Canadian Zinc Corporation (TSX:CZN)(OTCQB:CZICF) (the "Company" or
"Canadian Zinc") announces its financial results for the three and
nine month periods ended September 30, 2012.
This press release should be read in conjunction with the
unaudited interim consolidated financial statements and notes
thereto, and management's discussion & analysis ("MD&A")
for the three and nine month periods ended September 30, 2012, both
available on SEDAR at www.sedar.com.
FINANCIAL RESULTS SEPTEMBER 30, 2012
For the three and nine month periods ended September 30, 2012,
the Company reported a net loss and comprehensive loss of $621,000
and $12,576,000, respectively, compared to a net loss and
comprehensive loss of $5,293,000 and $29,844,000 for the same
periods, respectively, ending September 30, 2011.
The net loss in the three and nine month periods ended September
30, 2012 included a mark-to-market gain of $3,032,000 and a loss of
$4,998,000, respectively, on the Company's marketable securities,
compared to mark-to-market losses of $2,703,000 and $23,737,000 for
the comparative periods in 2011. Excluding the gain or loss on the
marketable securities, the Company recorded a loss of $3,653,000 in
the third quarter and a loss of $7,578,000 in the nine months ended
September 30, 2012, compared to similar losses of $2,590,000 and
$6,107,000 in the same periods last year.
Canadian Zinc currently holds 12.57 million shares of Vatukoula
Gold Mines plc ("VGM"), which represents approximately 10.7% of
VGM's issued share capital. VGM is a UK company listed on AIM (part
of the London Stock Exchange), which owns and operates the
Vatukoula Gold Mine in Fiji. At September 30, 2012, the Company's
investment in VGM had a market value of $8.8 million. The market
value of the Company's investment in VGM at November 13, 2012, was
$6.3 million.
At September 30, 2012, the Company had a positive working
capital balance of $16,432,000 including cash and cash equivalents
of $619,000, short term investments of $8,162,000 and marketable
securities of $8,804,000 (for a total of $17,585,000).
PRAIRIE CREEK MINE - 2012 SITE PROGRAMS
Numerous site development and exploration programs were
undertaken at the Prairie Creek Mine Site during the summer season
of 2012. Cabo Drilling (Pacific) Corp. was contracted to supply
manpower and technical supervision for the 2012 exploration diamond
drilling program during which a total of 5,629 meters of drilling
was completed utilizing Company owned drills.
Drilling was continued in the Casket Creek area, located
approximately 1.6 kilometres north of the most northern drill hole
that defines the present mineral resource, in order to complete
wedging some drill holes around the 2011 intercept in hole
PC-11-187W2 which intersected 5% Pb and 11% Zn over 3.5 metres of
core length. Drilling began in May 2012 utilizing the Company's
TM-2500 coring rig. A total of 2,182 metres over two drill holes
(with wedging) was completed in 2012. The drill holes confirmed
stratigraphy and contained a number of structural zones, however,
no visual high grade mineralization was evident but assays are
pending. After completing this phase of drilling at Casket Creek
the TM-2500 drill rig was moved back to the Mine Site in September
for maintenance and winter storage.
The Company's Longyear drill rig focused on drilling infill
areas closer to the Mine Site and within the defined mineral
resource. Drilling commenced in June 2012 and a total of 3,447
metres over nine drill holes was completed to the end of September.
Most of these holes were drilled at depth and along strike in the
proximity of the known underground workings. Targeted areas
included locations that have the potential to be upgraded from the
inferred category to the indicated resource category.
Analytical results for the 2012 exploration program are expected
later in November 2012.
A surface geophysical program involving both electromagnetic
(EM) and gravity surveys was also completed on a small part of the
Prairie Creek property in the proximity of the mine in August 2012.
Interpreted results indicate a strong multi-channel EM anomaly,
with coincident gravity anomaly, centered over a previously
undrilled area immediately west of the existing underground
workings. Further analysis of this anomaly is underway.
An auger drill rig contracted from Mobile Augers and Research
Ltd., in Edmonton was airlifted to the Prairie Creek site in May.
The auger drill completed a series of geotechnical holes within the
existing water storage pond and also in the proposed areas for the
waste rock pile and a possible second water pond. This provided
further engineering information for design and construction
purposes and also for permitting requirements. Drilling a series of
hydrological groundwater wells was also completed to further
monitor the hydrology of the site area in preparation for mining
activities.
