NorZinc raises $7.1 million for NWT mine, shares rise

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NorZinc Ltd. [NZC-TSX, NORZF-OTCQB] said Friday it has closed a short form prospectus offering and concurrent private placement that raised $7.17 million.

NorZinc President and CEO Rohan Hazelton said the financing will help position the company to keep advancing the Prairie Creek lead-zinc-silver mine, which is located in the Northwest Territories.

Under the financing, NorZinc issued 110.4 million units at $0.065 per unit, of which 95 million units were issued pursuant to the offering and 15.4 million units were issued by way of a concurrent private placement. Each unit consists of one common share and one half of one common share purchase warrant. Each warrant is exercisable at $0.09 per common share for up to three years after closing.

The offering was conducted by a syndicate of agents which have been granted an over-allotment option to offer for sale up to 15% of the offering for a period of 30 days after closing.

A unit of Resource Capital Fund VI LP subscribed for 15.4 million units in the concurrent private placement, generating approximately $1.0 million. If the over-allotment option is exercised, RCF may increase the size of its subscription by the same proportion as the amount of the over-allotment option exercised by the agents.

NorZinc shares advanced on the news, rising 9.15 or $0.005 to $0.06 on volume of 209,400. The shares are currently trading in a 52-week range of 11.5 cents and $0.055.

NorZinc’s main asset is the Prairie Creek Mine. It was originally a silver mine that operated in the early 1980s, but shut down due to low prices. “It has a lot of infrastructure on site, but it really is a zinc-lead-silver mine,’’ said former NorZinc CEO Don MacDonald in an interview that is posted on the company’s website.

The mine has a reserve of about 8.0 million tonnes of 23% zinc equivalent.  On top of that is an inferred resource of about 7.0 million tonnes of grade 11.3% zinc, 7.7% lead and 166 g/t silver, material that could increase the expected lifespan beyond 15 years if it can be updated to the measured and indicated category.

Having completed a feasibility study in September of 2017, the company recently secured permits that enable it to develop a 1,600 tonne-per-day mine. “It has been a multi-year process to get to this point,” MacDonald said. He said developing the mine is expected to be a two-to-three-year process that requires the construction of a winter road.

With a capital cost forecast of $279 million, the company said it may be possible, subject to financing, to be in production by the end of 2024.

Based on existing reserves, the 2017 feasibility study indicates that Prairie Creek will have a lifespan of 15 years, with average annual metal production contained in concentrate of 105 million pounds of lead, 95 million pounds of zinc and 2.1 million ounces of silver for the first 10 years.

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