CZN Cdn Zinc loses $611,000 in 2009
29 March 2010
Canada Stockwatch
Canadian Zinc Corp (TSX:CZN)
Shares Issued 118,900,563
Last Close 3/26/2010 $0.49
Monday March 29 2010 - News Release
Mr. John Kearney reports
CANADIAN ZINC REPORTS FINANCIAL RESULTS FOR FISCAL 2009
Canadian Zinc Corp. has released its financial results for the year ended Dec. 31, 2009.
This press release should be read in conjunction with the audited financial statements and notes thereto for the year ended Dec. 31, 2009, and management's discussion and analysis (MD&A) for the year ended Dec. 31, 2009, available on SEDAR.
Financial results for fiscal 2009
For the year ended Dec. 31, 2009, Canadian Zinc reported a net loss of $611,000 compared with a loss of $4,228,000 for the year ended Dec. 31, 2008. The reduced loss in 2009 was primarily attributable to gains on the company's marketable securities and lower mineral exploration and development expenses.
For the year ended Dec. 31, 2009, the company reported overall gains on its marketable securities of $6,102,000, compared with a $38,000 loss for the year ended Dec. 31, 2008. These gains arose as a result of increases in quoted prices for the company's marketable securities, notably its investment in Vatukoula Gold Mines PLC (VGM), which is described in further detail below.
As at Dec. 31, 2009, the company had cash and cash equivalents of $5,197,000, short-term investments of $2,246,000 and marketable securities of $15,382,000, for a total of $22,825,000. The company also had a positive working capital balance of $22,476,000.
As at Dec. 31, 2008, the company had cash and cash equivalents of $9,225,000, short-term investments of $11,723,000, marketable securities of $2,024,000 and a positive working capital balance of $22,557,000.
During 2009, Canadian Zinc expended $1,052,000 relating to permitting and environmental matters (2008 -- $862,000). These expenditures included costs related to the continuing environmental assessment being conducted by the Mackenzie Valley Environmental Impact Review Board as part of the permitting process for operating permits for the Prairie Creek mine, as well as liaising with local communities and Parks Canada Agency.
During the year ended Dec. 31, 2009, the company expended $2.26-million on its mineral exploration and development programs at Prairie Creek, compared with $3,426,000 for the year ended Dec. 31, 2008. The company also incurred expenditures of $2.4-million in 2009 relating to the Tuvatu gold exploration project in Fiji, which have been written off.
Prairie Creek mine
Canadian Zinc's principal focus is to advance the Prairie Creek mine, a zinc/lead/silver property located in the Northwest Territories of Canada, toward production. The Prairie Creek property hosts total measured and indicated resources of 5,840,329 tonnes grading 10.71 per cent zinc, 9.90 per cent lead, 0.326 per cent copper and 161.12 grams per tonne silver, a large inferred resource of 5,541,576 tonnes grading 13.53 per cent zinc, 11.43 per cent lead, 0.514 per cent copper and 215 g/t silver, and additional exploration potential. The mine is partially developed with an existing 1,000-tonne-per-day mill and related infrastructure.
The Prairie Creek mineral deposit contains substantial quantities of zinc, lead and silver. The measured and indicated resource is capable of supporting a mine life in excess of 14 years at the planned initial rate of 600 tonnes per day, which will increase to 1,200 tonnes per day, and the future inclusion of inferred resources is expected to extend the mine life to at least 20 years.
When in production the mine will add significantly to Canada's production of lead and zinc concentrates, and will create employment for about 225 people and business opportunities for the local communities in the Dehcho region of the Northwest Territories.
Prairie Creek operations and permitting update
Canadian Zinc's primary focus for 2009 has been to move forward in the permitting process for the operating permits for the Prairie Creek mine, operating only a limited mine site program in the summer months of 2009.
The main focus of summer work at Prairie Creek was a continuing program of rehabilitating part of the winter road which connects the Prairie Creek mine site to the Liard Highway. This program involved drilling and blasting to widen the road in the proximity of Prairie Creek. In addition, the company performed a number of environmental studies and programs including: mine site water management, groundwater analysis, air-monitoring, rare plant/wildlife analysis, archeological surveys, geotechnical assessments, and road analysis and terrain assessments.
