finance income 3 10Finance costs (5,322) (4,661)Loss before tax (33,229) (26,333)Taxation – 2Loss after tax (33,229) (26,331)

The activity split of net assets for the Group is as follows:Assets Liabilities Net assets

2014 2013 2012 2014 2013 2012 2014 2013 2012$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Recycling – operations 122,681 128,210 131,551 75,261 69,580 68,437 47,420 58,630 63,114Other segments 13,137 28,465 35,691 8,274 8,790 2,757 4,863 19,675 32,934Sector total 135,818 156,675 167,242 83,535 78,370 71,194 52,283 78,305 96,048UK Head Office – unallocated 422 5,707 6,544 408 690 510 14 5,017 6,034Total 136,240 162,382 173,786 83,943 79,060 71,704 52,297 83,322 102,082

The activity split of capital additions and amounts depreciated, impaired or amortised, for the Group is as follows:

Capital additions Depreciation, impairment and amortisation

2014 2013 2012 2014 2013 2012$’000 $’000 $’000 $’000 $’000 $’000

Recycling – operations 2,591 3,192 34,241 6,181 5,896 3,473Other segments 642 2,012 2,837 15,051 1,694 4,634Sector total 3,233 5,204 37,078 21,232 7,590 8,107UK Head Office – unallocated 2 – 20 565 630 73Total 3,235 5,204 37,098 21,797 8,220 8,180

Geographic InformationThe Group also has a global geographical presence which is reflected in the segmental analysis. As the Group develops future recyclingfacilities then each plant that’s subsequently developed will become an operating segment in its own right.

Revenue for the Group is generated by ZincOx (Korea) Ltd (2014: US$37.6 million, 2013: US$27.1 million) and Big River Zinc Corporationwithin the USA (2014: US$0.6 million, 2013: US$0.4 million).

Within Group revenue, 98.4% (2013: 98.5%) is generated from a single customer of ZincOx (Korea) Ltd and is included within the segmentcalled ‘recycling operations’.

The carrying amount of non-current assets, excluding deferred tax assets, analysed by the geographical area in which the assets arelocated is as follows:

2014 2013 2012$’000 $’000 $’000

United Kingdom 3,465 3,635 2,520Rest of Europe* 117 2,588 3,109USA – 15,225 17,172Korea 119,803 128,090 128,338Other Asia** 1,021 998 1,682Total 124,406 150,536 152,821

* Rest of Europe includes Belgium and Turkey ** Other Asia includes Thailand and Malaysia




ENTSOTHER INFORM

ATION

23 Share Based Payments

Employee Related Share Option PlansShare options to employees and other eligible persons are granted on a discretionary basis. The exercise price of the granted options is, atleast, equal to the market price of the shares on the date of the grant.

Movements in the number of employee share options outstanding and their related weighted average exercise prices, as stated in theirnominal currency of GBP, are as follows:

2014 2013 2012

Weighted Weighted Weightedaverage Outstanding average Outstanding average Outstanding

exercise price options exercise price options exercise price options(£ per share) (thousands) (£ per share) (thousands) (£ per share) (thousands)

At 1 January 2014 0.93 8,734 1.07 7,902 1.19 6,590Granted 0.12 10,650 0.30 5,650 0.39 2,674Exercised – – – – 0.45 (85)Cancelled 0.47 (6,232) 0.37 (4,465) 0.30 (1,029)Lapsed – – 0.54 (353) 1.20 (248)At 31 December 2014 0.49 13,152 0.93 8,734 1.07 7,902

No options were exercised in either of the years to 31 December 2014 or 31 December 2013. In the year to 31 December 2012, theweighted average share price, at the date of exercise, of options exercised during the year was £0.63. The weighted average assumptionsmade in applying the Black-Scholes model to option grants made in the period are set out below.

Weighted average fair value of share 2014 2013 2012options and input assumptions Options granted Options granted Options granted

Share price at grant £0.241 £0.355 £0.56Exercise price £0.121 £0.304 £0.395Shares under option 10,650,000 5,650,000 2,673,835Expected volatility 35% 58% 58%Option life (years) 5 5 5Risk free interest rate 2.07% 1.11% 0.99%Fair value per option £0.16 £0.22 £0.36Valuation model Black-Scholes Black-Scholes Black-Scholes

The total charge for the period relating to employee share based payment plans was US$330k (2013: US$8k, 2012: US$219k). Thevesting period for the options granted was three years (2013 and 2012: three years). Other non-market performance conditions that existare as follows:

(a) For the 2014 options, the award of options is conditional on the Company’s share price reaching 33 pence during a three year‘Performance Period’ ending on 28 January 2017.

