Don MacDonald
appointed President and to become CEO
/NOT FOR DISSEMINATION IN THE UNITED ST/ATES
OR TO UNITED STATES NEWSWIRE
SERVICES/
- 100 Million Shares at $0.20
per Share for $20
Million
- 50 Million Warrants at $0.25
per Share until December 31,
2018
- US$10 Million Project Bridge
Loan to be Repaid
CZN-TSX
CZICF-OTCQB
VANCOUVER, May 15, 2018 /CNW/ - Canadian Zinc
Corporation (TSX: CZN; OTCQB: CZICF) is pleased to announce
that it has entered into an equity financing agreement with RCF VI
CAD LLC ("RCF VI LLC"), a wholly owned subsidiary of Resource
Capital Fund VI L.P ("RCF VI L.P.", and collectively with RCF VI
LLC, "RCF VI"), pursuant to which RCF VI LLC has agreed, subject to
shareholder and regulatory approvals, to purchase 100 million
shares of Canadian Zinc at $0.20 per
share, for gross proceeds of $20
million.
As part of the placement, RCF VI LLC will be issued 50 million
short-dated warrants, exercisable at $0.25 per share until December 31, 2018, which if exercised in full
would generate an additional $12.5
million, or a total potential equity financing of
$32.5 million.
The use of proceeds of the equity financing will include
repayment of the US$10 million bridge
loan advanced by RCF VI L.P. in December
2017 and the ongoing development of the Company's flagship
Prairie Creek Zinc-Lead-Silver Project in the Northwest Territories, Canada, including
additional engineering and permitting work to improve project
confidence, and general working capital.
John Kearney, Canadian Zinc's
Chairman and CEO, commented, "This $20 million equity financing by RCF is another
strong vote of confidence in the Company's potential and the
viability of the Prairie Creek Project. RCF is the Company's
largest shareholder and the investment at a subscription price of
$0.20 per share represents a 61%
premium over the 10-day volume weighted average price of the
Company's shares as of May 14, 2018.
Management will be recommending that shareholders vote for approval
of the financing."
The proposed equity financing with RCF VI LLC will be submitted
to shareholders for approval at the forthcoming Annual General and
Special Meeting of Shareholders, scheduled to be held in
Vancouver, BC, on June 27, 2018, and is subject to certain
conditions precedent and regulatory approvals.
The existing Investor Agreement with RCF VI L.P., which contains
various rights granted to RCF VI L.P., including participation
rights to maintain its pro rata shareholding interest in the
Company for as long as it remains a significant shareholder, will
be amended to include RCF VI LLC and to provide for the right of
RCF VI to nominate additional members to the board of directors
proportional to its shareholding, and to provide certain other
project oversight rights.
About Resource Capital Funds
Resource Capital Funds ("RCF") is a group of commonly managed
private equity funds, established in 1998 with a mining sector
specific investment mandate spanning all hard-mineral commodities
and geographic regions. Since inception, RCF has supported 170
mining companies, with projects located in 51 countries and across
29 commodities.
Further information about RCF can be found on its website
(www.resourcecapitalfunds.com). RCF aims to partner with
companies to build strong, successful and sustainable businesses
and in doing so strives to earn superior returns for all
shareholders. RCF VI currently holds 19.7% of Canadian Zinc's
shares increasing to 41.4% on completion of the initial 100 million
share subscription.
Assuming the exercise of all of the warrants issued to RCF VI
following the completion of the equity financing, an aggregate of
201,630,000 Canadian Zinc shares would be owned and controlled by
RCF VI, representing approximately 48.5% of Canadian Zinc's issued
and outstanding shares.
New President Appointed
Canadian Zinc also announces that R.J. (Don) MacDonald has been appointed as
President of the Company, effective May 16, 2018, and that on approval of the RCF
financing by the shareholders, expected to occur at the AGM on
June 27, 2018, Mr. MacDonald will
also assume the role of CEO.
Mr. MacDonald is a CPA, CA, with bachelor and master's degrees
in engineering, and has been involved in the financing, development
and/or operation of over 20 mines in North and South America over his career. He served as
Chief Financial Officer of Quadra FNX (now KGHM International) from
2010 to 2017 and of NovaGold Resources Inc. from 2003 to 2010. Most
recently, Don was Acting President and CEO of KGHM
International.
