CZN-TSX
CZICF-OTCQB
VANCOUVER, Aug. 12, 2016 /CNW/ - Canadian Zinc
Corporation (TSX: CZN; OTCQB: CZICF) ("the Company" or
"Canadian Zinc") reports its interim financial results and
development activities for the three and six month periods ended
June 30, 2016.
This news release should be read in conjunction with the
Company's unaudited financial statements for the second quarter
ended June 30, 2016 and the related
management's discussion and analysis (MD&A) which are available
on the Company's website at www.canadianzinc.com,
under the "Financials" section, or on SEDAR
(www.sedar.com).
Financial Results for Second Quarter of 2016
For the three and six month periods ended June 30, 2016, the Company reported a net loss
and comprehensive loss of $866,000
and $1,643,000, respectively,
compared to a net loss and comprehensive loss of $2,613,000 and $6,435,000 for the same periods ended
June 30, 2015.
For the three and six month periods ended June 30, 2016, the Company expensed $385,000 and $693,000, respectively, on its exploration and
evaluation programs at Prairie Creek, compared to $2,039,000 and $5,727,000, respectively, for the three and six
month periods ended June 30, 2015.
For the six month period ended June 30,
2016, the Company also expensed $111,000 on its exploration and evaluation
properties in central Newfoundland
compared to $148,000 for the
comparative period in 2015.
Underwritten Public Offering of $10.2
Million Completed
On July 7, 2016, the Company
closed an underwritten public offering of common shares and
flow-through shares through a syndicate of underwriters co-led by
Paradigm Capital Inc. and Canaccord Genuity Corp. and including
Dundee Securities Ltd..
The Company issued 34,135,000 common shares at a price of
$0.25 per Common Share for gross
proceeds of $8,533,750 and 6,665,000
flow-through shares at a price of $0.25 per Flow-Through Share for gross proceeds
of $1,666,250. In total, the gross
proceeds of the Offering amount to $10,200,000.
Outlook
Canadian Zinc's focus for 2016 will be to continue to advance
the Prairie Creek Mine towards production. The updated 2016
Pre-Feasibility Study ("2016 PFS") indicates a robust project at
consensus forecasts for the long term prices of lead and zinc and
there is good potential for additional project optimization,
enhanced economics and further extending the mine life. The 2016
PFS, with the Base Case economic model, indicates a Pre-tax NPV,
using an 8% discount of $509 million,
with an IRR of 32% and Post-tax NPV, using an 8% discount, of
$302 million, with an IRR of 26% with
an initial mine life of 17 years and payback period of three
years.
The strong fundamental results derived from the economic model
combined with improving commodity prices and a strong outlook for
zinc prices helped the Company to raise $10.2 million in new financing in July 2016.
Several commercial banks have expressed indicative interest in
providing senior, secured project financing for the Project. From
discussions and investigations to date, while there is considerable
interest on the part of financial and commodity institutions,
particularly in the context of the positive outlook of the price of
zinc. It has been indicated that the opportunity for raising bank
debt financing for Prairie Creek would be enhanced with the
production of a definitive or bankable feasibility study which
would address all of the contingences in the required detail and
help to manage or reduce the various risk factors. The Company is
considering the benefits of continuing to work towards completion
of a definitive feasibility study which could be required to
support bank debt or other senior financing.
The 2016 PFS identified a number of project opportunities that,
if implemented, could yield economic, operational and environmental
benefits. The Prairie Creek Mineral Resource would support a
substantial increase in mining/milling rates and a high-level
assessment is envisaged of substantially increasing the mill
capacity with various scenarios of mining and milling, including
possible mill expansion, that could lead to improved economics with
more metal being mined and milled per year.
