Yukon Zinc Corporation
TSX VENTURE : YZC

Yukon Zinc Corporation

November 23, 2007 12:12 ET

Yukon Zinc Corporation Announces Final Prospectus Filing

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 23, 2007) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

Yukon Zinc Corporation (TSX VENTURE:YZC) (the "Company") announces that it has filed its final prospectus for an offering of up to $130 million of securities (the "Offering"). The Offering provides for the sale of Class A Subscription Receipts ("Class A Receipts"), Class B Subscription Receipts ("Class B Receipts") and units (the "Equity Units"). There is an over-allotment option of 10%. The Offering is expected to close on or about November 29, 2007 (the "Closing"). Dr. Harlan Meade, President and CEO of Yukon Zinc states that, "It has been a very difficult market within which to arrange the equity portion of project financing; however, it is important to complete the financing and advance the project to a production decision to take advantage of future zinc markets."

Pricing of the Offering has changed since the Company's previous release of November 7, 2007. Each Class A Receipt will be priced at Cdn$1,000 and will entitle the holder to acquire for no additional consideration (i) $1000 principal amount of subordinated secured convertible notes ("Convertible Notes"), and (ii) 700 common shares ("Common Shares") of the Company. The Convertible Notes will mature eight years and six months after the closing of the Offering (the "Closing"). An interest rate of 11.0% per annum will apply to each Convertible Note and will be paid semi-annually. The interest will accrue from Closing. The conversion price for the Convertible Notes is $0.20 per Common Share. If at any time after the 5th anniversary of the closing of the Offering, the weighted average trading price of the Common Shares is greater than $0.2625 for any 20 consecutive trading days, the Company may, subject to certain conditions, require the Convertible Notes to be converted upon 30 days notice.

Each Equity Unit will be priced at $0.16 and will consist of: (i) one Common Share and (ii) one-half of one Common Share purchase warrant (a "Warrant"). Each whole Warrant will entitle the holder to acquire an additional Common Share for a period of 5 years at an exercise price of $0.23.

Each Class B Receipt will be priced at Cdn$0.16 and will entitle the holder to acquire, for no additional consideration, one Common Share and one-half of one Warrant.

The net proceeds of the Offering, together with a previously-announced Barclays Capital US$140 million underwritten senior debt facility ("Barclays Facility") (see August 27, 2007 News Release), are to be used to fund the balance of the Wolverine Project capital funding requirement, which includes a US$25 million capital cost overrun requirement, and for general corporate purposes.

Upon completion of the Offering, the aggregate of: (i) the issue price of any Class A Subscription Receipt that is exercised at Closing; (ii) the greater of (A) $17 million and (B) the proceeds from the sale of Equity Units, (the aggregate of (i) and (ii) referred to herein as the "Closing Payment"); and (iii) the Agents expenses and Commission on the Closing Payment will be released to the Company and the Agents. The balance of the gross proceeds of the Offering, including the Agents cash commission on such funds, will be held in escrow pending satisfaction of the conditions for financial close of the Barclays Facility (the "Barclays Release Conditions"), provided that additional amounts, together with the Agents cash commission thereon, may be released from escrow to the Company prior to the release of the Barclays Release Conditions to support certain project-related expenditures.

Upon satisfaction of the Barclays Release Conditions by March 3, 2008, the Class A Receipts and Class B Receipts will automatically be exercised for Convertible Notes and Common shares and for Common Shares and Warrants, respectively, and the escrowed portion of the funds raised through the Offering will be released to the Company and the Agents.

If the Barclays Release Conditions are not met by March 3, 2008, the subscription price for the outstanding Class A Receipts and Class B Receipts will be refunded, and interest on the Class A Receipts at the rate of 11% per annum will be paid, using the escrowed funds. If there are insufficient escrowed funds to make such refunds and payments, the interest on the Class A Receipts will be paid from the escrowed funds derived from the sale of Class A Receipts and the balance of the escrowed funds will be allocated to the Class A and Class B Receipts in proportion to the initial funds contributed to the escrow from each class of receipts. The portion of the escrowed funds allocated to Class B Receipts will be used to refund the subscription price of Class B Receipts and those that are not refunded will automatically be exercised for Equity Units at the price of $0.16 per unit. The portion of the escrowed funds allocated to the Class A Receipts, less an amount equal to two years interest on the Convertible Notes that the Class A Receipts that are not refunded will be exercised for, will be used to refund the subscription price of Class A Receipts and any Class A Receipts not so refunded will automatically be exercised for Convertible Notes and Common Shares at the price of $1000 per $1,000 principal amount of Convertible Note and 700 Common Shares.

The completion of the Offering, together with the Barclays Facility, will enable the Company to proceed with construction at the Wolverine Project.

The Offering is subject to receipt of regulatory approvals and other standard conditions.

Yukon Zinc Corporation is focused on the development and construction of the Wolverine zinc silver deposit, as the Yukon's next significant zinc-silver mine and the exploration of the Finlayson District as Canada's newest Volcanogenic Massive Sulphide District.

The securities comprising the Offering have not been registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws, and may not be offered or sold in the United States absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. All dollars in this release refer to Canadian funds.

Except for the statements of historical fact contained herein, the information presented in this News Release constitutes "forward-looking statements" as such term is used in Canadian securities laws. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans, "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and should be viewed as "forward-looking statements". Such forward looking statements, including but not limited to, those with respect to the Offering, the Barclays Facility and the ability of the Company to proceed with construction at the Wolverine Project, zinc markets and the other factors and events described in this News Release, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, among others, the estimation or realization of Mineral Resources and Mineral Reserves (as such terms are defined by applicable Canadian securities regulators); variations in the underlying assumptions associated with conclusions of economic evaluations, including the timing and amount of estimated future production, costs of production, capital expenditures, the failure of plant, equipment or processes to operate as anticipated and possible variations in ore grade or recovery rates; availability of capital to fund programs and the resulting dilution caused by the raising of capital through the sale of shares; risks of the mining industry, including without limitation, those associated with the environment; and delays in obtaining governmental approvals, permits or financing. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that could cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained in this News Release and in any document referred to in this News Release.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy of this news release.

Contact Information

  • Yukon Zinc Corporation
    Dr. Harlan Meade
    President and CEO
    (604) 682-5474 or Toll-free: 1-877-682-5474
    or
    Yukon Zinc Corporation
    Shae Dalphond
    Manager, Investor Communications
    (604) 682-5474 or Toll-free: 1-877-682-5474
    (604) 682-5404 (FAX)
    Email: info@yukonzinc.com
    Website: www.yukonzinc.com