Name of the Project
Prairie Creek zinc/lead/silver project.

Location
Northwest Territories, Canada.

Client
Canadian Zinc.

Project Description
Prairie Creek has total proven and probable reserves of 8.07-million tonnes grading 124.22 g/t silver, 8.1% lead and 8.64% zinc.

A feasibility study completed on the project has confirmed that the Prairie Creek mine can support a significant increase in the mining rate and mill throughput, which will allow for the production of higher quantities of zinc, lead and silver at lower operating costs, compared with the mine plan presented in the 2016 prefeasibility study (PFS).

The feasibility mine plan covers a 15-year life-of-mine from mill start-up.

The study estimates a mining rate of 1 600 t/d, an increase of 18.5% on the 2016 PFS.

Mill throughput after dense-media separation has also increased by 25% to 1 200 t/d.

Average yearly production of lead concentrates has increased by 16 000 t/y to 71 600 t/y, compared with the 2016 PFS, while the grade of lead in the lead concentrates has also improved.

Average yearly total contained lead in zinc and lead concentrates is 105-million pounds a year, an increase of 23-million pounds, while the average yearly production of silver has also increased 25% to 2.1-million ounces a year.

Average yearly total contained zinc and lead concentrates have increased by about 7% from 82-million pounds in the 2016 PFS to 88-million pounds a year.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an estimated pretax net present value, at an 8% discount rate, of C$344.5-million, a 21% increase on the 2016 PFS, with an internal rate of return of 23.8%. Payback has been estimated at 4.4 years.

Value
Preproduction capital costs have increased from C$244-million in the 2016 PFS to C$278.9-million, including contingency, primarily because of the expansion in mine and mill throughput and accelerated mine development.

Duration
Not stated.

Latest Developments
Negotiations are under way and proposals are being evaluated for potential debt financing for the Prairie Creek zinc/lead/silver project.

The company is seeking to raise up to C$195.3-million in debt funding for the project, equating to 70% of the estimated C$279-million in capital expenditure that is required to complete the mine.

Canadian Zinc believes that the project’s robust economics will assist in raising the senior financing necessary to complete the construction and put Prairie Creek into production.

Meanwhile, the company has entered into an equity financing agreement with a subsidiary of Resource Capital Fund VI (RCF VI), which has agreed to buy 100-million shares at C$0.20 each to raise C$20-million. The RCF VI subsidiary has also been issued with 50-million short-dated warrants, which, if exercised, will generate an additional C$12.5-million.

The proceeds of the funding will be used to repay a $10-million bridge loan and will provide additional funding for the engineering work aimed at improving project confidence in Prairie Creek.

The proceeds of the unit offering will make the company debt free and boost its cash balance.

Canadian Zinc has signed memorandums of understanding with Korea Zinc and Boliden for the sale of most of the planned zinc concentrate production and almost half of the planned lead concentrate production for the first five years of operation.

The company has all the necessary permits for the development, operation and subsequent closure of the Prairie Creek mine in hand. In September last year the Mackenzie Valley Environmental Impact Review Board recommended a planned all-seasons road for approval, subject to the implementation of certain measures to prevent adverse impacts on the environment and local people.

Meanwhile, Canadian Zinc is continuing to engage with indigenous groups to reach agreement on the incorporation of Dene traditional knowledge and to include Indigenous groups in environmental and wildlife monitoring in the design, construction and operation of the all-seasons road.

Once it has approval from the Indian and Northern Affairs Canada Ministries, the road’s permitting process will move to the regulatory phase, during which land permit approval will be sought from the Water Board and Parks Canada.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Canadian Zinc VP corporate affairs Jospeh Lanzon, tel +1 613 796 5957 or email joseph@canadianzinc.com.