Companies: AAL    ZOX   

Anglo American Exploration has pulled out of Yemen's Jabali zinc project, where ZincOx Resources is the leading participant.

AIM-quoted ZincOx, which has elsewhere shifted its focus to extracting zinc from steel recycling, mine waste and lead smelting, has agreed a restructuring of the Jabali project. Under the new deal, ZincOx, headed by the enthusiastic Andrew Woollett, is to sell 13 per cent of the joint venture to local group Ansan Wikfs Hadramaut for an initial £3.9 million, with another £502,000 if it can arrange further debt finance for Jabali.

At the same time, Anglo American Exploration, with 20 per cent of Jabali, has decided the project does not have the potential to meet its its minimum output threshold when it does eventually come into production. As dictated by the joint venture terms, Anglo is therefore assigning 15 per cent to Ansan and five per cent to ZincOx.

ZincOx, which lost a nearly-trebled £625,100 in the six months to June, will now have 52 per cent of Jabali and Ansan the rest. ZincOx shares, which were floated five years ago at 120p, fell to 46p in 2004 before surging to 293.5p last April and are now 278p, down 4p today.

That compares favourably with our recommendation last year at 129.5p. Profit-taking could be prudent for those not waiting for longer-term potential.