Prairie Creek, Northwest Territories
Canadian zinc and lead developer NorZinc on Friday agreed to a cash offer from private equity group RCF VI (RCF) to maintain the current development work at its Prairie Creek project, in the Northwest Territories.
RCF will buy NorZinc for C$0.0325 a share in cash, which represents a 3.5% premium to the 45-day volume-weighted average price of $0.0314 a share. RCF and its affiliates currently hold about 48.31% of the outstanding shares of the company.
At the same time, NorZinc and RCF have amended and restated a credit facility, providing for an increase in the commitment by $11-million.
“The company has been working to address challenges with respect to its debt situation and the capital funding needs given the current market conditions,” said president and CEO Rohan Hazelton.
“The board has explored all viable strategic alternatives. Ultimately, it has concluded that the unsolicited all-cash offer to the minority shareholders contained within the arrangement agreement is in the best interest of the company and its stakeholders,” he said.
The Prairie Creek project last week achieved key permitting milestones, having received its water licence from the Northwest Territories government. Combined with the receipt of the land use permit, announced in mid-August, NorZinc has now completed the permitting process for mining operations at Prairie Creek.
Based on the preliminary economic assessment completed in October 2021 and the envisioned mining rate of 2 400 t/d, the project results in an net present value, using an 8% discount, $299-million with average earnings before interest, tax, depreciation and amortisation of $123-million a year
NorZinc expects Prairie Creek to deliver more than $8-billion in economic activity to the region over its 20-year mine life.
The company continues to work with the regulatory bodies, Parks Canada and the Mackenzie Valley Land and Water Board, on the completion and final approval of the management plans associated with construction of Phase 1 of the all-season road. NorZinc expects to receive all Phase 1 approvals from the respective regulators in October.