(b) For the 2013 options, the award of options is conditional on an ‘Award Production’ linked to a minimum production capacity at KRPwhere no options can be exercised below an annual production for 2013 of 127,500 tonnes of EAFD, rising to 100% of the optionsbeing exercised at 170,000 tonnes of processed EAFD. These options were cancelled in 2014.

(c) For the 2012 options, the award of options is conditional on an ‘Award Production’ linked to the production capacity at KRP where75% of the options can be exercised at 75% capacity of KRP increasing to 100% of the options being exercised at 90% productioncapacity subject to certain time limits and providing production is at this specified capacity for 30 continuous days. These options werecancelled in 2013.






ENTSOTHER INFORM

ATION

The volatility calculation used for 2014 options was based on the Company’s share price performance for the 6 to 12 months precedingthe date of grant as this was felt to be more reflective of the current trend in share price performance. In previous years, the volatilitycalculation was based on the Company’s share price performance for the five years preceding the date of grant. No dividend is assumedin the calculation (2013 and 2012: nil) of the option fair values.

Since the year end, the Company has granted a further 2,937,500 options (see note 21), the award of which is conditional on the Company’sshare price reaching 20 pence for 20 consecutive business days during a three year ‘Performance Period’ ending on 28 January 2018.The vesting period for the 2015 options is three years from date of grant with the other vesting conditions given above.

Share WarrantsThere were no share warrants granted in the year. In 2013, the Company granted four year warrants over 9,450,000 new ordinary sharesof the Company at an exercise price of 40 pence per share and an interest rate of 10% per annum. There is no vesting period attached tothe warrants but none were exercised or cancelled in the year to 31 December 2014 (2013: none exercised or cancelled, 2012: nowarrants in issue).

The warrants were fair valued using the Monte Carlo valuation method. The weighted average assumptions made, in applying the MonteCarlo method to valuing the warrants granted in the period, are set out below.

• Share price at grant was 20.25p,• Exercise price of 40p (see note 17 for details),• Expected volatility reducing from 42.3% in Year 1 to 31.5% in Year 4,• Warrant life of four years,• Risk free interest rate of 1.74%, and• Fair value per warrant of 2.5p.

The total share based payment charge for the period was US$ nil (2013: US$369k, 2012: US$ nil).


Independent Auditor’s ReportTo the members of ZincOx Resources plc

We have audited the parent company financial statements of ZincOx Resources plc for the year ended 31 December 2014 whichcomprise the parent company balance sheet and the related notes. The financial reporting framework that has been applied in theirpreparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them inan auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyoneother than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorAs explained more fully in the Directors’ Responsibilities Statement set out on page 19, the directors are responsible for the preparation ofthe parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and expressan opinion on the parent company financial statements in accordance with applicable law and International Standards on Auditing (UK andIreland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website atwww.frc.org.uk/auditscopeukprivate.

Emphasis of matterIn forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note2(c) to the financial statements concerning the Company’s ability to continue as a going concern. As explained in note 2(c), the zinc price, the recovery of zinc from EAFD, tonnes of zinc sold and key operating costs are critical to thefuture cash flow of the Company. In addition, another factor that may impact the Company, is the repayment of the £4.2 million loan notesdue in July 2015, which will be funded by either the sale of the remaining land in Turkey or by the successful renegotiation of the terms ofthe loan notes. These conditions, along with the other matters explained in note 2(c) to the financial statements, indicate the existence of a materialuncertainty which may cast significant doubt about the Company’s ability to continue as a going concern. Nevertheless, after makingenquiries and considering the uncertainties described above, the directors have a reasonable expectation that the Company has adequateresources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concernbasis of accounting in preparing the annual financial statements. The financial statements do not include the adjustments that would resultif the Company was unable to continue as a going concern.

