NZC-TSX
NORZF-OTCQB
VANCOUVER, March 18, 2019 /CNW/ - NorZinc Ltd. (TSX:
NZC; OTCQB: NORZF) ("NorZinc" or "the Company") reports its interim
financial results and development activities for the year ended
December 31, 2018. (All amounts are
in Canadian dollars unless otherwise stated. M = million.)
2018 Results & Recent Highlights
- Financial and Corporate
-
- Announces new investment from RCF (May)
- AGM supports new investment and new corporate plan (June)
- New CEO confirmed (June)
- $20M financing closes, NorZinc is
debt free (July)
- New technical and environment advisory committees formed
(July)
- Completes corporate reorganization as NorZinc Ltd (Sept)
- Completes restructuring of Newfoundland assets (Dec)
- Cash at December 31, 2018 -
$9.3 million (Dec)
- Loss for Q4 2018 - $3.7 million
(Dec)
- Permitting and Environmental – Prairie Creek
-
- Site program clean-up undertaken (July-Sept)
- Positive recommendation adopted by responsible ministers on ASR
(Oct)
- Completed third party environmental and permitting review
(Oct)
- Post-EA information package filed (Feb
2019)
- All Season Road (ASR) advances to Permit drafting stage
(March 2019)
- Project and Indigenous Groups – Prairie Creek
-
- Multiple risk analyses undertaken (Mar-June)
- Summer program included site infrastructure assessment
(Aug-Oct)
- Advanced ASR indigenous agreements (Dec)
- Traditional Lands Use Agreement for ASR signed (Jan 2019)
Prairie Creek Project - All Season Road
Regulatory Approval
On October 9, 2018, the Minister
of Crown-Indigenous Relations, on behalf of the Responsible
Ministers, issued a decision adopting the Review Board's
recommendation that the All Season Road ("ASR") for the Prairie
Creek Mine be approved subject to the Review Board's
conditions.
The Environmental Assessment ("EA") of the ASR was completed in
2018 and with the recent submission of the requested Post-EA
Information Package, the ASR permit has entered the final
permitting stage jointly with the Mackenzie Valley Land and Water
Board ("Water Board") and Parks Canada (jointly "MVLWB &
Parks"), with a permit expected to be received in Q3/2019, based on
the indicative timeline provided by MVLWB & Parks. The permit
is expected to incorporate the recommended mitigation measures
included in the EA Report.
Indigenous Agreements
The Nah?a Dehé Dene Band ("NDDB")
of Nahanni Butte is the nearest
community to the Prairie Creek Mine, located approximately 90
kilometres southeast of the mine site. The mine site and route of
the ASR are within NDDB's Traditional Territory. The Łíídlįį Kų́ę́
First Nation ("LKFN") of Fort
Simpson are the largest community within the Dehcho Region,
Fort Simpson is located about 185
kilometres east of the mine site.
In 2011, the Company signed an Impact Benefit Agreement with the
NDDB, and subsequently signed a similar agreement with the LKFN for
the development of the Prairie Creek Mine, which contemplated
access to the mine via a winter road only. In both agreements, NDDB
and LKFN agreed to support the Company in obtaining all necessary
permits and other regulatory approvals required for the Prairie
Creek Mine Project. Recognizing the ASR may have additional
potential impacts and effects on both groups as compared to a
winter-only road, the Company initiated consultation discussions
with both groups.
In January 2019, the Company
signed a Traditional Land Use Agreement with the NDDB for the
construction and operation of the ASR. The Company is also
finalizing negotiations for a Road Benefit Agreement with the LKFN.
As part of the EA Report engagement, the NDDB and LKFN entered into
an agreement with the Company which provides for the negotiation of
an Environmental Management Agreement ("EMA"). The EMA is intended
to be a formal mechanism, tested in other projects, to, in addition
to regulatory instruments, provide for Indigenous participation in
environmental management, and to ensure that the mitigative
measures and environmental protection commitments in the EA Report
are appropriately implemented. These aforementioned agreements,
both completed and near completion, provide assurance the Prairie
Creek Mine has strong local Aboriginal support as the ASR moves
through the final stage of permitting.
Timing
NorZinc plans to construct the ASR over three calendar years.
Prior to construction activities, the Company plans to conduct
field investigations and prepare site plans (including detailed
road design) and award construction contracts. Dependent on the
permitting and financing timeline, construction of the ASR is
planned to commence from a winter road in early 2020 and continue
into 2022, in parallel with continuous and ongoing site
construction and project development.
