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News
Release
Yukon Zinc Enters Into Acquisition Agreement with
Jinduicheng/Northwest
Vancouver, BC,
May 7, 2008 -
Yukon Zinc Corporation (YZC.TSX-V) ("Yukon Zinc" or the
"Company") announces that its Board has approved an acquisition
agreement (the "Acquisition Agreement") pursuant to which
Jinduicheng Molybdenum Group, Ltd., and Northwest Nonferrous International Investment
Company, Limited (collectively, the "Investors") will acquire, for
cash consideration, 100% of the outstanding shares, options and warrants of
the Company by way of Plan of Arrangement (the "Transaction").
Yukon Zinc and the Investors have entered into the Acquisition Agreement
effective as of May 6, 2008. Previously, the Board was considering a share
exchange proposal from Griffin Mining Limited.
The Yukon Zinc Board has
determined that the Transaction is fair to the shareholders and warrant holders
and is in the best interests of Yukon Zinc. The Board is recommending that
Yukon Zinc shareholders vote in favor of the Transaction. Paradigm Capital
Inc. has delivered an opinion to the Yukon Zinc Board stating that, in its
opinion, the Transaction is fair, from a financial point of view, to Yukon
Zinc shareholders. An extraordinary general meeting of shareholders is
scheduled for June 25, 2008 to consider the Transaction.
The Transaction provides
for the acquisition of all outstanding Yukon Zinc shares at a price of $0.22
per share (the "Purchase Price"), payable in cash. Each Yukon Zinc
option and warrant that is "in-the money" will be purchased for its
cash value. All options and warrants that have an exercise price greater than
the Purchase Price (that is, "out-of-the-money") will be purchased
for a cash consideration determined in accordance with a purchase schedule
for each series of options and warrants. There are no lockup or due diligence
conditions. The Investors have represented that they are confident that all
necessary People's Republic of China approvals will be obtained without delay
and that the Investors have the requisite funding in place to finance the
transaction. The Transaction is conditional on approval of 66 2/3% of the
votes cast by shareholders at a meeting of Yukon Zinc shareholders, receipt
of court and regulatory approvals, waiver of the Yukon Zinc shareholder
rights plan, and other customary provisions, such as no material adverse
change.
As a result of the
signing of the Acquisition Agreement, the Company is obligated to pay Griffin
Mining a $2.5 million break fee and related expenses, not to exceed $250,000.
Pursuant to a loan agreement dated May 6, 2008, the Investors have agreed to
provide a $2.5 million secured loan to the Company to finance working
capital.
Advisers and
Counsel
Yukon Zinc's
legal counsel and financial advisors are Lang Michener LLP and Paradigm
Capital Inc., respectively. The Investors legal and financial advisers are
Davies Ward Phillips & Vineberg LLP and BMO Capital Markets,
respectively.
About Yukon Zinc
Yukon Zinc is a
TSX Venture Exchange listed company based in Vancouver. It is focused on
development of its silver-rich Wolverine Project in southeast Yukon, Canada
and its large exploration land holdings in the Finlayson and Rancheria
Districts. A bankable feasibility study 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.
About Jinduicheng
and Northwest
Jinduicheng is
the largest producer of molybdenum and associated products in Asia and
reportedly the third largest in the world. It is publicly-traded on the
Shanghai Stock Exchange after a recent US$1.3 billion IPO. Jinduicheng's
operations are concentrated in Shaanxi province, China. Northwest represents
the Shaanxi state geological bureau, and in terms of revenue and technical
capacity is one of the top five exploration and mining Bureaus in China.
Northwest has more than 6,000 employees including 800 geologists,
technologists and engineers. Northwest was the first bureau in China to
conduct exploration projects in partnership with companies from Western
countries.
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 Yukon Zinc. 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 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 has 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 does 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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