Field work including geotechnical evaluation and studies of the
road route through Nahanni National Park Reserve and adjacent areas
has also been carried out. This included assessment of specific
areas of route re-alignment focussing on bridge crossings, reducing
steep grades and substratum assessment. A hydrologic assessment was
also completed along the road corridor to support further
regulatory requirements.
A detailed aerial LIDAR (light detection and ranging system)
survey in combination with new surface imagery was also carried out
by McElhanney Surveying utilizing a fixed wing aircraft. This
survey provided accurate baseline data and maps for road routing
and re-alignment and also for construction planning along the road
and at the mine site. The data from this survey has now been
delivered along with the orthophoto imagery. A second geotechnical
helicopter supported field program involving drilling, surveying
and sampling to further detail the route was completed in late
September. This drill testing included standard penetrating load
tests and perma-frost testing in areas where new structures or
significant road cutting are proposed.
Using the new LIDAR data a property wide geological
field-mapping and sampling program was completed in September 2012.
Concentration was on the main mining leases, which were accessed by
the network of existing roads with some additional traversing being
made. Previously mapped areas were incorporated and infill mapping
and resampling were carried out. Results are being compiled using a
Geographic Imaging System and are expected later in November
2012.
Further assessment work of the Mine Site ahead of planned
construction was completed by various contractors. These included
material inspections, roof and building envelope assessments and
site refurbishment studies. Additional assessment of the mill and
camp facilities were carried out with engineers from SNC Lavalin
Inc. visiting and assessing the existing facilities. Underhill
Geomatics Inc. completed a comprehensive internal laser scan survey
within the mill building to provide "as built" engineering data for
further design and planning. These engineering studies will
continue until year-end with procurement planning continuing into
2013.
ABORIGINAL TRAINING PROGRAMS AT PRAIRIE CREEK MINE SITE
In a major new initiative Canadian Zinc launched four
significant onsite training programs at the Prairie Creek Mine Site
this year. These training programs were undertaken with assistance
from the Federal Government, Human Resources and Skills Development
Canada, in the $4.2 million "More Than a Silver Lining" aboriginal
training program, specifically for the Prairie Creek Mine, and
administered by the NWT Mine Training Society and assisted by the
Government of the Northwest Territories.
These training programs included Office Administration, Mineral
Exploration Field Assistant, Environmental Monitors, Heavy
Equipment Operators, Diamond Drill Helper, Advance Medical First
Responder, and Camp Cook. The Silver Lining training program has
trained 62 individuals, with many of the graduates joining the
staff at the Prairie Creek Mine, Canadian Zinc's Fort Simpson
office, or service providers to the Project.
Other training programs, which will continue off-site, are
currently being planned and co-ordinated by the Company and the
Mine Training Society which has opened an office and training
centre in Fort Simpson. Planning sessions are currently underway
for training programs in 2013.
PERMITTING MOVING STEADILY FORWARD
The Company's principal focus has been to advance the Prairie
Creek Property towards receiving a Class "A" Water Licence and
associated Land Use Permits, through the regulatory process
established under the Mackenzie Valley Resource Management Act,
that will permit the further development and subsequent mine
production at Prairie Creek.
In January 2012, following the completion of the Environmental
Assessment in December 2011, the Water Board commenced the
regulatory process for the issue of a Class "A" Water Licence and
Land Use Permit for the operation of the Prairie Creek Mine. In
February 2012, the Company submitted a Consolidated Project
Description ("CPD"), highlighting the changes that resulted from
commitments made by Canadian Zinc during the environmental
assessment process.
The Water Board completed its review of the information
contained in the application, Environmental Assessment and the CPD
and in May 2012, issued a Directive on the additional information
required by the Water Board at this stage of the Regulatory
Process.
A 700 kg bulk composite sample of mineralization from the 870m
and 930m underground levels at Prairie Creek Mine was shipped to
SGS Minerals Services in Vancouver for processing. Locked cycle
tests were performed with water that was collected and shipped down
from the Prairie Creek Mine in order to produce representative
process water. The sample was crushed and sorted then sent to SGS
Lakefield to undergo Dense Media Separation and then returned to
Vancouver.
SGS has carried out a number of locked cycle tests in order to
generate mineral concentrates, waste tailings and waste water. The
process water then underwent further treatment studies conducted by
CEMI Labs along with toxicity studies by Hatfield Consultants.
Other generated products, such as the tailings, are slated for
further engineering studies related to paste backfill.