Opinion on financial statementsIn our opinion the parent company financial statements:• give a true and fair view of the state of the Company's affairs as at 31 December 2014; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financialstatements are prepared is consistent with the parent company financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received

from branches not visited by us; or• the parent company financial statements are not in agreement with the accounting records and returns; or• certain disclosures of directors’ remuneration specified by law are not made; or• we have not received all the information and explanations we require for our audit.

Other matterWe have reported separately on the Group financial statements of ZincOx Resources plc for the year ended 31 December 2014.

David MillerSenior Statutory Auditorfor and on behalf of Grant Thornton UK LLPStatutory Auditor, Chartered AccountantsLondon

14 April 2015


2014 2013Notes $’000 $’000

Fixed AssetsIntangible assets 28 8,207 15,400Tangible fixed assets 29 8 20Investments 30 74,587 65,249

82,802 80,669

Current AssetsDebtors due within one year 31 4,370 3,741Debtors due after one year 31 16,379 33,799Restricted cash 32 1,476 667Cash at bank and in hand 251 4,534

22,476 42,741

Creditors – amounts falling due within one year 33 (7,626) (1,278)

Net Current Assets 14,850 41,463

Total Assets less Current Liabilities 97,652 122,132

Creditors – amounts falling due after one year 33 (67) (6,996)Net Assets 97,585 115,136

Capital and ReservesShare capital 34, 35 46,310 45,795Share premium 35 181,371 176,944Profit and loss account 35 (90,581) (73,861)Foreign currency reserve 35 (39,515) (33,742)Equity Shareholders’ Funds 36 97,585 115,136


Approved by the directors on 14 April 2015.

Simon HallDirector



ENTSOTHER INFORM

ATION

Company Balance SheetAs at 31 December 2014



24 Significant Accounting PoliciesThe individual financial statements of the Company are presented as required by the Companies Act 2006. As permitted by that Act, the individual financial statements have been prepared in accordance with the United Kingdom Accounting Standards (United KingdomGenerally Accepted Accounting Practice). The principal accounting policies which differ to those set out in note 1 to the consolidatedfinancial statements are noted below.

The financial statements have been prepared on the historical cost basis.

(i) Deferred tax is recognised on all timing differences where the transactions or events that give the Company an obligation to pay moretax in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognisedwhen it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted orsubstantively enacted by the balance sheet date.

(ii) The requirements of FRS 20, Share Based Payments, are the same as those set out in note 1 to the consolidated financial statements.

(iii) The Company has taken advantage of the exemption under section 408 of the Companies Act 2006 not to publish its individual profitand loss and related notes.

(iv) Investments in subsidiaries, intergroup funding and deferred consideration:

Fixed asset investments in subsidiary undertakings are stated at cost less provision for diminution in value. The cost of acquisitionincludes directly attributable professional fees and other expenses incurred in connection with the acquisition.

Sales of fixed asset investments are accounted for on exchange and deferred consideration is not recognised until the receipt isconsidered to be virtually certain.

Where the Company has provided funds to a subsidiary in the year these amounts are also stated at cost less provision for adiminution in value.

(v) The directors continue to adopt the going concern basis in preparing the Company’s financial statements. As stated in the Directors’Report on page 19, and per the Group accounting policies note 2(c), the directors have reviewed future forecasts and commitments,which when compared to the current cash available, lead the directors to have a reasonable expectation that the Company hasadequate financial resources to continue in operational existence for the next twelve months from the date of this report.

Presentational CurrencyThe Company has elected to translate its Profit and Loss account at average exchange rates for the period and to translate its assets andliabilities at period end exchange rates. Share capital and share premium reserves have been translated at historic exchange rates with anydifferences between the historic rates and the period end rates being charged to the foreign exchange translation reserve.

25 Impairment ProvisionsThe impairment provisions that have been made in the Company are calculated from the same underlying assumptions that were used incalculating the impairment provisions in the consolidated financial statements (see note 2(a) for more details).


26 Loss for the Financial YearThe Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own Profit and Loss account inthese financial statements. The loss for the Company was US$17,050,000 translated at an average rate for the year of 1.65274 US$/£ (2013: US$6,050,000 translated at an average rate for the year of 1.56353 US$/£).

