• Prairie Creek Optimization Projects
Under Way
• Positive Metallurgical Test
Results from Newfoundland Deposits
CZN-TSX
CZICF-OTCQB
VANCOUVER, Nov. 15, 2016 /CNW/ - Canadian Zinc
Corporation (TSX: CZN; OTCQB: CZICF) ("the Company" or
"Canadian Zinc") reports its results for the three and nine
month periods ended September 30,
2016.
This press release should be read in conjunction with CZN's
Management's Discussion and Analysis (MD&A) and interim
Financial Statements for the period ended September 30, 2016, which are available on the
Company's website at www.canadianzinc.com, or under
the Company's profile on SEDAR
(www.sedar.com).
Financial Results
For the three and nine month periods ended September 30, 2016, the Company reported a net
loss and comprehensive loss of $1,708,000 and $3,351,000 respectively, compared to a net loss
and comprehensive loss of $1,778,000
and $8,213,000 for the same periods
ended September 30, 2015.
For the three and nine month periods ended September 30, 2016, the Company expensed
$758,000 and $1,451,000 respectively on its exploration and
evaluation programs at Prairie Creek compared to $1,208,000 and $6,935,000 respectively for the three and nine
month periods ended September 30,
2015. The Company was completing an underground diamond
drilling program at Prairie Creek in the comparable periods of 2015
with no similar programs of comparable costs in the three and nine
month periods ending September 30,
2016.
For the three and nine month periods ended September 30, 2016, the Company expensed
$80,000 and $191,000 respectively on its exploration and
evaluation properties in central Newfoundland compared to $81,000 and $229,000 respectively for the comparative
periods.
The Company completed an underwritten public offering in July,
2016 and raised gross proceeds of $10.2
million from the issue of 40,800,000 common shares. Net
proceeds from the offering were $9,249,000 after costs.
At September 30, 2016, the Company
had a positive working capital balance of $9,245,000 including cash and cash equivalents of
$3,483,000 and short term investments
of $6,025,000.
Prairie Creek Project
On September 30, 2016, the Company
re-filed the Prairie Creek 2016 Technical Report, originally filed
with SEDAR on May 12, 2016, to
correct an overstatement of the gross smelter revenue in the
life-of-mine economic model included in its 2016 Preliminary
Feasibility Study.
All other inputs into the economic model and all technical
aspects of the 2016 Preliminary Feasibility Study remain unchanged,
including all mineral resource and reserve estimates, mining plans
and production rates and estimates of capital and operating costs
and assumptions on concentrate treatment charges and penalties.
The revised base case economic model continues to indicate a
robust project at consensus forecasts for the long-term prices of
lead and zinc and there remains good potential for additional
project optimization, enhanced economics and further extending the
life of the Prairie Creek Mine.
The revised financial results remain strongly positive and
indicate a pre-tax undiscounted cumulative cash flow of
$710 million at metal prices of
US$1.00/lb for zinc and lead and
US$19/oz for silver. The revised
financial model yields a pre-tax NPV of $284
million at an 8% discount rate, with an IRR of 23%, and a
post-tax NPV of $155 million, with a
post-tax IRR of 18%.
Highlights of the 2016 Prairie Creek Prefeasibility Study
("PFS")
(All costs are in Canadian dollars unless indicated
otherwise, g=gram, tpd=tonnes per day, dmt=dry metric tonnes,
LOM=life of mine, CDN=Canadian, US=United
States).
- Post-tax Net Present Value, using an 8% discount, of
$155 million, with a post-tax
internal rate of return of 18%, based on base case metal price
forecasts of US$1.00 per pound for
both zinc and lead and US$19.00 per
ounce of silver, for the LOM production at an exchange rate of
$1.25CDN:$1.00US.
- Average EBITDA of $64 million per
year and cumulative EBITDA of $1.0
billion over the LOM.
- 17 year mine life based exclusively on a defined mineral
reserve of 7.6 million tonnes, grading 8.9% zinc and 8.3% lead,
with 128 g/t silver, including a defined Mineral Reserve in the
Main Quartz Vein of 5.2 million tonnes, grading 9.4% zinc, 10.4%
lead and 160 g/t silver.
- Average annual production of 60,000 dmt of zinc concentrate and
55,000 dmt of lead concentrate containing 86 million pounds of
zinc, 82 million pounds of lead and 1.7 million ounces of
silver.
- Pre-production capital cost is estimated to be $216 million of which $59
million will be incurred in year 1 and $157 million in year 2, with an additional
contingency of $28 million.
- Average LOM cash operating costs per tonne of ore mined (before
transportation costs) are estimated at $165 per tonne.
The 2016 PFS does not take into consideration the Inferred
Resources of 7.0 million tonnes of 11.3% zinc, 7.7% lead and 166
g/t silver, which is currently too speculative geologically to have
economic considerations applied to them, but could have the
potential to more than double the presently considered mine life.
