CZN-TSX
CZICF-OTCQB
VANCOUVER, May 16, 2018 /CNW/ - Canadian Zinc
Corporation (TSX: CZN; OTCQB: CZICF) ("the Company" or
"Canadian Zinc") reports its interim financial results and
development activities for the three month period ended
March 31, 2018 (Q1 2018).
(All amounts are in Canadian dollars unless otherwise
stated. M = million)
Q1 2018 Results & Recent Highlights
- $20M RCF equity financing at
$0.20/share
- Don MacDonald new President
and to become CEO
- Cash at March 31, 2018
$10.5M
- Plan to pay off all US$10M
debt
- Loss for Q1 2018 $1.8M
RCF Provides $20M Equity
Financing
On May 15, 2018, the Company
announced it had entered into an equity financing agreement with
Resource Capital Funds (RCF) pursuant to which RCF has agreed,
subject to shareholder and regulatory approvals, to purchase
$20M in units, each unit consisting
of one common share and a half share purchase warrant, at
$0.20 per unit, with each full
warrant exercisable to purchase one share at $0.25 per share on or before December 31, 2018. The use of proceeds of the
equity financing will include repayment of the US$10M bridge loan advanced by RCF in
December 2017, the ongoing
development of the Prairie Creek Project and general working
capital.
This $20M equity financing by RCF
is a 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.
Don MacDonald new President
and to become CEO
The Company has hired Don
MacDonald, formerly CFO and Acting CEO of KGHM International
as President of the Company effective May
16, 2018 and CEO, immediately after the AGM scheduled for
June 27, 2018, assuming the RCF unit
financing is approved by shareholders. Mr. MacDonald is a CPA, CA
with bachelors and masters 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.
Liquidity
At March 31, 2018, the Company had
cash and cash equivalents of $10.5M.
Following the repayment of the bridge loan (plus interest) from the
proceeds of the $20M unit offering
the Company will be debt-free and have increased cash of
approximately $7M, depending on the
USD/CAD exchange rate at time of repayment. If the RCF warrants are
exercised in full prior to December 31,
2018 the Company will receive an additional $12.5M from the warrants.
Financial Results for First Quarter of 2018
The Company reported a net loss and comprehensive loss for Q1
2018 of $1.8M compared to a net loss
and comprehensive loss of $2.6M for
Q1 2017. At March 31, 2018, the
Company reported cash and cash equivalents of $10.5M.
Outlook
Canadian Zinc's focus for 2018 is to continue the development of
the Prairie Creek Project and advance the Prairie Creek Mine
towards production.
RCF has agreed, subject to shareholder approval and certain
other conditions to a $20M financing
in units, with the proceeds to be used to repay the bridge loan of
US$10M and to provide additional
funding for the ongoing development of the Prairie Creek Mine,
focused on further engineering work to improve project confidence
while the Company completes the senior project financing package
and establishes the construction and development management
team.
As part of the process of enhancing the senior management team,
the Company has hired Don MacDonald,
formerly CFO and Acting CEO of KGHM International to become
President of the Company effective May 16,
2018 and CEO, immediately after the AGM scheduled for
June 27, 2018, if the RCF unit
financing is approved by shareholders. His appointment represents
the next step in enhancing the senior management team that will put
the Prairie Creek Mine into production.
At March 31, 2018, the Company had
cash and cash equivalents of $10.5M.
Following the repayment of the bridge loan (plus interest) from the
proceeds of the $20M unit offering
the Company will be debt-free and have increased cash of
approximately $7M, depending on the
USD/CAD exchange rate at time of repayment. If the RCF warrants are
exercised in full prior to December 31,
2018 the Company will receive an additional $12.5M from the warrants.
The Company is also working with HCF to facilitate the raising
of project debt financing of up to 70% of the capital expenditures
required for the Prairie Creek Mine. Negotiations with potentially
interested parties are advancing and proposals are being evaluated.
It is anticipated that up to 70% of the currently estimated
$279M of capital required to complete
the Prairie Creek Project could be supported by debt financing.
In addition to various site care-and-maintenance programs,
specific programs aimed at further de-risking the Prairie Creek
Project are being planned for 2018, including detailed engineering
and design of the mine facilities, rehabilitation of equipment and
accommodations, hydrological investigations and initial
site/underground preparation.
On the permitting and environmental side, Canadian Zinc will
continue its engagement with Indigenous groups on the
implementation of various mitigation measures recommended by the
Review Board in its Report on Environmental Assessment of the All
Season Road, to seek agreement on the incorporation of Dene
traditional knowledge and the inclusion of the Indigenous groups in
environmental and wildlife monitoring in the design construction
and operation of the of the All Season Road.
The Company plans to submit formal replies on information
requests to Indian and Northern Affairs Canada with the expectation
that the Responsible Ministers will approve the Report of EA,
following which the permitting process will move to the regulatory
phase for the issue of the land use permits for the All Season Road
by the Water Board and by Parks Canada.
The long-term price outlook for lead and zinc remains very
positive. Supported by the robust economics indicated by the 2017
FS, Canadian Zinc will continue to pursue all alternatives for
raising the senior financing necessary to complete the development
and construction and put the Prairie Creek Mine into
production.
RCF Financing Details
On May 15, 2018 the Company
announced that it has entered into an equity financing agreement
with a wholly owned subsidiary of Resource Capital Fund VI L.P
("RCF VI"), pursuant to which the RCF VI subsidiary has agreed,
subject to shareholder and regulatory approvals, to purchase
100M shares of Canadian Zinc at
$0.20 per share, for gross proceeds
of $20M. In addition, the RCF VI
subsidiary will be issued 50M
short-dated warrants, exercisable at $0.25 per share until December 31, 2018, which if exercised in full
would generate an additional $12.5M,
or a total potential equity financing of $32.5M. Assuming the exercise of all of the
warrants issued to RCF, following the completion of the equity
financing, RCF would hold approximately 48.5% of Company's issued
and outstanding shares.
The use of proceeds of the equity financing will include
repayment, without penalty, of the US$10M RCF VI bridge loan that was due
January 31, 2019, and the ongoing
development of the Company's flagship Prairie Creek
Zinc-Lead-Silver Project in the Northwest
Territories , including additional engineering and
permitting work to improve project confidence, and general working
capital.
The proposed equity financing 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. Management will be recommending that
shareholders vote for approval of the financing.
The existing Investor Agreement with RCF VI, which contains
various rights granted to RCF VI, 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 the RCF VI subsidiary 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 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-staged
zinc-lead-silver property, located in the Northwest Territories. Canadian Zinc also owns
an extensive land package in central Newfoundland.
This news release should be read in conjunction with the
Company's unaudited condensed interim consolidated financial
statements for the three month period ended March 31, 2018 and the related management's
discussion and analysis which are available on the Company's
website at www.canadianzinc.com, under the
"Financials" section, or under the Company's profile on SEDAR
at www.sedar.com.
Qualified Person: Alan
Taylor, P.Geo., Vice President of Exploration, Chief
Operating Officer and Director of the Company, who is a
Non-Independent Qualified Person as defined in National Instrument
43-101 – Standards of Disclosure for Mineral Projects, has
prepared, supervised the preparation of or reviewed, the parts of
this News Release that are of a scientific or technical nature.
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