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Canadian Zinc Corporation (TSX:CZN
- News; OTCBB:CZICF - News; the
"Company" or "Canadian Zinc") announces its financial
results for the three and nine months ended September 30, 2010.
This press release should be read in
conjunction with the unaudited financial statements and notes thereto for the
period ended September 30, 2010, and management's discussion & analysis
("MD&A") for the period ended September 30, 2010 available on
SEDAR at www.sedar.com.
Net Income of $8.3 million for Third
Quarter
For the three months ended September 30,
2010 the Company reported net income of $8.328 million, compared to a loss of
$2.411 million for the three months end September 30, 2009. For the nine
months ended September 30, 2010 the Company reported net income of $10.906
million compared to a loss of $3.435 million for the comparative period in
2009. The net income in both the third quarter and the nine months of 2010
was primarily attributable to gains on the quoted market values of the
Company's marketable securities.
For the three and nine months ended
September 30, 2010 the Company recorded overall gains on its marketable
securities of $11.417 million and $16.473 million, respectively, compared to
a gain of $759,000 and a loss of $91,000 in the comparative 2009 periods.
Vatukoula Gold Mines increased Gold
Production
The primary contribution to Canadian
Zinc's reported net income for the period ended September 30, 2010 was the
increase (since December 31, 2009) in the quoted market value of the
Company's investment in Vatukoula Gold Mines Plc ("VGM"). VGM is a
United Kingdom AIM (London Stock Exchange) listed company which owns and
operates the Vatukoula Gold Mine in Fiji. For its financial year ended August
31, 2010, VGM reported that it had produced 59,658 ounces of gold of which
54,642 ounces were shipped and sold. For the fourth quarter ended August 31,
2010, VGM reported that 21,107 ounces of gold were produced and 19,251 ounces
were shipped and sold.
On October 21, 2010, VGM announced a
proposal to carry out a share consolidation on a one for fifty basis in order to enhance the marketability of the
company's shares. VGM also stated its intention to explore the listing of its
shares on a North American exchange.
Canadian Zinc acquired its investment in
VGM during 2009 at an original cost of $10.142 million. The quoted market
value of the Company's investment in VGM increased from $14.038 million at
December 31, 2009 to $30.753 million at September 30, 2010, resulting in a
recorded gain of $16.715 million for the nine months.
Working Capital of $36.5 million
As at September 30, 2010, Canadian Zinc
had cash and cash equivalents of $4.165 million, short term investments of
$1.128 million and marketable securities of $31.552 million (for a total of
$36.845 million). The Company also had a positive working capital balance of
$36.505 million.
As at December 31, 2009, the Company had
cash and cash equivalents of $5.197 million, short term investments of $2.246
million, marketable securities of $15.382 million (for a total of $22.825
million) and a positive working capital balance of $22.476 million.
The Prairie Creek Mine
Canadian Zinc's principal focus is to
advance the Prairie Creek Mine, a zinc/lead/silver property located in the
Northwest Territories of Canada, towards production.
The Prairie Creek Property hosts total
Measured and Indicated Resources of 5,840,329 tonnes grading 10.71% zinc,
9.90% lead, 0.326% copper, and 161.12 grams silver per tonne, a large
Inferred Resource of 5,541,576 tonnes grading 13.53% zinc, 11.43% lead,
0.514% copper and 215 grams silver per tonne and additional exploration
potential. The Mine is partially developed with an existing 1,000 tonne per
day mill and related infrastructure.
The Prairie Creek mineral deposit
contains substantial quantities of zinc, lead and silver. The Measured and
Indicated Resource is capable of supporting a mine life in excess of fourteen
years at the planned initial rate of 600 tonnes per day, which will increase
to 1,200 tonnes per day, and the future inclusion of Inferred Resources is
expected to extend the mine life to at least 20 years.
The proposed development and operation
of the Prairie Creek Project is currently undergoing Environmental Assessment
by the Mackenzie Valley Environmental Impact Review Board ("Review
Board"), which expects to complete the EA process in 2011.