Throughout 2009, the company continued its discussions and engagement with the local communities of Nahanni Butte Dene Band and Liidlii Kue First Nation (Fort Simpson) with whom Canadian Zinc has entered into memoranda of understanding to establish mutually beneficial, co-operative and productive relationships. Canadian Zinc has agreed to use its best efforts to employ community members on a first preference basis and to assist the communities to benefit from the business opportunities associated with the Prairie Creek project.
In May, 2008, the company applied to the Mackenzie Valley Land and Water Board (MVLWB) for a Type A water licence and three Type A land use permits; one for the operation of the Prairie Creek mine and the other two for transfer facilities along the road. A detailed project description report was filed with the MVLWB as part of the permit applications. In September, 2008, the MVLWB referred the applications to the Mackenzie Valley Environmental Impact Review Board (MVEIRB) for environmental assessment.
The MVEIRB issued the draft terms of reference and a draft work plan in May, 2009, and the final terms of reference and work plan were issued in June 26, 2009. Following the issue of the final terms of reference and work plan the company commenced the preparation of the Developer's Assessment Report (DAR) which was submitted for filing with the MVEIRB in March, 2010.
The MVEIRB had indicated that it anticipated concluding its report of environmental assessment by October, 2010, however, it is likely given the open-ended nature of the Mackenzie Valley permitting process and company's experience to date, that the environmental assessment and permitting process for the Prairie Creek mine will extend for a considerable time.
Vatukoula Gold Mines PLC:Canadian Zinc holds 628,669,022 ordinary shares, representing approximately 17 per cent of the issued share capital, of Vatukoula Gold Mines PLC (VGM), a United Kingdom company listed on the AIM Market of the London Stock Exchange, which currently owns and operates the Vatukoula gold mine located in Fiji.
The Vatukoula gold mine has an operational history of over 70 years during which time it is reported to have produced approximately seven million ounces of gold and over two million ounces of silver from the treatment of around 22.5 million tonnes of ore. Production at the mine was suspended by the previous owners in 2006. VGM acquired the mine in April, 2008, and since then has restarted operations.
For its financial year ended Aug. 31, 2009, VGM reported total consolidated revenue of 18.8 million British pounds sterling, compared with 3.8 million British pounds sterling in the prior year, as a result of a substantial increase in gold production to 33,757 ounces of gold from the treatment of 220,439 tonnes of ore, compared with the production of 12,847 ounces of gold from the treatment of 57,117 tonnes of ore in the prior year, and a higher average gold price received of $881 (U.S.) per ounce.
VGM has reported, in its mineral reserves and mineral resources report (prepared in accordance with National Instrument 43-101 by John Tyrell and Anthony Silveira, who are qualified persons and full-time employees of AMC Consultants Pty. Ltd.) that, as at Aug. 31, 2009, the Vatukoula gold mine had:
- A combined proven and probable reserve estimate of 1.9 million tonnes of ore grading 10.9 grams of gold per tonne, for contained gold of 680,000 ounces of gold;
- An underground combined measured and indicated mineral resource of 8.3 million tonnes grading 10.5 grams of gold per tonne, for contained gold of 2.8 million ounces;
- An inferred mineral resource of 4.7 million tonnes grading 8.6 grams of gold per tonne, for contained gold of 1.3 million ounces.
In September and October, 2009, VGM raised finances totalling 11 million British pounds sterling. The net proceeds of the share placements completed by VGM during 2009 are anticipated to be used to assist in increasing its gold production to a targeted annual rate of 100,000 ounces by the beginning of the 2011 calendar year. This is expected to be achieved via an increased underground capital development program allowing access to increased mining faces, increasing both the tonnage delivered from underground and delivered grade to the mill.
In December, 2009, VGM signed the Vatukoula trust deed with the Minister for Lands and Mineral Resources of the Republic of Fiji, which formalizes a number of key concessions and exemptions to VGM's Fijian operations as well as establishing a social assistance trust. The trust will support members of the Vatukoula community who were previously employed at the mine when it closed temporarily in December, 2006, but who have not been rehired and have not been able to find new employment. A total of Fijian $6-million (Fijian) (approximately $3-million (U.S.)), payable over five years will be paid to the trust. VGM completed the first payment of $1.5-million (Fijian) to the trust in March, 2010.
