BACKGROUND

Introduction

Korea generates about 330,000 tonnes of EAFD per annum. The recycling plant is designed to treat 200,000 tonnes per year of EAFD containing an average grade of about 25% zinc. It has the potential to produce 80,000 tonnes per annum of zinc oxide concentrate (63% zinc, 4.5% lead), together with about 80,000 tonnes per annum of ZHBI for use in electric arc furnaces.

The Korean Recycling Plant was ZincOx’s flagship development. It was completed in the first quarter of 2012 at a cost of US$112 million. The plant produces 50,000 tpa of zinc in a concentrate.

Korea has one of the world’s largest and the most concentrated steel recycling industries. ZincOx has been working in Korea for over seven years and in June 2008 the company entered into a Memorandum of Understanding with KOSA, the association representing the steel industry in Korea, by which KOSA would assist ZincOx in obtaining EAFD supply commitments from various steel companies and in finding a suitable plant site. In April 2009 this led to ZincOx entering into exclusive EAFD Supply Agreements with all Korea’s significant EAF operators: Hyundai Steel, Dongkuk Steel, Daehan Steel, YK Steel, Dongbu Steel, Hwanyoung Steel, Korean Iron and Steel Company, SeAH Besteel and Posco Speciality Steel. Together these companies generate approximately 330,000 tonnes per annum of EAFD with a zinc grade of about 25%.

EAFD Supply Agreement Signing Ceremony

The plant site was identified with the Cheonbuk Industrial Complex (CIC) and in December 2010 this site was environmentally permitted for the recycling of electric arc furnace dust (EAFD) by ZincOx Korea Limited, a company in which ZincOx has a 10% interest.

The CIC site covers 9.3 hectares and is situated approx 10km to the west of Pohang, one of Korea’s major steel producing centres. The CIC falls under the local jurisdiction of Gyeongju City and is situated in Gyeonsangbuk-Do Province.

In September 2010, the Company announced its intention to accelerate the development of the project, and make this the company’s first development priority.