TSX-listed Canadian Zinc has received shareholder approval for the reorganisation of the company to complete financing for the construction of its flagship Prairie Creek project, in the Northwest Territories.
The restructure, which was first announced in May and approved at an annual general meeting (AGM) at the end of June, involves the reorganisation of the company into a separate, publically-listed holding company, NorZinc, and a directly held, wholly-owned operating subsidiary, Canadian Zinc.
The new structure is aimed at facilitating future project financing for the Prairie Creek lead/zinc/silver project.
Canadian Zinc explained on Friday that discussions with financial institutions had confirmed that raising project debt would require that the Prairie Creek project, which included the property, assets, agreements and permits, be held in a separate standalone entity and that the public parent company be structured to act as project sponsor.
More details would be disclosed in due course, the base metals company said in a post-AGM press release, which also stated that the previously announced $20-million financing by RCF, subsidiary of Resource Capital, was approved and that Don MacDonald had been appointed CEO.
The $20-million financing would close July 10. The financing would be used to repay the $10-million bridge loan advanced by RCF in December 2017 and for ongoing development of Prairie Creek, including additional engineering and permitting work to improve project confidence and general working capital.
Upon closing, RCF and its associates would hold about 41% of the issued shares of the company, and 48% if the warrants were exercised.
“RCF is pleased to continue its relationship with Canadian Zinc and provide support to this exciting company. The most recent financing will increase RCF's equity exposure and ensure the company is debt free as it embarks on the final stages of pre-construction activities,” RCF private equity funds head Ross Bhappu commented in the statement.
Commenting on the confirmation of MacDonald as CEO, nonexecutive chairperson and former CEO John Kearney stated: "Don has been involved in the financing, development and/or operation of over 20 mines in North and South America over his career and has all the necessary background and experience to lead the company forward with the financing and development of the Prairie Creek mine".
Prairie Creek is one of the highest grade (zinc-equivalent) undeveloped deposits found anywhere in the world.
Most recently, MacDonald was acting president and CEO of KGHM International, formerly QuadraFNX, from 2010 to 2017, and CFO of NovaGold Resources from 2003 to 2010.