A recommendation from the 2016 PFS is the creation of a
composite bulk sample, collected from recent underground drilling,
on which to carry out Locked Cycle Tests for better definition of
the milling process, recoveries and reagent consumption, together
with a high-level assessment of substantially increasing the mill
capacity with various scenarios of mining and milling, including
possible mill expansion. In addition, Tetra Tech has recommended
further metallurgical variability tests be carried out from
different mineralization zones for better understanding of
metallurgical performances.
Some of these recommended mill capacity studies and
metallurgical testing studies have been initiated, along with the
ongoing environmental assessment and permitting of the proposed all
season road. The Company expects both initiatives will be carried
out over the balance of the year.
The metallurgical testing program on the Company's
Newfoundland properties is continuing and will be followed-up
by the development of a process simulation and cost assessment
model which will be used to help focus on the key factors that are
critical to realizing the economic potential of the base metal
deposits in central Newfoundland.
This program, which is financially supported by the Research &
Development Corporation of Newfoundland and Labrador ("RDC"), will continue throughout
2016 and is scheduled to be completed by November 2016. The Company is also planning a two
stage exploration program on selected targets with the first stage
of geophysical surveys to be conducted in the fall and the second
stage drill program planned for the winter of 2017.
Zinc has led the revival in base metal prices in the first half
of 2016. The Zinc price increased around 16% in the second quarter
of 2016, its best performance since 2010, taking its improvement in
the year to date to 38.6%. Recent spot prices for Zinc have been
over US$1.02 per pound. The long term
outlook for lead and zinc remains very positive and, supported by
the results of the 2016 PFS, Canadian Zinc will continue to
evaluate all alternatives and possibilities for raising the senior
financing necessary to complete the development and construction
and put the Prairie Creek Mine into production.
Prairie Creek Permitting Update
The Company has submitted an application to the Mackenzie Valley
Land and Water Board and to Parks Canada for Land Use Permits to
permit the possible future upgrade of the current winter access
road to all season use. The application is now undergoing
environmental assessment before the Mackenzie Valley Review Board
("MVRB").
Technical Sessions took place in Yellowknife from June
13, 2016 to June 16, 2016. The
purpose of the Technical Sessions was for all parties and
regulators to discuss issues face-to-face in order to gain a better
understanding of the all season road project and its potential
environmental impacts. The Technical Sessions generated a list of
commitments and undertakings to which Canadian Zinc is now
responding. It is expected that once this is complete, a second
round of Information Requests will be submitted to the Company in
late August.
In July 2016, CZN completed a
field work program gathering additional base line data on
vegetation, wildlife and stream crossings. Additional Technical
Sessions on cultural impacts were also held in the local
communities of Nahanni Butte and
Fort Simpson on July 4 and 5, 2016. The purpose of these sessions
was to gather information from land and resource users in the two
Dehcho communities about the potential impacts and to discuss
possible mitigations of the proposed all season road. The Company
anticipates the environmental assessment process for the all season
road application will be completed by the end of the year.
Newfoundland Properties
Canadian Zinc owns an extensive land package in central
Newfoundland that includes three
VMS projects, each with defined deposits, which are being explored
by Canadian Zinc.
In 2015, the Company entered into a collaboration agreement with
Buchans Minerals Corporation ("Buchans Minerals"), a wholly owned
subsidiary of Minco Plc (AIM: MIO), whereby the two Companies share
research data on their respective central Newfoundland
Zn-Pb-Cu-Ag-Au deposits. The collaboration agreement is focused on
seven VMS deposits located in central Newfoundland. Four of the deposits are held
the Company (Lemarchant, Boomerang-Domino, Tulks East, and
Long Lake).
The intent and objective of the research is to determine the
technical and economic viability of developing the companies'
deposits into producing operations by utilizing a central milling
facility. The concept is based on the potential that collectively,
the satellite deposits can be economically mined, pre-concentrated,
trucked and then milled simultaneously or sequentially through a
central mill.