The Company submitted its Developer's
Assessment Report ("DAR") to the Review Board in March 2010, and in
May, submitted an Addendum to the DAR. The Review Board determined the DAR to
be in conformity with the Terms of Reference on May 28, 2010.
A total of 131 Information Requests from
various government departments and regulatory agencies were received on July
23, 2010 and the Company's responses to the Information Requests were
submitted to the Review Board on September 13, 2010. Technical Meetings
involving all interested parties were then held by the Review Board over
three days from October 6 to 8, 2010, at which detailed technical reviews and
discussions were carried out.
On October 20, 2010 the Review Board
published the invitation for a Second Round of Information Requests, focusing
on the information presented during the Technical Meetings. Parties were
asked to submit their Information Requests to the Review Board by October 29.
At this time a total of 53 Information Requests have been received from
government departments and regulatory agencies. The new Information Requests
largely focus on water quality questions, including mine water effluent,
groundwater and surface water regimes in the Prairie Creek watershed. The
Company has been asked to provide its responses to the Review Board by
November 29, 2010.
New bulk rock and water samples were
recently collected from underground at the Prairie Creek Mine in order to
perform more locked-cycle flotation tests to produce further representative
mill process water. The mill process water is now being further analyzed and
tested to aid in determining the final water treatment scheme for the
proposed mining operations. Additional site studies relating to hydraulic
engineering, water storage pond facility and groundwater were also completed.
The Company expects to be able to respond to the majority of the Second
Information Requests by the requested date of November 29, 2010 but complete
responses to some of the Requests must await completion of the latest tests
on the new water samples and integration of the additional studies.
The Review Board had announced on May
28, 2010, an estimated schedule for the EA, which outlined the Analytical
phase, to be followed by a Hearing phase and Close of the public registry by
December 2010, with a decision from the Review Board by March 2011. The
schedule is an estimate only and may be extended to accommodate the
additional Information Requests.
Prairie Creek Exploration Program
Work at the Prairie Creek mine site
during the summer of 2010 included continuing care and maintenance,
environmental monitoring programs, road construction and repair and a diamond
drill exploration program.
A total of 2,703 metres of diamond
drilling was completed in three holes to test for possible extensions of the
defined mineral resource within the main zone at Prairie Creek mine, where
the host geology and structure are projected to continue at depth,
approximately 1.5 kilometres north of the last drill hole within the
currently defined mineral resource.
The 2010 deep drilling exploration
program confirmed the presence of the host Whittaker geological formation at
the projected horizon, about four kilometres north of the Prairie Creek Mine
portal. The drill rig has been winterized and remains on location at the
Casket Creek drill site. It is anticipated that the deep hole exploration
program will continue in 2011 and hole PC-10-187
will be completed next year.
Risks and Uncertainties
This press release should be read in
conjunction with the unaudited financial statements and notes thereto and
management's discussion & analysis ("MD&A") for the period
ended September 30, 2010, available on SEDAR at www.sedar.com.
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, 2009,
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. The Company recorded significant income on its investment
in Vatukoula Gold Mines during the three and nine months ended September 30,
2010. The changes in net income or loss over the past four quarters primarily
reflect the movements in quoted market value of the Company's investment in
VGM during those quarters. At September 30, 2010 the investment in VGM had a
market value of $30.753 million and represents almost 100% of the total
market value of CZN's marketable securities and is the Company's largest
balance sheet item. The outlook for this investment is dependent on the
ongoing performance of VGM and CZN's ability to realize a gain is dependent
on the performance of the shares of that 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.
Qualified Person
Alan Taylor, P.Geo.,
Chief Operating Officer, Vice President Exploration and a Director of
Canadian Zinc Corporation, is a 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 resources, future trends for the
company, progress in development of mineral properties, future production and
sales volumes of VGM, capital costs, mine production costs, demand and market
outlook for metals, future metal prices and treatment and refining charges,
the timing of exploration, development and mining activities 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. 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 20-F which
may be secured from us, or from the SEC's website at http://www.sec.gov/edgar.shtml.
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