- Continued Progress on Prairie Creek Project
CZN-TSX
CZICF-OTCQB
VANCOUVER, March 22, 2017 /CNW/ - Canadian Zinc
Corporation (TSX: CZN; OTCQB: CZICF) ("the Company" or
"Canadian Zinc") reports its financial results for the year
ended December 31, 2016.
This press release should be read in conjunction with CZN's
Management's Discussion and Analysis (MD&A) and Annual
Consolidated Financial Statements for the year ended December 31, 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 year ended December 31,
2016, Canadian Zinc reported a net loss and comprehensive
loss of $5,077,000 compared to a net
loss and comprehensive loss of $8,262,000 for the year ended December 31, 2015.
Included in the loss for the year ended December 31, 2016, were exploration and
evaluation expenditures of $2,428,000
compared to $7,650,000 for the
previous year and share-based compensation charges of $1,104,000 in the current year versus
$124,000 in the comparable year.
At December 31, 2016, the Company
had a positive working capital balance of $9,513,000 including cash and cash equivalents of
$9,817,000 and short term investments
of $28,000.
Prairie Creek Project
Initiation of Definitive Feasibility Study
Canadian Zinc has initiated a Definitive Feasibility Study
("DFS") to follow up on the recommendations contained in
previous prefeasibility studies and to facilitate the raising of
project debt financing for the Prairie Creek Project. AMC Mining
Consultants (Canada) Ltd.
("AMC") and Ausenco Engineering Canada Inc.
("Ausenco") have been engaged to complete the DFS.
Ausenco will assess all surface infrastructure needs to bring
the Project into operation and undertake project
development/execution planning services for the Prairie Creek Mine
and deliver a robust optimized project development plan that can be
used to advance the project to production. At the same time this
will provide a critical link to the project financing plan by
providing potential providers of debt or equity with a clear path
to profitable production.
Ausenco will also complete required engineering utilizing a
cost-effective project design methodology to support the
development of a high-level execution plan that will define the
approach to constructing the Prairie Creek project. This will
include the development of a contracting and procurement strategy
for further stages of work, which will align with the project
execution schedule and will serve to support the capital cost
estimate and make provision for the identified execution risks and
opportunities. The plan will be developed with the objective of
converting it to an Engineering Procurement and Construction
Management ("EPCM") contract at the appropriate time.
The DFS is expected to be completed by mid-2017.
Engagement of HCF as Debt Financing Advisors
Concurrently, the Company has also retained HCF International
Advisers ("HCF") as financial advisers to arrange debt
financing for the project.
HCF has prepared a three-staged approach to source and negotiate
the debt financing. The preliminary stage, which is now under way,
includes development of a funding strategy, appointment of an
independent technical engineer, preparation of a new financial
model to be incorporated into the DFS; and conducting preliminary
market soundings of potential lenders. This will be followed by
formal engagement with potentially interested parties and
thereafter negotiation and finalization of financing documentation.
It is anticipated that up to 70% of the currently estimated
$250 million of capital required to
complete the Project could be supported by debt financing.
Mineral Processing Optimization
In tandem with the development of the DFS, Canadian Zinc has
initiated a mineral processing optimization program. To complete
the testing, the Company engaged SGS Canada Inc. ("SGS") to
undertake further mineral processing optimization testing on new
composite bulk samples collected from underground drill holes
recently drilled in the Prairie Creek Mine. The principal
objectives of the program are to examine metallurgical
characteristics and responses from the fresh and relatively
unoxidized zones of the deposit, to optimize the proposed mineral
processing flow sheet and to simplify the flotation circuit design,
thereby improving the projected metal recoveries and lowering
milling production costs. In addition, the waste products generated
in the test programs will be utilized in designing treatment plans
for the process water and in testing paste tailings for underground
disposal.
Alternative Energy Options – Use of LNG
In February 2017, the Company
entered into an agreement with the Northwest Territories Power
Corporation ("NTPC") to develop an electrical power strategy
for the Prairie Creek Project. The process will examine the method
best suited to delivering power and the potential integration of
energy alternatives such as Liquefied Natural Gas ("LNG")
which is a cheaper and much more environmentally friendly source of
fuel for power generation.
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 has been undergoing environmental
assessment before the Mackenzie Valley Review Board ("MVRB")
over the past two years.
In February 2017, the
environmental assessment process entered into the Hearing Phase.
Various registered parties submitted Technical Reports on
March 10, 2017 and CZN will file its
responses before April 7, 2017
A revised work schedule was issued by the MVRB which indicates
that community and public hearings will be held in Nahanni Butte and Fort
Simpson during the week of April 24,
2017.