Financing Initiatives – RCF Provides $20 Million Equity Financing
On May 14, 2018, the Company
entered into an equity financing agreement with RCF VI CAD LLC
("RCF VI CAD"), a subsidiary of Resource Capital Fund VI L.P. ("RCF
VI"), pursuant to which RCF VI CAD agreed, subject to shareholder
and regulatory approvals, to purchase $20
million in units, each unit consisting of one common share
and a half share purchase warrant, at $0.20 per unit, with each full warrant
exercisable to purchase one share at $0.25 per share on or before December 31, 2018 ("Units"). The use of proceeds
was agreed to include repayment of the US$10
million Project Bridge Loan, the ongoing development of the
Prairie Creek Project and general working capital. At the Company's
Annual General and Special Meeting of Shareholders held on
June 27, 2018, the shareholders voted
in favour of the equity financing agreement with RCF VI CAD.
On July 10, 2018, the Company
closed the $20 million financing and
issued 100 million units to RCF VI CAD at a price of $0.20 per Unit. The proceeds from the equity
financing were used to repay the US$10
million Project Bridge Loan, in full, to RCF VI and are
being directed to ongoing development of the Prairie Creek Project,
including additional engineering and permitting work to improve
project confidence and general working capital.
In conjunction with the closing of the financing, (i) the
existing Investor Agreement with RCF VI was amended to include RCF
VI CAD and to provide for the right of RCF VI CAD to nominate
additional members to the board of directors and to provide certain
other project oversight rights, among other things, and (ii) RCF VI
transferred its holdings in NorZinc to RCF VI CAD. As a result of
the financing, RCF VI CAD holds approximately 41% of the issued
shares of the Company on a non-diluted basis.
The Company is working with HCF International Advisers as
financial advisers to facilitate the raising of project debt
financing of up to 70% of the capital expenditures required for the
Prairie Creek Mine. A temporary slowdown was placed on discussions
in June 2018 due to the extended time
of approving the ASR, but discussions have recently recommenced.
The market for project lending is currently reasonably strong,
however, equity markets for junior base metal companies are
currently at recent historic lows. The Company is assessing various
options for financing the development of Prairie Creek, these
include alternative project financing, discussions with strategic
investors, governmental supported funding, leases and other
financing mechanisms.
Newfoundland Properties
The Company holds four, high-grade zinc-lead-copper-gold-silver
volcanogenic massive sulphide ("VMS") deposits being Lemarchant,
Boomerang-Domino, Long Lake and
Tulks East. Three of these have resource estimates and Tulks East
has a historical resource. All of these deposits have excellent
potential for expansion. NorZinc intends to focus its exploration
on priority targets at these four established deposits with the aim
of increasing the resource base.
The Lemarchant zinc-lead-copper-gold-silver VMS deposit is
located 20 km from Teck's past-producing Duck Pond copper-zinc
mine. On September 20, 2018, the
Company reported an updated Mineral Resource Estimate for the 100%
owned Lemarchant deposit as follows:
- Indicated Resource of 2.42 million tonnes grading 6.15% zinc,
1.60% lead, 0.68% copper, 1.22 g/t gold, 64.0 g/t silver and 23.5%
barite (at 4.0% Zinc Equivalent cutoff)
- Inferred Resource of 0.56 million tonnes grading 4.68% zinc,
1.08% lead, 0.45% copper, 1.06 g/t gold, 44.7 g/t silver and 13.1%
barite (at 4.0% Zinc Equivalent cutoff)
- Total contained metal in the Indicated Resource has increased
by 123% zinc, 162% lead, 129% copper, 136% gold and 111% silver
from prior 2012 resource estimate.
Additional information regarding the Mineral Resource Estimate
can be found in the Technical Report filed on October 24, 2018 on SEDAR.
Corporate Matters
Executive Changes
On May 16, 2018, the Company hired
R.J. (Don) MacDonald, formerly CFO
and Acting CEO of KGHM International, as President of the Company
effective May 16, 2018 and as Chief
Executive Officer effective June 27,
2018. Mr. MacDonald is a CPA, CA with bachelors and masters
in engineering and has been involved in the financing, development
and/or operation of over 20 mines in North and South America over his career. On June 27, 2018, John
Kearney retired as Chief Executive Officer, while continuing
as the Chairman of the Board.