The average monthly number of employees of the Company (including directors) during the year was 9 (2013: 10) and their aggregateremuneration comprised:

2014 2013$’000 $’000

Wages and salaries 1,371 1,364Social security costs 162 165Other pension costs 63 69

1,596 1,598

27 Operating LossThe auditors’ remuneration for audit services to the Company was US$30,000 translated at an average rate for the year of 1.65274 US$/£(2013: US$30,000 translated at an average rate for the year of 1.56353 US$/£).

28 Intangible Assets – Deferred Costs Company

development Companycosts Total$’000 $’000

CostAt 1 January 2013 14,079 14,079Additions 1,966 1,966Impairment provisions (513) (513)Foreign exchange 234 234At 1 January 2014 15,766 15,766Additions 514 514Impairment provisions (6,895) (6,895)Foreign exchange (477) (477)At 31 December 2014 8,908 8,908

AmortisationAt 1 January 2013 – –Charge for the year 347 347Foreign exchange 19 19At 1 January 2014 366 366Charge for the year 378 378Foreign exchange (43) (43)At 31 December 2014 701 701

Net Book ValueAt 31 December 2014 8,207 8,207At 31 December 2013 15,400 15,400



ENTSOTHER INFORM

ATION



29 Tangible Fixed AssetsLand and Plant and Fixtures and Computerbuildings machinery fittings equipment Total

$’000 $’000 $’000 $’000 $’000

CostAt 1 January 2013 175 843 104 715 1,837Foreign exchange 3 16 2 12 33At 1 January 2014 178 859 106 727 1,870Additions – – – 2 2Disposals – – – (4) (4)Foreign exchange (9) (48) (6) (39) (102)At 31 December 2014 169 811 100 686 1,766

DepreciationAt 1 January 2013 164 843 104 676 1,787Charge for the year 11 – – 18 29Foreign exchange 3 16 2 13 34At 1 January 2014 178 859 106 707 1,850Charge for the year – – – 14 14Released on disposals – – – (4) (4)Foreign exchange (9) (48) (6) (39) (102)At 31 December 2013 169 811 100 678 1,758

Net Book ValueAt 31 December 2014 – – – 8 8At 31 December 2013 – – – 20 20

30 InvestmentsSubsidiaries Joint venture Total

$’000 $’000 $’000

CostAt 1 January 2013 69,741 – 69,741Additions 22 106 128Foreign exchange 1,299 – 1,299At 1 January 2014 71,062 106 71,168Additions 9,938 – 9,938Foreign exchange (922) (6) (928)At 31 December 2014 80,078 100 80,178

Impairment ProvisionsAt 1 January 2013 5,810 – 5,810Foreign exchange 109 – 109At 1 January 2014 5,919 – 5,919Foreign exchange (328) – (328)At 31 December 2014 5,591 – 5,591

Net Book ValueAt 31 December 2014 74,487 100 74,587At 31 December 2013 65,143 106 65,249

Additions in the year represents a series of capital contributions by the Company for shares in its wholly owned subsidiary, ZincOx (Korea) Ltd.


Interest in Subsidiary UndertakingsIn March 2014 the Company liquidated its subsidiary undertaking ZincOx Malaysia Sdn Bhd.

The Company had an interest in the following subsidiary undertakings in the year ending 31 December 2014, all of which are included inthe consolidated financial statements. With the exception of those holdings marked with an asterisk, all shareholdings are held directly bythe Company.

Proportion of, andvoting rights held

Country of incorporation/ by the CompanyName of Undertaking registration and operation Principal activities and the Group

ZincOx Belgium Sprl Belgium Metallurgical research 99.99%Zinc Corporation of Kazakhstan Ltd British Virgin Islands Holding 100%ZincOx Anadolu Cinko SVTAS Turkey Zinc processing 100%ZincOx Resources (USA) Ltd UK Holding 100%Big River Zinc Corporation* USA Zinc processing 100%Zinc and Iron Recycling of Ohio, Inc.* USA Zinc processing 100%Zinc and Iron Recycling Inc.* USA Zinc processing 100%ZincOx (USA) Recycling, Inc.* USA Holding 100%ZincOx Thailand Company Ltd Thailand Zinc processing 100%ZincOx Malaysia Sdn Bhd Malaysia Zinc processing 100%ZincOx Resources (Korea) Ltd UK Zinc processing 100%ZincOx (Korea) Ltd Korea Zinc processing 100%

The Company tests the carrying value of its investments in its subsidiary undertakings which are carried at historical cost less anyimpairment. This test is carried out on an annual basis or more frequently if market conditions indicate a potential impairment.