Due to the necessary time required to complete the lab testing
program with the Water Board revised the original work plan. Under
the revised work plan issued by the Water Board, technical sessions
are now scheduled to be held in Yellowknife, NT in late November
2012, with a public hearing now scheduled in late January 2013. A
draft water licence is expected in April 2013 followed by a final
licence after Ministerial approval in June 2013.
Documentation related to this regulatory process is posted on
the Water Board website at www.mvlwb.ca/mv/registry.aspx (Year
2008, Canadian Zinc MV2008L2-0002).
COLLABORATION AGREEMENT SIGNED WITH GOVERNMENT OF THE NORTHWEST
TERRITORIES (GNWT)
In August 2012, Canadian Zinc and the GNWT Department of
Transportation signed a Collaboration Agreement to ensure effective
co-operation related to the public transportation infrastructure
that will support the Prairie Creek Mine project and will help
ensure that both public needs and mine activities are
supported.
Canadian Zinc plans to use the existing Northwest Territories
public transportation system to bring goods, fuel and equipment by
road to the Mine and to transport its mineral products from the
Mine to world markets. As part of this collaborative agreement, to
assist in priority setting, CZN will provide reports to the
Department of Transportation on its anticipated road transportation
requirements for the construction and operation of the Prairie
Creek Mine.
ACQUISITION OF PARAGON MINERALS
On July 31, 2012, Canadian Zinc announced that it had entered
into a binding arrangement agreement to complete a business
combination as well as a non-brokered private placement with
Paragon Minerals Corporation (TSX VENTURE:PGR). On September 24,
2012, Canadian Zinc acquired all of the outstanding common shares
of Paragon in exchange for common shares of Canadian Zinc on the
basis of 0.136 of a share of Canadian Zinc for each share of
Paragon. Canadian Zinc issued 7,299,019 common shares valued at
$3,394,000 based on the closing market price of the Company's
shares on September 24, 2012 of $0.465 per share.
Paragon's primary project is its 100% interest in the South
Tally Pond Property, which includes the Lemarchant deposit, and is
located in a proven mining district near Buchans, Newfoundland. The
South Tally Pond Property covers 261 km2 and is immediately
adjacent to Teck Resources Limited's Duck Pond Cu-Zn mine and mill
complex. The Lemarchant deposit is a significant precious
metal-rich copper-lead-zinc Volcanogenic Massive Sulphide ("VMS")
discovery with a potential opportunity to develop into a viable
economic resource. An initial National Instrument ("NI") 43-101
mineral resource estimate that was recently completed by Paragon on
the Lemarchant deposit includes the following defined mineral
resources:
-- Indicated resource estimate: 1.24 million tonnes at an average grade of
5.38% Zn, 0.58% Cu, 1.19% Pb, 1.10 g/t Au and 59.17 g/t Ag; and
-- Inferred resource estimate: 1.34 million tonnes at an average grade of
3.70% Zn, 0.41% Cu, 0.86% Pb, 1.00 g/t Au and 50.41 g/t Ag.
(See Paragon Technical Report and Mineral Resource Estimate on
Lemarchant Deposit, South Tally Pond VMS Project, Central
Newfoundland, dated March 2, 2012 filed on SEDAR.)
The Lemarchant deposit has been defined to a 210m depth and
remains open along strike and at depth. The exploration potential
outside of the Lemarchant area of the South Tally Pond Property is
still relatively untapped with numerous priority VMS targets that
have seen limited or no drilling.
GRANT OF STOCK OPTIONS
The Company has granted stock options to certain officers and
employees to purchase a total of 960,000 shares of the Company for
a period of five years at an exercise price of $0.46 per share
pursuant to the Corporation's stock option plan. The granting of
the options is subject to all necessary regulatory approvals.
OUTLOOK
Canadian Zinc's continued focus for the balance of 2012 and for
2013 will be to advance the Prairie Creek permit applications
through the final regulatory phase to the issue of permits allowing
for production. Laboratory testing relating to water treatment work
is finished and the results have been submitted to the Water Board.
Technical sessions are scheduled in mid-November with public
hearings to be held in January. The water license is now expected
in mid-2013.
Working with SNC Lavalin Inc. and other consultants, the Company
plans to advance the development of the Prairie Creek Project.
Following delivery of the Preliminary Feasibility Study in June
2012, further site investigation and geo-technical work, under the
direction of SNC, has been completed and engineering and
procurement activities will continue during the winter of 2012 and
into the new year.
