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News Release
Griffin Mining
Limited to Acquire Yukon Zinc Corporation
Vancouver, BC, April 21, 2008 - Yukon Zinc Corporation (YZC.TSX-V) ("Yukon Zinc") and Griffin
Mining Limited (GFM.L) ("Griffin")
announced today that they have signed an Agreement (the
"Agreement") whereby Griffin
will acquire all of the issued shares of Yukon Zinc through a court-approved
plan of arrangement. The shares of Griffin are traded on the Alternative
Investment Market ("AIM") of the London Stock Exchange.
Under the terms of the
transaction the shareholders of Yukon Zinc will receive one ordinary share of
Griffin for
every nine common shares of Yukon Zinc held. This represents a value of
C$0.206 per Yukon Zinc share based upon the closing price of the Griffin shares on AIM
on April 18, 2008 of 0.9225 of a British Pound Sterling and a Canadian Dollar
- British Pound Sterling exchange rate of 0.4984. This represents a
premium of 46.9% to the closing price of the Yukon Zinc shares on the TSX-V
on April 18, 2008 and 43.0% premium to the 20 day volume weighted average
trading price of the Yukon Zinc shares on the TSX-V. After completion of the
transaction, the shareholders of Yukon Zinc will hold approximately 16% of
the issued Griffin shares, with the current Griffin shareholders
holding the remaining 84%. It is expected that the transaction will close by
July 31, 2008.
Griffin will have the following
attributes after completion of the transaction:
- A strong balance sheet with over C$200 million
in cash; No debt;
- 60 percent interest in the low-cost Caijiaying zinc-gold-silver-lead mine in Hebei Province
China;
- 100 percent interest in the high grade advanced
zinc-silver-copper-gold-lead Wolverine Project located in Yukon Canada;
- When the Wolverine Project achieves full
production status, projected annual zinc production in concentrates from
Caijiaying and Wolverine will exceed 150
million pounds and annual payable silver production will exceed 4.5
million ounces. There will also be significant quantities of
copper, gold and lead production; and
- Exciting exploration and development potential
in the vicinity of the Caijiaying mine in China
and in the Yukon Zinc's Finlayson District and other exploration
properties.
Harlan Meade, President
and Chief Executive Officer of Yukon Zinc, said "The transaction with Griffin will result in
the development of the Wolverine deposit, which is projected to become a very
low cost producer. Yukon Zinc's properties and exploration expertise will
complement the development and financial strengths of Griffin
and provide an attractive growth outlook for Yukon Zinc and Griffin shareholders. We believe that this
transaction represents an excellent value proposition for our shareholders
and provides a bright future."
Mladen Ninkov,
Chairman of Griffin, stated "This transaction fulfills
the stringent economic and geological and political criteria the Company has
imposed upon itself. Yukon Zinc will add a high grade, profitable mine
to Griffin's
portfolio and add extensive exploration acreage in one of the most exciting
base metals regions in the world. The returns for existing Griffin shareholders and our new Griffin shareholders through Yukon Zinc
will be very exciting. We couldn't be more pleased."
Summary of the
Transaction
The acquisition of Yukon
Zinc by Griffin is to be completed by way of a
court-approved Plan of Arrangement whereby each shareholder of Yukon Zinc
will receive one-ninth of an ordinary share of Griffin for each common share of Yukon Zinc
held (the "Exchange Ratio"). Outstanding warrants and options of
Yukon Zinc will be converted into Griffin
warrants and options by multiplying the number of warrants and options held
by the Exchange Ratio. The exercise price of the warrants and options
will be adjusted to a number equal to the current exercise price, divided by
the Exchange Ratio. The expiry dates of the warrants and options remain
unchanged.
The transaction is
subject to a number of conditions that are customary for transactions of this
nature, including execution of definitive transaction documents, a favourable
vote of at least 66 2/3% of the Yukon Zinc shares voted at a special
meeting of the shareholders of Yukon Zinc called to approve the transaction,
regulatory and court approvals and completion of due diligence. Yukon
Zinc has agreed to pay a break fee to Griffin,
under certain circumstances, of C$2.5 million. Yukon Zinc has also
provided Griffin
with certain other customary rights, including a right to match competing
offers.
The Special Committee of
the Board of Directors of Yukon Zinc has determined that the transaction is
in the best interest of Yukon Zinc shareholders and that the Exchange Ratio
is fair to its shareholders. The Board of Directors of Yukon Zinc
unanimously recommends that the Yukon Zinc shareholders vote in favour of the
transaction. Paradigm Capital Inc. has provided an opinion to the Board
of Directors of Yukon Zinc that the Exchange Ratio is fair, from a financial
point of view, to the holders of common shares of Yukon Zinc. Senior
officers and Directors of Yukon Zinc have agreed to vote in favour of the
transaction.