The initial flotation test results indicate the deposits are
amenable to a common flotation flowsheet with the sequential
Cu-Pb-Zn flotation flowsheet providing the best overall performance
for all four deposits tested. Preliminary bench scale rougher
flotation tests at varying primary grind sizes were conducted in
order to select the primary grind size to use for subsequent
rougher flotation testing. Results of the rougher flotation program
show good to very good copper, lead and zinc recoveries to the
respective rougher flotation concentrates but with some tests
reporting elevated levels of arsenic and antimony, which may
necessitate further cleaning or reduction test work. The bench
scale batch cleaner flotation test program on the copper, lead and
zinc concentrates is underway and expected to be completed by late
August. The program is scheduled to be completed by November 2016.
As part of the recently completed financing, the Company has
allocated $1.67 million in
flow-through financing for exploration of its properties in central
Newfoundland. Three priority areas
of the South Tally Pond property (Lemarchant Deposit, Beaver Lake
and Lake Douglas - Lake of the
Woods areas) and two targets on the Tulks South properties
(a possible extension of the Boomerang deposit and the Tulks West
target) will be evaluated in a two-staged exploration program. The
first stage, to be completed over the summer and fall, will include
the review and modelling of geophysical data, limited line cutting
and grid establishment, to be followed by ground magnetic and EM
surveys. Based on successful results, a winter drill program will
be completed to further explore selected priority targets.
Grant of Stock Options and Restricted Share Units
On August 11, 2016, pursuant to
the Company's Stock Option Plan, the Company granted stock options
to purchase a total of 5,150,000 shares, exercisable at a price of
$0.35 per share, to directors,
officers, employees and other service providers, and subject to all
necessary regulatory approvals. The stock options will vest over a
period of two years and have a term of five years. The Company also
awarded a total of 1,900,000 RSUs pursuant to the Company's
Restricted Share Unit Plan to three senior officers, subject to a
one year vesting period, a pay-out date of thirty months and an
expiry date of five years, and subject to all necessary regulatory
approvals.
About Canadian Zinc
Canadian Zinc is a TSX-listed exploration and development
company trading under the symbol "CZN". The Company's key project
is the 100%-owned Prairie Creek Project, a fully permitted,
advanced-staged zinc-lead-silver property, located in the
Northwest Territories. Canadian
Zinc also owns an extensive land package in central Newfoundland.
Cautionary Statement – Forward-Looking Information
This press release contains certain forward-looking
information, including, among other things, the expected completion
of acquisitions and the advancement of mineral properties. This
forward looking information includes, or may be based upon,
estimates, forecasts, and statements as to management's
expectations with respect to, among other things, the completion of
transactions, the issue of permits, the size and quality of mineral
resources, future trends for the company, progress in development
of mineral properties, future production and sales volumes, capital
costs, mine production costs, demand and market outlook for metals,
future metal prices and treatment and refining charges, the outcome
of legal proceedings, the timing of exploration, development and
mining activities, acquisition of shares in other companies and the
financial results of the company. There can be no assurances that
such statements will prove to be accurate and actual results and
future events could differ materially from those anticipated in
such statements. Mineral resources that are not mineral reserves do
not have demonstrated economic viability. Inferred mineral
resources are considered too speculative geologically to have
economic considerations applied to them that would enable them to
be categorized as mineral reserves. There is no certainty that
mineral resources will be converted into mineral reserves.
This press release has been reviewed and approved by
Alan Taylor, P.Geo., COO & VP
Exploration and director of Canadian Zinc who is a Non-Independent
QP under NI 43-101.
Cautionary Note to United States Investors
The United States Securities and Exchange Commission ("SEC")
permits U.S. mining companies, in their filings with the SEC, to
disclose only those mineral deposits that a company can
economically and legally extract or produce. We use certain terms
in this press release, such as "measured," "indicated," and
"inferred" "resources," which the SEC guidelines prohibit U.S.
registered companies from including in their filings with the
SEC.
SOURCE Canadian Zinc Corporation