The market capitalisation of the Company at the end of the period is less than the net assets of the Company. The Company has carefullyassessed the carrying value of its investments using the discounted cashflow forecasts of the Group and a 10% discount rate with a timehorizon of 20 years, which takes into account a successful ramp up in Korea as discussed in the Strategic Report. Management havebased their assessment of the expected future cash flows on the available data and will revisit these key assumptions and judgements inthe cash flow forecasts at each annual reporting date.

The resulting valuation supports the carrying values at 31 December 2014 and therefore no impairment of the investments and inter-company funding of the parent company is made at this time.

Interest in Joint VentureThe Company has a 51% interest in an unincorporated joint venture with Ural Recycling Ltd, a wholly owned subsidiary of Magnezit GroupLimited, a Russian company looking at the potential to develop a zinc recycling plant in Russia.



ENTSOTHER INFORM

ATION



31 Debtors2014 2013$’000 $’000

Due within one yearOther debtors 112 311Prepayments 99 69Amounts owed by Group undertakings 4,159 3,361

4,370 3,741

Due after one yearAmounts owed by Group undertakings 16,379 33,799

16,379 33,799

The Company tests the carrying value of its loans to its undertakings of the Group which are carried at historical cost less any impairment.This test is carried out on an annual basis or more frequently if market conditions indicate a potential impairment.

Amounts owed by Group undertakings due after one year are stated after allowing for any impairment provision. At 31 December 2014impairment provisions stood at US$37.2m (2013: US$31.6m) against ZincOx Resources (USA) Ltd in respect of the recycling assets atBRZ and in the USA.

32 Restricted CashRestricted cash of £948k, equivalent to US$1,476k, existed at 31 December 2014 (2013: £404k, equivalent to US$667k). It representscash generated from land sales at Aliaga in Turkey offset by interest paid to holders of secured loan notes (see note 16). These funds arerestricted under the terms of the loan.

33 Creditors2014 2013$’000 $’000

Amounts falling due within one yearTrade creditors 164 361Taxation and social security 67 79Accruals 127 198Amounts owed to Group undertaking 678 587Loan notes 6,590 53

7,626 1,278

Amounts falling due after one yearAmounts owed to Group undertaking 67 71Loan notes – 6,925

67 6,996

The Company issued loan notes in 2013 to a value of £4.2m (US$6.6m) together with four year warrants over 9,450,000 new ordinaryshares of the Company at an exercise price of 40 pence per share (see note 16 for details). Amounts falling due within one year include aninterest accrual at 31 December 2014 of £31k (US$49k) made against the loan notes.


34 Share CapitalThe shares of the Company are denominated in Pounds Sterling but are translated for the Group financial statements at their historic rate.

Share ShareNumber capital premium Totalshares $’000 $’000 $’000

In issue 1 January 2012 89,021,335 39,525 165,850 205,375Ordinary shares issued 14,360,725 5,713 4,109 9,822Issued options exercised 84,656 33 26 59In issue 31 December 2012 103,466,716 45,271 169,985 215,256103,466,716 deferred shares at 24 pence 103,466,716 40,526 – 40,526103,466,716 ordinary shares at 1 pence 103,466,716 4,745 169,985 174,730Ordinary shares issued 32,113,913 524 6,959 7,483In issue 31 December 2013 135,580,629 45,795 176,944 222,739Ordinary shares issued 30,725,149 515 4,427 4,942In issue 31 December 2014 166,305,778 46,310 181,371 227,681

The share capital reserve at 31 December 2014 stated at its historical value in its nominal currency of GBP, is £26,495k (2013: £26,188k,2012: £25,867k) which equates to being translated at an average exchange rate of approximately 1.75 US$/£ (2013: 1.75 US$/£, 2012:1.75 US$/£).