Central Newfoundland Properties
Canadian Zinc owns an extensive mineral land package in central
Newfoundland covering three large
Volcanogenic Massive Sulphide ("VMS") projects with known
mineral deposits and excellent exploration potential, including the
South Tally Pond Project, which hosts the Lemarchant deposit; the
Tulks South Project, which hosts the Boomerang and Domino deposits
and the Hurricane and Tulks East prospects; and the Long Lake
Project.
Central Milling Facility Research Collaboration
Project
In 2015, the Company entered into a collaboration agreement with
Buchans Minerals Corporation ("Buchans Minerals",
"BMC"), 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 collaborative research program, partially funded by the
Research & Development Corporation of Newfoundland and Labrador ("RDC") through the GeoEXPLORE
Industry-led program,
To evaluate the potential for centralized milling of some or all
of these deposits, the study included bench scale testing for
process development, preliminary mine plan development and using a
conceptual economic model to assess the economics of various
processing scenarios.
The metallurgical research study demonstrated that the ore from
the Company's Lemarchant and Boomerang-Domino deposits can be
successfully processed in a central mill using a sequential
flotation flowsheet, and that selective zinc, lead and copper
concentrates at marketable grades can be produced from these
deposits.
Highlights of Results of Research Program:
- Pre-concentration of the samples by bench scale DMS testing
(prior to flotation) was determined to be technically viable for
the Lundberg deposit, Bobbys Pond samples and the semi-massive and
stringer sulphide sample from the Lemarchant Footwall.
- Metallurgical test results strongly support the development of
a sequential flotation flowsheet for the processing of all five
deposits using a centralized processing facility.
- Bench scale flotation test programs indicated improved grade
and recovery relationship for the production of copper, lead and
zinc concentrates using a common sequential flotation flowsheet
rather than a bulk flotation flowsheet.
- Test results and METSIMTM metallurgical simulations
confirm that selective zinc, lead and copper concentrates at
marketable grades can be produced using a sequential flotation
flowsheet.
- The process simulation and cost assessment results (conceptual
economic modeling) provided key information on which to base future
studies and development plans, including the ongoing exploration
programs that are critical to expanding the deposits and advancing
the viability of developing the central Newfoundland deposits through a centralized
milling facility.
The positive results of the research project provide valuable
direction to guide future exploration on the Company's central
Newfoundland deposits and the
conceptual economic modeling provided key information on which to
focus future economic studies and development plans for advancing
the development of these deposits through a centralized milling
facility. It was recommended that further review of the satellite
deposits should be undertaken to examine the potential to increase
minable resource size, run of mine ore grades and mine production
rates, and to evaluate alternative cost effective mining
methods.
Central Newfoundland Exploration Work
In February 2017, the Company
initiated a winter drill program on the South Tally Pond property
based on the magnetic and electromagnetic geophysical surveys
completed in late 2016 which outlined new drill targets in three
priority areas including Lemarchant North, Spencers Pond and Lost
Pond.
Between February 1 and March 7,
2017, Canadian Zinc completed 2,247 metres of drilling in 9
drillholes (2,115 metres) and 2 drillhole extensions (312 metres)
at the South Tally Pond property - Lemarchant deposit. The drilling
to date has focused on extending the known mineralization on the
Lemarchant deposit Main Zone. Assay results are pending.
Outlook
Canadian Zinc's focus for 2017 will be to complete a Definitive
Feasibility Study and seek the financing required to begin initial
development of the Prairie Creek Project and advance the Mine
towards production.
Building on the robust economics indicated by the 2016
Pre-Feasibility Study, opportunities for optimization that could
yield further economic, operational and environmental benefits are
being pursued as part of the DFS process. Some of the 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 is well advanced in completing the DFS with a target
completion date of June 30, 2017.
This independent report co-authored by AMC and Ausenco will be used
by the Company, with the assistance of HCF International Advisers,
to seek senior debt financing. Several commercial banks have
expressed indicative interest in providing project financing for
the development and construction of the Prairie Creek Mine.
The all season road environmental assessment is nearing
completion, and will be followed by the permitting process.
The metallurgical testing program on the central Newfoundland properties was successfully
completed and will help to plan the 2017 exploration program. A
winter drill program on the South Tally Pond property based on the
magnetic and electromagnetic geophysical surveys completed in late
2016 is ongoing and a two-stage exploration program on selected
targets will begin in the second quarter of 2017.
Zinc has continued to be one of the strongest performing metals
throughout 2016 and into 2017, rising from the US$0.70 per pound level at the end of 2015 to a
high of US$1.30 per pound in the
first part of 2017. Lead has also performed well in 2016, rising
from US$0.75 per pound at the end of
2015 to US$0.95 per pound during the
third quarter and continuing to stay in the US$0.90 to US$1.12 per pound range into early
2017. The price of silver surged over 40% in the first half of 2016
and then retreated from a two-year high of over US$20 per ounce to approximately US$18 per ounce.
The long-term price environment for lead and zinc remains very
positive and, supported by the completion of the DFS, 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.
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