ZincOx unit in talks with bondholders ahead of potential default

By Jennifer Chiou

New York, Oct. 2 - ZincOx Resources plc announced that its 52%-owned Jabal Salab Co. (Yemen) Ltd. has begun discussions with bondholders following news that it may not reach the mid-August 2010 production milestone required under the $120 million bond facility being used for the construction of the Jabali mine and plant.

The facility anticipates the attainment of certain project development milestones, one of which is that production of 63% of capacity is achieved by mid-August 2010. Jabal Salab reported that it has been made aware that the technical adviser has notified bondholders that they believe the production milestone will be achieved two to three months after the August deadline.

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

The management of Jabal Salab noted that it is talking with bondholders about accommodating any delay.

The company entered into the bond facility on Feb. 28, 2008. ZincOx's liability under the facility is limited to $5.2 million.

The company produces zinc oxide mainly from raw materials obtained from recycling facilities in South Korea, Thailand, Turkey and the United States. Its Jabali mine is located in Yemen.

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