ZincOx, Jabal Salab, bondholders reach two-week standstill agreement

By Angela McDaniels

Tacoma, Wash., Nov. 18 - ZincOx Resources plc and subsidiary Jabal Salab Co. (Yemen) Ltd. reached a standstill agreement with the holders of Jabal Salab's $120 million bonds, according to a ZincOx news release.

The agreement has a two-week term during which time the parties intend to finalize their discussions about the default event that occurred under the bond facility, which is being used for the construction of the Jabali mine and plant in Yemen.

As previously reported, one of the milestones under the bond facility requires that production of 63% of capacity is achieved by mid-August 2010. The technical adviser has notified bondholders that it believes this production milestone will be achieved two to three months after the deadline.

Jabal Salab said the notification of this belief to the bondholders constituted a default under the terms of the facility, an event that triggers certain rights for the bondholders including the right to demand repayment of the bonds.

ZincOx announced on Oct. 2 that Jabal Salab began discussions with the bondholders about accommodating the potential delay.

Jabal Salab, which is 52%-owned by ZincOx, entered into the bond facility on Feb. 28, 2008. ZincOx's liability under the facility is limited to $5.2 million.

ZincOx is based in Bagshot, England, and produces zinc oxide mainly from raw materials obtained from recycling facilities in South Korea, Thailand, Turkey and the United States.

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