At 31 December 2014, there were options available over 13,151,962 ordinary shares in the Company, 7,747,172 available to directors (seepage 18 within Corporate Governance) and 5,404,790 to eligible persons. The exercise price of each option is between £0.00 and £2.625.Options granted before 2009 cannot be exercised for two years (three years for those granted from 2009) from the date they were granted,and must be exercised within ten years from that date.

At 31 December 2014, there were warrants available over 9,450,000 ordinary shares in the Company, 3,318,750 available to directors (seepage 18 within Corporate Governance) and 6,131,250 to other subscribers of the bond. The warrants have a four year life and can beexercised immediately, with an exercise price of 40p.

The highest and lowest prices of the Company’s shares during the year were 25.88p and 6.00p respectively, and the share price at theend of the year was 6.55p.

The number of shares which would have been in issue at the end of the financial year, had all options and warrants been exercised, was188,907,740. There were no share options or warrants exercised in the year.

35 ReservesShare Share Profit Foreigncapital premium and loss currency

account account account reserve$’000 $’000 $’000 $’000

At 1 January 2014 45,795 176,944 (73,861) (33,742)Issue of shares 515 4,427 – –Loss for the financial year – – (17,050) –Share based payments expense – – 330 –Movement in foreign currency reserve – – – (5,773)At 31 December 2014 46,310 181,371 (90,581) (39,515)

The share capital and share premium account have been translated at historic US$/£ exchange rates at the point where shares wereissued in the Company. The profit and loss result for the year and share based payment expense have been translated at the averageUS$/£ exchange rate for each year.



ENTSOTHER INFORM

ATION


36 Reconciliation of Movements in Shareholders’ Funds2014 2013$’000 $’000

Loss for the financial year (17,050) (6,050)Issue of shares 4,942 7,483Share based payments expense 330 377Net (decrease)/increase to shareholders’ funds (11,778) 1,810At beginning of year 115,136 111,480Movement in foreign currency reserve (5,773) 1,846At end of year 97,585 115,136

37 Financial CommitmentsAt 31 December 2014 the commitment under operating leases for land and buildings was US$11k representing a two month break periodon the recently negotiated office lease (2013: US$12k).

38 Related Party TransactionsThe Company has taken advantage of the exemptions available under Financial Reporting Standard 8, Related Party Disclosures, not todisclose transactions with its wholly owned subsidiary undertakings.

All other related party transactions requiring disclosure under Financial Reporting Standard 8 are the same for both the Group and theparent company (see note 2(c) on page 30).

39 Post Balance Sheet EventsOn 28 January 2015, the Company granted 1,919,000 options over its ordinary shares at a subscription price of 10.0 pence per ordinaryshare and issued a further 1,018,500 options under its Performance Share Plan at a zero subscription price (see note 23 for details).

In March 2015, further negotiations took place with Korea Zinc regarding the repayment of the US$15 million Development Loan. Theterms of the renegotiation allow six equal payments of US$3.1 million to be made every six months beginning in February 2016. Inrecognition of the excellent quality of the KRP zinc concentrate, the offtake agreement has been increased to 1,050,000 tonnes duringthese renegotiations of the Korea Zinc loans.

On 14 April 2015, following a re-organisation of the Board, Jacques Dewalens resigned as an executive director and Guy Lafferty as anon-executive director.



Forward Looking Statements

The Chairman’s Statement, Chief Executive’s Review and the Strategic Report contain discussion of future operations and financialperformance by use of various forward looking words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,”“believes” and terms of similar substance. These forward looking statements are based on management’s current expectations andbeliefs about future events but as with any projection or forecast, they are inherently susceptible to uncertainty and changes incircumstances which could cause the Group’s actual activities and results to differ materially from those contained in the forward looking statements.



ENTSOTHER INFORM

ATION


Notice of the Annual General Meeting

NOTICE IS HEREBY GIVEN that the 2015 Annual General Meeting of ZincOx Resources plc will be held at the offices of Eversheds LLP,One Wood Street, London EC2V 7WS on Friday, 22 May 2015 at 12:30pm for the purpose of transacting the following business:

Ordinary Business1) To receive and adopt the Strategic Report, the Directors’ Report and financial statements for the financial year ended 31 December

2014 together with the auditors’ report.

2) To re-elect Simon Hall as a director of the Company, retiring by rotation in accordance with Article 106 of the Company’s articles ofassociation.

