ZZL Zeehan Zinc

RNS Number:7942A
Zeehan Zinc Limited
25 July 2007




                              Zeehan Zinc Limited

                            Pre-close trading update


Zeehan Zinc Limited ("Zeehan Zinc" or the "Company") announces a progress update
preceding the announcement of the Company's preliminary results for the year to
30 June 2007. It is expected that these results will be announced in late
September 2007.

Following the announcement of the appointment of Brian Caffyn as Managing
Director on 26 June 2007, the Board has reviewed the progress made to date and
has refined its strategy to concentrate on achieving initial operations and
revenues in the short term.

The Company's gravity separation plant is nearly complete and is expected to
deliver a pre-concentrate material suitable for many floatation plants. The
continuing high commodity prices and the resultant market flexibility in selling
lower quality materials (such as pre-concentrates) gives the Company confidence
that this initiative, as outlined in Zeehan Zinc's Admission Document, will
prove viable commercially. The Company is also reviewing the possibility of
producing a lead concentrate from the gravity plant which initial testing
indicates is viable.

The Company is accelerating commercial negotiations with various parties on a
potential offtake agreement for lead/zinc pre-concentrate and possibly a lead
concentrate with a view to achieving first deliveries in approximately three
months time, dependent on positive laboratory testwork on the pre-concentrate
material and subsequent large scale testing in Q3 2007.

Mined material has already been stockpiled at the site ready for processing and
the infrastructure to facilitate this programme is either already in place or in
the final stage of construction. Consequently, the Company is delaying the
construction of the floatation plant at the Comstock mine in the short term.

There have been some delays in getting into operation which related to operating
permit delays and their consequent knock-on effect on construction work at the
Comstock site which has taken place in poorer weather conditions than originally
expected. The Company believes that all major construction will be completed in
the next few weeks and that operational permits to operate the tailings dam,
polishing pond, waste rock dump, water system and local infrastructure are
expected by the end August to allow full commercial operations to commence.
Additionally, the Company previously made an application to alter the conditions
of the Permit to increase allowable production at the Comstock site from 200,000
tonnes per annum to 400,000 tonnes per annum and this is expected prior to
commencing full mining operations.

Exploration activities have continued with a significant drilling programme in
the Comstock area to confirm near term mining prospects, in the Oceana area in
advance of submitting a Mining Lease application and a significant seismic and
drilling programme within the Company's exploration license areas. Given recent
extensions granted to other companies in the area and with the significant
expenditures incurred already and continuing drilling expected to be completed
over the next 6 months, the Company expects to be in position to apply and
receive an extension of its exploration licenses. Longer term, Zeehan Zinc will
seek to bring these areas into operation if this programme yields positive
results. An update of the Company's reserves and resources is expected to be
available by the end of Q3 2007.

Brian Caffyn, Managing Director of Zeehan Zinc, commented:

"While delays and cost increases have occurred since original projections, the
Comstock mine and gravity plant will be completed shortly. Current metals prices
and our plans to sell lower grade pre-concentrate zinc and lead will enable us
to generate cashflow and provides us with the flexibility to complete the
floatation plant and increase production and processing capacity over time. We
have a good team in place and expect to add additional key people in the near
future to progress towards commercial production. Although the majority of the
equipment for the floatation plant has been refurbished and is expected to be
shipped from Canada in August, deferring the construction of the floatation
plant will allow us to optimise its final design whilst we focus our efforts on
generating revenues from the sale of pre-concentrates."


Enquiries to:

Zeehan Zinc Pty c/o Bankside Consultants
Brian Caffyn, Managing Director                 Tel: 0207 367 8888

Libertas Capital                                Tel: 0207 569 9650
Jakob Kinde, Aamir Quraishi

Bankside Consultants                            Tel: 0207 367 8888
Simon Rothschild/Oliver Winters




                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
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