Management Team
and Board of Directors
No change to the Board of
Directors of Griffin is contemplated. Under the Agreement, Yukon Zinc
must use its reasonable best efforts to maintain and preserve its
organization, including its current management staff.
Yukon Zinc Advisors and Counsel
Yukon Zinc's legal and
financial advisors are Lang Michener LLP and Paradigm Capital Inc.
respectively. Griffin
legal counsel is Anfield Sujir
Kennedy & Durno, Barristers and Solicitors.
About Griffin
Griffin is a Bermuda
based mining and investment company listed on the Alternative Investment
Market of the London Stock Exchange (symbol GFM). Griffin,
through its two Chinese joint ventures has a controlling interest in mining
and exploration licenses over 67 square kilometers
at Caijiaying in the Hebei Province
in the People's Republic of China.
Within this area Griffin has successfully
commissioned the Caijiaying mine and processing facilities, with a current
throughput rate of some 500,000 tonnes of ore per annum to produce a zinc
concentrate and a separate lead concentrate containing gold and silver for
sale in China.
Griffin has a
60% interest in the Caijiaying mine and mineral interests covering the above,
but is entitled to 100% of the net cash flows from Caijiaying for the first
three years from the commencement of commercial production in July 2005.
Continuing exploration in
the area surrounding the mine at Caijiaying and within Griffin's local Chinese joint venture's
tenement boundary has shown the area to be highly prospective, indicating
significant potential for further economic base and precious metals
mineralisation. Considerable progress has been made in defining a
separate resource at the Zone II area some 1.5 kilometres to
the south of the mine at Caijiaying.
Griffin reported a profit after tax of
US$18,010,000 for the six months ended 30th June 2007 and total
assets of US$88,926,000 as at 30th June 2007. In August 2007 Griffin completed a
placing of 68,181,818 million shares at �1.10 per share for total proceeds of
�75 million (US$152 million) and currently retains cash resources in excess
of US$200 million.
About Yukon Zinc
Yukon Zinc is a TSX
Venture Exchange listed company based in Vancouver. It is focused on development of
its exceptionally silver-rich Wolverine Project in southeast Yukon and its large
exploration land holdings in the Finlayson and Rancheria Districts. A
bankable feasibility was completed for the Wolverine Project by Wardrop
Engineering in January 2007 indicating favourable project economics. The
Project has all of its main development permits and enjoys strong support
from the Yukon Government and its local First Nations communities.
Cautionary Note
Regarding Forward-Looking Statements
This press release
contains "forward-looking statements" within the meaning of
applicable Canadian securities laws concerning the business, operations and
financial performance and condition of each of Yukon Zinc and Griffin. Forward-looking
statements include, but are not limited to, statements with respect to the
future price of metals, the estimation of mineral reserves and resources, the
realization of mineral reserve estimates, the timing and amount of estimated
future production, costs of production, capital expenditures, costs and
timing of the development of new deposits, success of exploration activities,
permitting time lines, hedging practices, currency exchange rate
fluctuations, requirements for additional capital, government regulation of
mining operations, environmental risks, unanticipated reclamation expenses,
timing and possible outcome of pending litigation, title disputes or claims
and limitations on insurance coverage. Generally, these forward-looking
statements can be identified by the use of forward-looking terminology such
as "plans", "expects" or "does not expect",
"is expected", "budget", "scheduled",
"estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or state
that certain actions, events or results "may", "could",
"would", "might" or "will be taken",
"occur" or "be achieved". Forward-looking statements are
subject to known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or achievements of
Yukon Zinc and Griffin to be materially different from those expressed or
implied by such forward-looking statements, including but not limited to:
risks related to the integration of acquisitions; risks related to
international operations; risks related to joint venture operations; actual
results of current exploration activities; actual results of current
reclamation activities; conclusions of economic evaluations; changes in
project parameters as plans continue to be refined; future prices of metals;
possible variations in ore reserves, grade or recovery rates; failure of
plant, equipment or processes to operate as anticipated; accidents, labour
disputes and other risks of the mining industry; delays in obtaining
governmental approvals or financing or in the completion of development or
construction activities. Although Yukon Zinc and Griffin have attempted to identify
important factors that could cause actual results to differ materially from
those contained in forward-looking statements, there may be other factors
that cause 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. Yukon Zinc and Griffin do not undertake to update any
forward-looking statements that are incorporated by reference herein, except
in accordance with applicable securities laws
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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
THE TSX VENTURE
EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY
OF THIS NEWS RELEASE.
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