Horsehead Holding Corporation announced its decision to proceed with plans to construct a new lower cost, environmentally friendly zinc production facility.
The new facility will replace the company's older smelter technology and will significantly reduce emissions of greenhouse gases and particulates into the atmosphere. The plant will utilize the ZINCEX(TM) solvent extraction technology. Horsehead has engaged Tecnicas Reunidas a leading technology provider and developer of the ZINCEX(TM) process, to complete an engineering study for this plant. This study has confirmed findings from previously completed feasibility studies which led to the decision to move forward with the project. The ZINCEX(TM) process has been successfully deployed at the Skorpion facility in Namibia and the Akita facility in Japan.
Horsehead anticipates that its new facility will be capable of producing in excess of 150,000 tonnes of zinc metal per year and will significantly reduce manufacturing conversion costs due to the lower energy usage, higher labor productivity and lower maintenance needs associated with the new technology. The plant design will rely upon sustainable manufacturing practices in that it will produce zinc solely from recycled materials and use significantly less fossil fuel than the Company's current smelter.
The new plant will convert electric arc furnace based feed and other recycled materials into special high grade zinc and other grades in addition to the Prime Western grade currently offered by the Company thereby expanding the Company's access to new markets while it continues to serve customers in the zinc oxide market. In addition, the process will allow the Company to recover value from new metals such as silver and lead as well as the copper and cadmium contained in electric arc furnace dust. The Company believes the investment will produce an attractive net present value of expected cash flows and increase earnings, with benefits that would not change significantly with changes in the price of zinc.
Site evaluations and negotiations continue regarding the final location for the new zinc facility. A primary site has been identified for engineering design purposes. The Company believes the project has been enthusiastically received by public and private constituencies located within the candidate communities.
The Company currently plans to submit environmental permit applications during the third quarter of 2011 and, subject to the availability of appropriate financing, to begin construction before the end of the year. A final decision on the site of the facility is not expected until project financing is completed. Construction of the facility could be completed as early as the third quarter of 2013. The existing smelter will continue to operate until such time as the new plant has achieved its targeted production run-rate.
The Company is evaluating a range of financing sources for both the new zinc plant and other ongoing expansion and diversification initiatives. Sources could include cash on hand, a new revolving credit facility and financing through the debt capital markets.
