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Not for
distribution to United States news wire services or dissemination in the
United States
News Release
Yukon Zinc Corporation
Announces Pricing and Amendments to Financing
Vancouver, B.C.,
November 7, 2007 - Yukon Zinc Corporation (YZC.TSX-V) ("the Company")
announces that it has priced and made certain amendments to the
previously-announced prospectus offering of up to $140 million of securities
(see October 4, 2007 News Release) (the
"Offering"). In consultation with the syndicate lead by
Haywood Securities Inc. and Paradigm Capital Inc., the Company has elected to
amend the Offering to exclude the Debt Units and to provide for the sale of
Class A Subscription Receipts ("Class A Receipts") and Class B
Subscription Receipts ("Class B Receipts") and units ("the
Equity Units"). The total size of the Offering will now be up to
$130.0 million with an over-allotment option of 10%. The Offering is
expected to close on or about November 29, 2007 (the "Closing").
Each Class A Receipt will
be priced at Cdn$1,000 and will entitle the holder to acquire for no
additional consideration one unit ("Convertible Note Unit")
composed of (i) $1000 principal amount of
subordinated secured convertible notes ("Convertible Notes"), and
(ii) 500 common shares ("Common Shares") of the Company
("Convertible Note Units"). The Convertible Notes will mature
8.5 years after the closing of the Offering (the "Closing"). An
interest rate of 10.0% per annum will apply to each Convertible Note and will
be paid semi-annually. The interest will accrue from Closing. The
conversion price for the Convertible Notes is $0.25 per Common Share. If
at any time after the 5th anniversary of the closing of the
Offering, the weighted average trading price of the Common Shares is greater
than $0.3125 for any 20 consecutive trading days, the Company may, subject to
certain conditions, require the Convertible Notes to be converted upon 30
days notice.
Each Equity Unit will be
priced at Cdn$0.20 and will consist of: (i) one
Common Share and (ii) one-half of one Common Share purchase warrant (a
"Warrant"). Each Warrant will entitle the holder to acquire
an additional Common Share for a period of 5 years at an exercise price of
$0.29.
Each Class B Receipt will
be priced at Cdn$0.20 and will entitle the holder to acquire, for no
additional consideration, one Equity Unit.
The net proceeds of the
Offering together with a previously-announced Barclays Capital US$140 million
underwritten senior debt facility ("Barclays Facility") (see
August 27, 2007 News Release), are to be used to fund the balance of
the Wolverine Project capital funding requirement, which includes a US$25
million capital cost overrun requirement, and for general corporate purposes.
Upon completion of the
Offering, $15 million, all of the Agents' and the Company's expenses in
respect of the Offering and the Agents' commission thereon (to an aggregate
maximum of $17 million) will be released to the Company and the Agents, respectively,
from the proceeds of the Equity Units.
The balance of the gross
proceeds of the Offering, including the Agents cash commission on such funds,
will be held in escrow pending satisfaction of the conditions for closing and
release of funds under the Barclays Facility (the "Barclays Release
Conditions"), provided that additional amounts, together with the Agents
cash commission thereon, will be released from escrow to the Company to
support certain project-related expenditures.
If the Barclays Release
Conditions are satisfied by March 3, 2008, the Class A and Class B Receipts
will automatically convert into Convertible Note Units and Equity Units,
respectively, and the escrowed portion of the funds raised through the
Offering will be released to the Company and the Agents.
If the Barclays Release
Conditions are not met by March 3, 2008, the subscription price for the
outstanding Class A and Class B Receipts will be refunded, and interest on
the Class A Receipts at the rate of 10% per annum will be paid, using the
escrowed funds. If there are insufficient escrowed funds to make such
refunds and payments, the interest on the Class A Receipts will be paid from
the escrowed funds and the balance of the escrowed funds will be allocated to
the Class A and Class B Receipts in proportion to the initial funds
contributed to the escrow from each class of receipts. The portion of
the escrowed funds allocated to Class B Receipts will be used to refund the
subscription price of Class B Receipts and those that are not refunded will
automatically convert into Equity Units at the price of $0.20 per unit.
The portion of the escrowed funds allocated to the Class A Receipts, less an
amount equal to two years interest on the Convertible Notes that the Class A
Receipts that are not refunded will convert into, will be used to refund the
subscription price of Class A Receipts and any Class A Receipts not so
refunded will automatically convert into Convertible Note Units at the price
of $1000 per unit.
Dr. Harlan Meade, President
and CEO of the Company said: "We are very pleased with these overall
changes to the Wolverine financing package which will allow for potentially
less share dilution and the extra time to complete documentation and closing
of all the elements of the Wolverine financing."
The completion of the
Offering, together with the Barclays Facility, will enable the Company to
proceed with construction at the Wolverine Project. In addition,
completion of the Offering will enable the Company to consider certain
corporate initiatives, which could include applying to the Toronto Stock
Exchange for the listing of the Company's securities and a consolidation of
the share capital of the Company.
The Offering is subject
to receipt of regulatory approvals and other standard conditions.
Yukon Zinc Corporation
is focused on the development and construction of the Wolverine zinc silver
deposit, as the Yukon's next significant zinc-silver mine and the exploration
of the Finlayson District as Canada's newest Volcanogenic Massive Sulphide
District.
The securities
comprising the Offering have not been registered under the U.S. Securities Act of 1933, as amended (the
"U.S. Securities
Act") or any state securities laws, and may not be offered or sold in
the United States absent
registration or any applicable exemption from the registration requirements
of the U.S.
Securities Act and applicable state securities laws. This news release does
not constitute an offer to sell or a solicitation of an offer to buy any of
the securities in the United
States. All dollars in this release refer to Canadian funds.
Except for the
statements of historical fact contained herein, the information presented in
this News Release constitutes "forward-looking statements" as such
term is used in Canadian securities laws. These statements relate to analyses
and other information that are based on forecasts of future results,
estimates of amounts not yet determinable and assumptions of
management. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but not
always, using words or phrases such as "expects" or "does not
expect", "is expected", "anticipates" or "does
not anticipate", "plans, "estimates" or "intends",
or stating that certain actions, events or results "may",
"could", "would", "might" or "will"
be taken, occur or be achieved) are not statements of historical fact and
should be viewed as "forward-looking statements". Such forward
looking statements, including but not limited to, those with respect to the
Offering, the Barclays Facility and the ability of the Company to proceed
with construction at the Wolverine Project and the other factors and events
described in this News Release, involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Such risks and other factors include, among
others, the estimation or realization of Mineral Resources and Mineral
Reserves (as such terms are defined by applicable Canadian securities
regulators); variations in the underlying assumptions associated with
conclusions of economic evaluations, including the timing and amount of
estimated future production, costs of production, capital expenditures, the
failure of plant, equipment or processes to operate as anticipated and
possible variations in ore grade or recovery rates; availability of capital
to fund programs and the resulting dilution caused by the raising of capital
through the sale of shares; risks of the mining industry, including without
limitation, those associated with the environment; and delays in obtaining
governmental approvals, permits or financing. Although the Company has
attempted to identify important factors that could cause actual actions,
events or results to differ materially from those described in
forward-looking statements, there may be other factors that could cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will prove to
be accurate as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place
undue reliance on forward-looking statements contained in this News Release
and in any document referred to in this News Release.
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For more information contact:
Dr. Harlan Meade, President and CEO
Shae Dalphond
Manager, Investor Communications
Telephone: (604) 682-5474 Toll-free: 1-877-682-5474
Facsimile: (604) 682-5404
info@yukonzinc.com www.yukonzinc.com
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