JABALI PROJECT, YEMEN

The exploitation and development rights to the Jabali zinc deposit are owned by Jabal Salab Company (Yemen) Limited (“Jabal Salab”), in which ZincOx holds a 52% interest. The balance of 48% is held by Ansan Wikfs Investments Limited. The Jabali zinc oxide deposit is located 110 km north east of Sana’a, Yemen’s capital city.

Major advances with the development of the deposit were achieved during 2007 which culminated in a $216 million financing package for Jabal Salab in February 2008. This included equity and financial security guarantees from the shareholders and a $120 million loan facility provided by a group of emerging market specialist hedge funds.

The term of the loan facility is six years with an interest rate of 11.5% and a three year grace period on principal repayments. In addition, the facility carries an additional coupon linked to the zinc price (“the ZIPPO” or Zinc Price Related Payment Obligation) which is calculated at US$0.16 for each dollar that the average annual international zinc price is above US$1,300 per tonne on every tonne of zinc sold by Jabal Salab over a period of 12 years from close of the financing. The ZIPPO notes are tradable instruments and are believed to be the first such instruments to be launched for a metal related transaction and the first Yemen project bond.

The Government of Yemen is extremely supportive of the Jabali project. It is the first large scale mining project to be developed in Yemen and the Government recognises that mining is a way of diversifying away from its dependence on the oil sector. Jabal Salab has a 20-year Exploitation Agreement with the Ministry of Oil and Minerals that sets out all the terms and conditions for development of the deposit. The Contract has been approved by the Yemen parliament and ratified as law by the President.

The Company has fostered a close relationship with local communities and stakeholders’ training programmes, employment and improved infrastructure, especially road and water, are benefits to the nearby communities that should prove to be sustainable well beyond the life of the mine.

The Jabali deposit contains a mineable reserve of 8.7 million tonnes of ore at an average grade of 9.2% zinc. The deposit will be mined at the rate of 800,000 tonnes per annum by open pit with a strip ratio of 2:1. Ore will be crushed and calcined prior to milling and leaching using ammonia based solutions. Following purification, zinc carbonate will be precipitated and calcined for the production of 70,000 tonnes per annum of very high quality zinc oxide (>79% zinc). The zinc oxide will be bagged and shipped to customers in the rubber, paint and ceramics industries.

Construction of the mine and associated facilities is scheduled to take 22 months, such that production of a high quality zinc oxide should commence at the end of 2009. A site camp sufficient for 300 people is under construction.

Please click here to view the Jabali Photo Gallery.

 

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