Concessions granted to VGM under the trust deed include exemptions: on the payment of corporation tax for a total of five years; on the payment of import excise duty for a period of three years; on the importation of automotive diesel oil and industrial diesel fuel; on the payment of export tax for a period of five years; on the payment of fiscal duties for all plant equipment machinery and motor vehicles for a period of three years; and the acceleration of depreciation provisions.
VATUKOULA GOLD MINE OPERATIONS REPORT
(per VGM Dec. 17, Dec. 1, Sept. 1, June 1 Year ended
2009, and March 22, to Feb. 28, to Nov. 30, to Aug. 31, Aug. 31,
2010, updates) 2010 2009 2009 2009
(Q2) (Q1) (Q4)
Underground mining/
sulphide processing
Ore mined (t) 62,606 45,105 43,705 212,029
Average grade 6.93 8.34 7.57 7.59
Ore delivered (t) 58,230 43,406 45,310 188,344
Sulphide head grade (g/t) 6.60 8.63 4.93 6.28
Oxide plant
Ore delivered (t) 43,472 43,899 32,095 32,095
Oxide head grade (g/t) 1.99 1.93 1.78 1.78
Total
Development (metres) 2,036 1,664 1,682 5,755
Ore processed (t) 102,302 86,329 77,405 220,439
Average ore head
grade (g/t) 4.64 5.29 3.63 6.27
Recovery (%) 84% 84% 82% 75%
Gold recovered (i) (oz) 12,869 12,227 7,444 33,757
Gold shipped (oz) 15,267 8,826 6,617 33,246
(i) Includes gold which has been partially processed but not produced as
gold dore or shipped.
For its quarter ended Nov. 30, 2009, VGM reported gold sales of 8,826 ounces, up from the previous quarter (6,617 ounces), an average realized gold price of $1,096 (U.S.) per ounce, compared with the previous quarter ($929 (U.S.) per ounce) and gold recovery of 12,227 ounces, up from the previous quarter (7,444 ounces).
VGMs underground production for the quarter ended Nov. 30, 2009, increased to 45,105 tonnes, with an average mine grade of 8.34 grams of gold per tonne. The planned increase in underground mining was impacted by the availability and utilization rates of the underground haulage equipment which limited the amount of ore transported to the mill.
During the quarter ended Nov. 30, 2009, a total of 43,406 tonnes of ore from underground was milled at a grade of 8.63 grams gold per tonne and the oxide circuit treated 43,899 tonnes at a grade of 1.93 grams of gold per tonne. Over all the plant had recoveries of 84 per cent, consistent with the previous quarter.
For its quarter ended Feb. 28, 2010, VGM reported gold sales of 15,267 ounces, up from the previous quarter (8,826 ounces), an average realized gold price of $1,104 (U.S.) per ounce, compared with the previous quarter of $1,096 (U.S.) per ounce and gold recovery of 12,869 ounces, compared with the previous quarter of 12,227 ounces.
VGMs underground production for the quarter ended Feb. 28, 2010, increased to 62,606 tonnes, with an average mine grade of 6.93 grams of gold per tonne, compared with 45,105 tonnes with an average grade of 8.34 grams per tonne for the quarter ended Nov. 30, 2009. The upgraded underground mining fleet had a positive impact on operations resulting in an 18-per-cent increase in tonnes of ore processed and a 20-per-cent increase in development metres, compared with the previous quarter. The lower mining grade was as a result of increased ore delivered from development work and mining of lower grade areas. VGM reported that it has acquired four additional underground exploration drills (for a total available of nine), which are being used to provide advance information for detailed mine planning purposes.
During the quarter ended Feb. 28, 2010, a total of 58,230 tonnes of ore from underground was milled at a grade of 6.60 grams gold per tonne and the oxide circuit treated 43,472 tonnes at a grade of 1.99 grams of gold per tonne. Over all the plant had recoveries of 84 per cent, consistent with the previous quarter.
Current planning reported by VGM management is to restore mine operations to a targeted production of 60,000 ounces of gold for the year ending Aug. 31, 2010, and to a pro rata annual production rate of 100,000 ounces by the beginning of the 2011 calendar year.
Alan Taylor, PGeo, chief operating officer, vice-president exploration and a director of Canadian Zinc, is responsible for the company's exploration program and is a qualified person for the purposes of National Instrument 43-101, and has approved this press release.
