Exploration group ZincOx Resources is negotiating with bond-holders to avoid a repayment which could be triggered by delays in reaching a production milestone at its Jabali mine.
The group says its 52%-owned subsidiary Jabal Salab has completed the $120m bond facility to be utilised in construction of the Jabali mine and plant. ZincOx's liability is limited to $5.2m.
The facility anticipates project development milestones which include reaching production of 63% of capacity by mid-August 2010, with regular reports to bond-holders from a technical adviser.
Jabal Salab has been made aware that the technical adviser has notified the bond-holders it believes the production milestone will be achieved two to three months after the August deadline.
This constitutes a default and triggers the right to demand repayment of the bond. The management of Jabal Salab has started discussions with the bond-holders with a view to accommodating any delay within the facility.
Jabal Salab is working with the technical adviser to draw up a revised development schedule.
ZincOx says it currently has more than £45m in cash not currently earmarked for the development of the Jabali project.
Story provided by Business Financial Newswire