By Nigel Somerville, the Deputy Sheriff of AIM | Tuesday 29 December 2015
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
This morning AIM-listed ZincOx Resources (ZOX) produced a calamitous RNS. A failed funding round (for $5 million) means that 90% of its erstwhile wholly-owned subsidiary ZincOx Korea Ltd is to be handed over to Korea Zinc or – at Korea Zinc’s request – a loan by Korea Zinc will be converted in an eye-watering debt-for-equity shareholder dilution to leave ZincOx shareholders with just 10% of the equity. And there could be more dilution as ZincOx Korea is loss-making: any further funding to keep the lights on at the plant will come from Korea Zinc which will increase its ownership in proportion. Even after this ZincOx looks to be in dire straits and is now considering delisting. In short, this is a trainwreck. Time for one of Tom Winnifrith’s bags of Walkers – or will it be just Tesco Value?
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