3) To re-elect Rod Beddows as a director of the Company, retiring by rotation in accordance with Article 106 of the Company’s articles ofassociation.

4) To re-appoint Grant Thornton UK LLP as auditors to the Company, to hold office until the conclusion of the next general meeting atwhich accounts are laid before the Company, and to authorise the directors to determine their remuneration.

Special Business5) To consider and, if thought fit, pass the following resolution which will be proposed as an ordinary resolution:

“THAT the directors be and they are hereby generally and unconditionally authorised pursuant to section 551 of the Companies Act2006 (the “Act”) to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in theCompany up to an aggregate nominal amount of £554,352 representing a number of ordinary shares of 1 pence each (the “Shares”)equivalent to approximately one third of the issued share capital of the Company at the date of this notice.

The authorities referred to in this Resolution 5 shall be in substitution for all other existing authorities dealing with the subject matter ofthis Resolution and shall expire at the conclusion of the next annual general meeting of the Company after the passing of this Resolutionor on the date that is 15 months from the date of the passing of this Resolution (if earlier). The Company may before such expiry makean offer or agreement which would or might require relevant securities to be allotted after such expiry and the directors are herebyauthorised to allot such securities in pursuance of such offer or agreement as if the authority conferred hereby had not expired. Thisauthority shall replace all existing authorities conferred on the directors in respect of the allotment of relevant securities to the extentthat the same have not been previously utilised.”

6) To consider and, if thought fit, pass the following resolution which will be proposed as a special resolution:

“THAT, subject to and conditional upon the passing of Resolution 5, the directors be and they are hereby empowered pursuant tosection 570 of the Act, in substitution for all previous powers granted thereunder, to allot equity securities (within the meaning ofsection 560 of the Act) for cash pursuant to the general authority conferred by the foregoing resolution as if section 561(1) of the Actdid not apply to such allotment, provided that this power shall be limited to the allotment of equity securities:

(a) in connection with or pursuant to an offer by way of rights, open offer or other pre-emptive offer to the holders of Shares in theCompany and other persons entitled to participate therein in proportion (as nearly as practicable) to their respective holdings, butsubject to such exclusions or other arrangements that the directors may consider necessary or expedient to deal with fractionalentitlements or legal or practical problems under the laws of any territory or the regulations or requirements of any regulatoryauthority or any stock exchange in any territory; and

(b) (otherwise than pursuant to sub–paragraph (a) of this Resolution 6) up to an aggregate nominal amount of £166,306 representingapproximately 10% of the current issued share capital of the Company;

and the authority shall expire at the conclusion of the next annual general meeting of the Company after the passing of this Resolutionor on the date that is 15 months from the date of the passing of this Resolution (if earlier). The Company may before such expiry makean offer or agreement which would or might require relevant securities to be allotted after such expiry and the directors are herebyauthorised to allot such securities in pursuance of such offer or agreement as if the authority conferred hereby had not expired. Thisauthority shall replace all existing authorities conferred on the directors in respect of the allotment of relevant securities to the extentthat the same have not been previously utilised.”

Registered Office By Order of the BoardKnightway HousePark Street Ian HalliwellBagshot SecretarySurreyGU19 5AQ 21 April 2015

Notes1. Any member entitled to attend and vote at the annual general

meeting (“AGM”) convened by the notice above is entitled toappoint one or more proxies (who need not be a member ofthe Company) to attend and to vote instead of the member.Completion and return of a form of proxy will not preclude amember from attending and voting at the meeting in person,should he subsequently decide to do so.

2. In order to be valid, any form of proxy and a power of attorneyor other authority under which it is signed, or a notarially certifiedor office copy of such power or authority, must reach theCompany’s Registrars: Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU, not lessthan 48 hours (excluding any part of a day which is a non-working day) before the time of the AGM or of any adjournmentof the AGM. Alternatively, members may submit their proxyvotes electronically using the Share Portal service at www.capitashareportal.com.