The Company is conducting further technical work to assist in
this process which involves further planning and design, site
investigations to further assess the existing infrastructure,
optimizing the mill plan layout and further assessing the
transportation corridor.
At September 30, 2012, the Company had working capital of $16.4
million and is well positioned to finalize the 2012 programs,
continue engineering work and begin procurement of long lead time
items.
Canadian Zinc is also evaluating its newly acquired base metal
properties, including the South Tally Pond VMS project, in
Newfoundland and preparing exploration work plans and budgets for
2013.
QUALIFIED PERSON
Alan Taylor, P.Geo., Chief Operating Officer, Vice President
Exploration and a Director of Canadian Zinc Corporation, is
responsible for the Company's exploration program, and is a
non-independent Qualified Person for the purposes of National
Instrument 43-101 and has approved this press release.
ABOUT CANADIAN ZINC CORPORATION
Canadian Zinc is a Toronto-listed exploration and development
company. The company's main project is the 100%-owned Prairie Creek
zinc, silver and lead project located in the Northwest Territories,
Canada. The Prairie Creek Project contains a Mineral Reserve of 5.2
million tonnes averaging 9.4% zinc, 9.5% lead and 151 g/t silver.
In addition, Prairie Creek hosts an Inferred Resource averaging
14.5% zinc, 11.5% lead, 0.57% copper and 229 g/t silver. (AMC
Mining Consultants (Canada) Ltd. J M Shannon and D Nussipakynova,
Qualified Persons, June 2012).
A Pre-Feasibility study completed by SNC Lavalin in June 2012
indicates a pre-tax net present value ("NPV") of $253 million using
an 8% discount, with an internal rate of return ("IRR") of 40.4%
and payback period of 3 years using long-term metal price
projections of $1.00/lb zinc, $1.00/lb lead and $26.00/oz. silver,
based on the Mineral Reserve alone.
Canadian Zinc also holds the South Tally Pond VMS exploration
project in Newfoundland.
Risk and Uncertainties
The Company's business and results of operations are subject to
numerous risks and uncertainties, many of which are beyond its
ability to control or predict. Because of these risks and
uncertainties, actual results may differ materially from those
expressed or implied by forward looking statements, and investors
are cautioned not to place undue reliance on such statements, which
speak only as of the date hereof.
Investors are advised to review the discussion of risk factors
associated with the Company's business set out in the Company's
Annual Information Form for the year ended December 31, 2011, which
has been filed with the Canadian Securities Regulators on SEDAR
(www.sedar.com). The risks and uncertainties, as summarized in the
Company's MD&A and in other Canadian and U.S. filings, are not
the only risks facing the Company. Additional risks and
uncertainties not currently known to the Company, or that are
currently deemed to be immaterial, also may materially adversely
affect the Company's business, financial condition and/or operating
results.
Alan Taylor, P.Geo., Chief Operating Officer, Vice President
Exploration and a Director of Canadian Zinc Corporation, is
responsible for the Company's exploration program, and is a
Non-Independent Qualified Person for the purposes of National
Instrument 43-101 and has approved this press release.
Cautionary Statement - Forward Looking Information
This press release contains certain forward looking information.
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 issue of
permits, the size and quality of the company's mineral reserves and
resources, future trends for the company, progress in development
of mineral properties, the timing of exploration, development and
mining activities, completion of financings and the merger, capital
costs, mine production costs, demand and market outlook for metals,
future metal prices and treatment and refining charges, the
financial results of the company and future gold production and
profitability of Vatukoula Gold Mines in which the Company has a
significant shareholding. 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. The Company does not currently hold a permit for the
operation of the Prairie Creek Mine. 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.
U.S. Investors are urged to consider closely the disclosure in our
Form 40-F which may be secured from us, or from the SEC's website
at http://www.sec.gov/edgar.shtml.
Contacts: Canadian Zinc Corporation John F. Kearney Chairman
(416) 362-6686 (416) 368-5344 (FAX) Canadian Zinc Corporation Alan
B. Taylor VP Exploration & Chief Operating Officer (604)
688-2001 or Toll Free: 1-866-688-2001 (604) 688-2043 (FAX) Canadian
Zinc Corporation Steve Dawson VP Corporate Development (416)
203-1418 (416) 368-5344 (FAX)invest@canadianzinc.com
www.canadianzinc.com