Zinc of Ireland will not go ahead with the acquisition of a lead-zinc processing plant — an option that would have fast-tracked it to production.

The company (ASX:ZMI) had an 18-month option to acquire a 650,000 tonne-per-annum processing plant originally used at the Galmoy mine, 70km from its Kildare project area.

The shares dropped 20 per cent to 0.4c by 1.30pm AEDT.

To exercise the option, Zinc of Ireland would have had to pay $6 million in cash and issue $2 million worth of shares.

The plant is in storage in Darwin.

Zinc of Ireland told investors it would instead channel the funds into its exploration programs.

The company is planning to begin a detailed gravity survey over its Celtic Tiger discovery, where drilling intersected high grades of up to 8 per cent zinc plus lead.

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The zinc price has climbed over 120 per cent in the past couple of years to around $US3215 per tonne.

The metal is used to galvanise steel and has benefited from Chinese infrastructure development and higher steel prices.

Stockhead is seeking comment from Zinc of Ireland.