The Prairie Creek orebody continues open-ended at increasing depths
to the north.
Recommendations for Optimization
The 2016 PFS included a number of recommendations for further
optimization and potentially enhanced economics identified in the
2016 PFS including:
- Complete environmental assessment and permitting of the all
season access road.
- A front-end engineering and design phase to complete detailed
engineering and issued for construction drawings to definitive
feasibility study levels to obtain fixed pricing from construction
contractors.
- Additional mill studies to further optimize the mill circuit
capacity to increase both ore throughput and metal recoveries.
- Further metallurgical tests to optimize the process flowsheet,
particularly reagent regimes, including variability tests on the
samples from various mineralization zones and ore types.
- Further study of on-site or off-site processes to reduce
deleterious components of concentrates, thereby reducing smelter
penalties.
- Studies to optimize the mine operation by automation and
adoption of advanced technology.
- Additional underground paste backfill strength studies.
- Additional hydrology studies to better design, size and cost
water management facilities.
- Early completion of site clearance construction, engineering
and mine development programs to accelerate start-up times. This
would include preliminary earthworks on the water storage pond,
waste rock pile, building foundations, portal construction and
upgrades of existing infrastructure in tandem with detailed
engineering of new structures.
Prairie Creek Permitting Update
In April 2014, the Company
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 Session 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.
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 submitted comments on the cultural impact reports.
The June Technical Sessions generated a list of commitments and
undertakings. In July 2016, CZN
completed a field work program along the road corridor to gather
additional base line data on vegetation, wildlife and stream
crossings that were deemed necessary to respond to some of the
undertakings. On August 18, 2016,
Canadian Zinc completed submitting its responses to the
undertakings from the June Technical Session. Canadian Zinc
was subsequently asked to submit some additional information and
did so on September 6, 2016.
In September 2016, the Company
received the second round of Information Requests from parties
registered in the regulatory process. CZN submitted its
responses to the second round of Information Requests on
October 24, 2016.
The environmental assessment regulatory process has now entered
a risk assessment and report stage, which will be followed by
public hearings, now expected to take place in the first quarter of
2017, and completion is expected in the second quarter of 2017.
Newfoundland Properties
Canadian Zinc owns an extensive land package in central
Newfoundland that includes three
major Volcanogenic Massive Sulphide ("VMS") properties, each with
defined deposits, which are being explored by Canadian Zinc.
Central Milling Collaboration Project
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 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 metallurgical test program, completed by Thibault &
Associates Inc. of Fredericton, New
Brunswick, was based on an assessment of pre-concentrating
the ore prior to flotation using Dense Media Separation ("DMS")
technology and the development of a process relative to the
metallurgical characteristics of five deposits under
development.
The preliminary test results confirm that selective zinc, lead
and copper concentrates at marketable grades can be produced using
a common flotation flowsheet. The positive results from the
metallurgical test program strongly support the development of the
sequential flotation technology for processing of the deposits
using a centralized processing facility.
The metallurgical test programs are being followed-up with a
Process Simulation and Cost Assessment model to evaluate and
identify the key factors impacting the operating economics of a
centralized processing concept for the production of the base metal
concentrates from the various base metal deposits in central
Newfoundland.
The research programs are scheduled to be completed in December,
2016.
Planned Exploration in Newfoundland
Following the financing completed in July
2016, the Company allocated $1.67
million in flow-through funds for further exploration in
central Newfoundland. Most of this
will be spent on the South Tally Pond and Tulks South
properties.
Canadian Zinc is undertaking ground geophysical surveys
including magnetics, gravity, electromagnetics ("EM") and borehole
EM on a number of high priority Cu-Pb-Zn-Ag-Au target areas on its
South Tally Pond and Tulks South properties.
The ground geophysical surveys are aimed at defining priority
drill targets in each of the areas and are expected to be completed
by the end of November. A winter drill program will be undertaken
to further explore selected priority targets.
Outlook
Canadian Zinc's focus for the remainder of 2016 and into 2017
will be to continue to advance the Prairie Creek Mine towards
production.
The updated 2016 Pre-Feasibility Study 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 identified a number of project opportunities that,
if implemented, could yield economic, operational and environmental
benefits. The Prairie Creek Mineral Resource should support a
substantial increase in mining/milling rates and a high-level
assessment is envisaged for substantially increasing the mill
capacity.
One 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. Another is
that further metallurgical variability tests be carried out from
different zones of mineralization. Some of these recommended mill
capacity 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 continue over the balance of the year.
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. The
Company is evaluating the scope, cost and duration of completing a
definitive feasibility study which could be required to support
bank debt or other senior financing.
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 that it is exploring for
copper-lead-zinc-silver-gold deposits.
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.
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