3. The right of members to vote at the meeting is determined byreference to the register of members. As permitted by Regulation41 of the Uncertificated Securities Regulations 2001, shareholders(including those who hold Shares in uncertificated form) mustbe entered on the Company’s share register at 6pm on 20 May2015 in order to be entitled to attend and vote at the AGM.Such shareholders may only cast votes in respect of Sharesheld at such time. Changes to entries on the relevant registerafter that time shall be disregarded in determining the rights ofany person to attend or vote at the meeting.

4. The total number of Ordinary Shares in issue as at 14 April 2015,the last practicable day before printing this document, was166,305,778 Ordinary Shares and the total level of voting rightswas 166,305,778, none of which were attached to Shares heldin treasury by the Company.

5. There will be available for inspection at the registered office ofthe Company, during usual business hours on any weekday(except Saturdays and public holidays) from the date of thisnotice until the date of the meeting, and at the place of themeeting for 15 minutes prior to and until the conclusion of themeeting, copies of the service contracts and letters ofappointment of each of the directors.

6. Biographical details of each director who is being proposed for appointment or re-election by shareholders, including theirmembership of Board committees, are set out on pages 14and 15.

Explanation of Resolution 5The directors wish to renew at the forthcoming AGM the authorityand power which were granted to them at the AGM held on 30 June2014. Such authority and power are normally given on an annualbasis to the directors of a company that has its shares traded onthe Alternative Investment Market. The Act provides that thedirectors may not issue new shares unless authorised to do so by the shareholders. In Resolution 5 an authority is being sought to issue new Shares up to a maximum aggregate nominal amountof £554,352, representing a number of Shares equivalent toapproximately one third of the issued share capital of the Companyat the date of this notice. Such authority will (except in relation tocommitments which have been made but not fulfilled) lapse on theearlier of (i) the conclusion of the AGM of the Company to be heldin 2016 and (ii) 15 months from the date of Resolution 5 being passed.

The granting of these authorities will ensure that the directors areable to maintain a degree of flexibility for the issue of Shares withoutthe need to obtain shareholders’ consent on each occasion. Thedirectors have no present intention to exercise this authority exceptin connection with the Company’s employee share incentive schemes.In the event that the further authority is exercised, the directorsintend to follow emerging best practice as regards its use (includingas to the requirement for directors to stand for re-election) asrecommended by the ABI.

Explanation of Resolution 6If new Shares are to be allotted for cash, Section 561(1) of the Actrequires the new Shares to be offered first to the existing holders of Shares on a proportionate basis. Resolution 6, which will beproposed as a special resolution, is in accordance with normalpractice and, if passed, will give the directors the power to allotShares for cash without first offering those Shares to shareholders.This power will allow the directors to implement rights issues, openoffers or other similar such issues of Shares without complying fullywith the pre-emption requirements of the Act which can proveunduly burdensome in certain circumstances (for example, in thecase of shareholders resident in certain overseas countries). Poweris also being sought to enable the directors to issue Shares for cashotherwise than on a pre-emptive basis in relation to outstandingshare options and otherwise for new Shares up to an aggregatenominal amount of £166,306 which represents a number of Sharesequal to approximately 10% of the Company’s issued share capitalat the date of this notice. If given, the power contained in thisspecial resolution will (except in relation to commitments whichhave been made but not fulfilled) lapse on the earlier of (i) theconclusion of the AGM of the Company to be held in 2016 and (ii)15 months from the date of Resolution 6 being passed.



ENTSOTHER INFORM

ATION



Notes

Printed by Park Communications on FSC® certified paper.Park is an EMAS certified company and its Environmental Management Systemis certified to ISO 14001.100% of the inks used are vegetable oil based, 95% of press chemicals arerecycled for further use and, on average 99% of any waste associated with thisproduction will be recycled.

This document is printed on Cocoon 50 Silk, a paper containing 50% recycledfibre from genuine waste paper and 50% virgin fibre sourced from well-managed,responsible, FSC® certified forests.Designed by Benjamin Rowntree Designwww.benrown.co.uk

ZincOx Resources plcKnightway House T +44 (0)1276 450 100Park Street F +44 (0)1276 850 281BagshotSurrey www.zincox.comGU19 5AQUnited Kingdom

Documents

ZincOx Resources plc Annual Report & Accounts 2014zincox.com/wp-content/uploads/2015/04/ZincOx_AR14_160415... · 2017. 9. 6. · Globally, the outlook for zinc continues to be positive,