News

September 24, 2008

ZincOx Shaken But Not Stirred By Tough Market Conditions

By Alastair Ford

It’s not easy being out of favour. With equity markets in a shambles, it’s not even easy being in favour. But the double whammy of exposure to a metal that is regarded as particularly weak, and to a market that is relentlessly selling everything is tough enough for anyone to bear. Zincox is rather hemmed in by its name in this regard, even though in the USA it’s got exposure to pig iron as well as zinc at the Ohio Recycling Project. So, it came as no real surprise on the day the company released its latest set of financials, to get a stark reminder from broker Fairfax as to how cruel the equity markets can be. From the glory days of last summer, Fairfax pointed out, when Zincox traded as high as 421p per share, the decline has been precipitous. On the day of the results the shares dropped a further 3.25p to a lowly 50.75p, a level not seen since 2004.

All of which means that Zincox, with a market capitalization of just under £48 million, is now trading at less than the value of the cash on its balance sheet. Cash currently stands at just under US$100 million, according to Zincox executive chairman Andrew Woollett. Zincox is not alone in trading below cash value, indeed, it’s actually a commonplace sight on the market at the moment. The thinking from the market’s point of view is that that cash won’t be there forever, and that additional...