John Kearney, Canadian Zinc's
Chairman and CEO, commented, "We are delighted to have been
able to recruit Don MacDonald as
President, and to take over as CEO, as the Company moves forward
with the financing and development of the Prairie Creek Mine. Don
has great experience with the financing and construction of mining
projects, and his appointment represents the next step in
enhancing the senior management team that will put the Prairie
Creek Mine into production".
Grant of Stock Options
Don MacDonald has been granted
stock options under the Company's Incentive Stock Option Plan on
2.5 million shares at $0.20 per
share, exercisable for five years with vesting quarterly in arrears
over two years, subject to regulatory and shareholder approvals, if
required.
Prairie Creek Project
In September 2017, Canadian Zinc
announced the results of its 2017 Feasibility Study ("2017 FS")
which contemplates a mine life of 15 years resulting in
$3 billion in net revenue and
$1.3 billion in earnings before
interest, taxes, depreciation and amortization ("EBITDA") over the
life of the mine and pre-tax Net Present Value ("NPV") of
$344 million, using an 8% discount
rate, with an Internal Rate of Return ("IRR") of 24% (post-tax NPV
of $188 million and an IRR of 18%)
and using base case metal price forecasts of US$1.10 per pound for zinc, US$1.00 per pound for lead and US$19 per ounce for silver with a foreign
exchange rate of CA$1.25=US$1.00.
A Technical Report prepared in accordance with National
Instrument 43-101 Standards for Disclosure for Mineral Projects
reporting the results of the 2017 Feasibility Study was filed on
SEDAR on October 31, 2017.
For 2018, specific programs are being planned to further de-risk
the Prairie Creek Project, which will include detailed engineering
and design of the mine facilities, rehabilitation of equipment and
accommodations, hydrological investigations and initial
site/underground preparation.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy nor shall there be any sale of any
of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful. The securities have
not been and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act"), or
the securities laws of any state of the
United States and may not be offered or sold within
the United States, or to or for
the account or benefit of a U.S. person (as that term is used in
Regulation S of the U.S. Securities Act) unless registered under
the U.S. Securities Act and applicable state securities laws or
pursuant to an exemption from such registration requirements.
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, an advanced-stage
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.
Forward-Looking Information
This news release contains certain forward-looking
information, including, among other things, , the closing of the
equity financing and the expected completion of 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,
regulatory and shareholder approval of the financing, conditions of
the financing being met, the issue of permits, the size and quality
of mineral resources and reserves, 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.
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 news 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.
Statements about the Company's planned/proposed Prairie Creek
Mine operations, which includes future mine grades and recoveries;
the Company's plans for further exploration at the Prairie Creek
Mine and other exploration properties; future cost estimates
pertaining to further development of the Prairie Creek Mine and
items such as long-term environmental reclamation obligations;
financings and the expected use of proceeds thereof; the completion
of financings and other transactions; the outlook for future prices
of zinc, lead and silver; the impact to the Company of future
accounting standards and discussion of risks and uncertainties
around the Company's business are not guarantees of future
performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict. Therefore, the Company's
actual results could differ materially and adversely from those
expressed in any forward-looking statements as a result of various
factors. You should not place undue reliance on these
forward-looking statements.
The Company cautions that the list of factors set forth above
is not exhaustive. Some of the risks, uncertainties and other
factors which negatively affect the reliability of forward-looking
information are discussed in the Company's public filings with the
Canadian securities regulatory authorities, including its most
recent Annual Report, quarterly reports, material change reports
and news releases, and with the SEC. In particular, your attention
is directed to the risks detailed therein concerning some of the
important risk factors that may affect its business, results of
operations and financial conditions. You should carefully consider
those risks, in addition to the other information in the Company's
filings and the various public disclosures before making any
business or investment decisions involving the Company and its
securities.
The Company undertakes no obligation to revise or update any
forward-looking statement, or any other information contained or
referenced in this News Release to reflect future events and
circumstances for any reason, except as required by law. In
addition, any forecasts or guidance provided by the Company are
based on the beliefs, estimates and opinions of the Company's
management as at the date of this News Release and, accordingly,
they involve a number of risks and uncertainties. Consequently,
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. Except as
required by law, the Company undertakes no obligation to update
such projections if management's beliefs, estimates or opinions, or
other factors should change.
SOURCE Canadian Zinc Corporation