Reorganization
At the Canadian Zinc Corporation's Annual General and Special
Meeting of Shareholders held on June 27,
2018, the shareholders voted in favour of a statutory
Arrangement to reorganize the Company into a separate
publicly-listed holding corporation, named NorZinc Ltd., and a
directly held, wholly-owned, operating subsidiary retaining the
name Canadian Zinc Corporation. The Arrangement, which became
effective September 6, 2018, leaves
all the Prairie Creek property, assets, agreements and permits in
place in the wholly-owned subsidiary. The shares of Canadian Zinc
Corporation were exchanged for shares of NorZinc, on a one-for-one
basis, with no impact on shareholder's ultimate economic interest.
The objective of the arrangement was to structure the assets of the
Company to facilitate future project financing of the Prairie Creek
Project.
Financial Results for the Year ended Fourth Quarter of
2018
For the year ended December 31,
2018, the Company reported a net loss and comprehensive loss
of $11,619,000 compared to a net loss
and comprehensive loss of $11,074,000
for the year ended December 31,
2017.
Liquidity
At December 31, 2018, the Company
had a positive working capital balance of $8,327,000 which included cash and cash
equivalents of $9,253,000 and
short-term investments of $32,000.
The Company is debt free, having repaid the Project Bridge Loan,
including accrued interest, in full on July
10, 2018.
Outlook and Factors Affecting Performance
NorZinc's focus for 2019 is to continue the development of the
Prairie Creek Project and advance the Prairie Creek Mine towards
production.
At December 31, 2018, the Company
had cash and cash equivalents and short-term investments totaling
$9.3 million and a working capital
balance of $8.3 million. The
long-term price outlook for zinc and lead remains positive.
Supported by the robust economics indicated by the 2017 FS, NorZinc
will continue to pursue all alternatives for raising the senior
financing necessary to complete the development and construction of
the Prairie Creek Mine.
At the Prairie Creek Mine Site, various care-and-maintenance
programs were completed over the summer of 2018. Further de-risking
programs will continue in 2019 and include detailed engineering and
design of the mine facilities, assessment of, and proposals for,
rehabilitation of certain site facilities in anticipation of
construction, including site cranes, accommodation, the mill roof
and some electrical facilities. The Company will be considering
refurbishment of some of those items in the 2019 summer season,
prior to main construction activities planned for 2020.
On the permitting and environmental side, the Company received a
positive recommendation of the EA Report by the Responsible
Ministers in October 2018 and has now
moved from the EA process to the permitting phase for the issue of
the land use permits for the ASR by the MVLWB & Parks. The
regulatory phase is expected, based on the schedule provided by the
regulators, to be completed in the third quarter of 2019.
The Company concluded an important TLUA agreement with NDDB and
is negotiating the RBA agreement with LKFN, all the while
continuing engagement with both Indigenous groups on the
implementation of various mitigation measures recommended by the
Review Board in the EA Report of the All Season Road to seek
agreement on the incorporation of Dene traditional knowledge and
the inclusion of both Indigenous groups in environmental
monitoring.
A temporary slowdown was placed on project debt financing
discussions in June 2018, due to the
extended time of approving the ASR, but discussions have
recommenced with a target for financing in the latter part of 2019.
The Company is assessing various options for financing the
development of Prairie Creek, these include alternative project
financing, discussions with strategic investors, governmental
supported funding, leases and other financing mechanisms.
About NorZinc
NorZinc is a TSX-listed mine development
company trading under the symbol "NZC". The Company is developing
its key project, the 100%-owned high grade zinc-lead-silver Prairie
Creek Mine, located in the Northwest
Territories. The Company also owns projects in Newfoundland that host several
zinc-lead-copper-gold-silver deposits.
This news release should be read in conjunction with the
Company's annual consolidated financial statements for the year
ended December 31, 2018 and the
related management's discussion and analysis, which are available
on the Company's website at www.norzinc.com, under the "Financials"
section, or under the Company's profile on SEDAR at
www.sedar.com.
Cautionary Statement – Forward-Looking Information
This press release contains certain forward-looking
information, including, among other things, the expected completion
of acquisitions and the advancement of mineral properties. 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 completion of
transactions, the issue of permits, the size and quality of mineral
resources, future trends for the company, progress in development
of mineral properties, future production and sales volumes, capital
costs, mine production costs, demand and market outlook for metals,
future metal prices and treatment and refining charges, the outcome
of legal proceedings, the timing of exploration, development and
mining activities, acquisition of shares in other companies 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. 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.
SOURCE NorZinc Ltd.