Vancouver, British Columbia, Canada – Monday, September 9, 2013 – Canada Zinc Metals Corp. (TSX Venture Exchange: CZX) is pleased to announce that the Company has entered into an option agreement with Teck Resources Limited (“Teck” TSX: TCK.B) that will see Teck earn into the Company’s Pie, Cirque East and Yuen properties; three of the 10 regional properties that make up the Kechika Regional Project.
The Akie property is the Company’s flagship exploration project and host to the Cardiac Creek SEDEX Zn-Pb-Ag deposit. The Kechika Regional Project, represented by a series of property blocks including Pie and Mt. Alcock, extends northwest from the Akie property for approximately 140 kilometres covering the highly prospective Gunsteel Formation shale. The southernmost project boundary is located approximately 260 kilometres northwest of the town of Mackenzie, in northeastern British Columbia, Canada.
Teck Earn-in Agreement
Canada Zinc Metals and Teck have entered into an option agreement (the “Agreement”) that would see Teck acquire up to 70% interest in the Pie, Cirque East and the Yuen properties, herein called the “Property”.
The deal includes a private placement by Teck for 1,250,000 units of Canada Zinc Metals at a price per unit of $0.40, resulting in a total subscription of $500,000. Each unit shall comprise one common share and one share purchase warrant that will entitle Teck to purchase one additional common share of Canada Zinc Metals within 24 months at a price of $0.40 per share.
The Agreement outlines two options (the “Options”) that are subject to certain expenditure requirements, as outlined below:
- Under the First Option, Teck can earn an undivided 51% interest in and to the Property by incurring a cumulative aggregate of $3,500,000 in exploration expenditures on the Property on or before September 30, 2017, with $500,000 in exploration expenditures to be completed on or before September 30, 2014.
- Under the Second Option, Teck may elect to acquire an additional 19% interest in the Property for a total of 70%, by incurring an additional $5,000,000 in exploration expenditures (for a total aggregate of $8,500,000 in exploration expenditures) on the Property on or before September 30, 2019.
Subject to one or more of the Options being exercised, Teck and Canada Zinc Metals will form a Joint Venture to continue with exploration and, if warranted, development of the Property. Thereafter each party will fund its pro-rated share of exploration expenditures on the Property or incur dilution. If a party’s Joint Venture interest is reduced below 10% then that party’s interest will be converted to a 5% Net Profits Royalty interest in the Property.
A Technical Committee formed from staff of the two companies will advise on the design and implementation of exploration programs for the Property through the duration of the Options. After the formation of the Joint Venture, a Management Committee formed from staff of both companies will continue to guide the exploration and possible development of the Property. Teck will manage exploration programs during the Options and shall be the operator of the Joint Venture.
The transaction is subject to approval of the TSX Venture Exchange.
The Yuen, Cirque East and Pie properties surround Teck/Korea Zinc’s jointly owned Cirque deposit to the north and east, and provide extensive coverage of the highly prospective Gunsteel Formation shale, which is the known host rock for SEDEX Zn-Pb-Ag deposits at Cirque and at Canada Zinc Metals’ Cardiac Creek deposit, located 22 kilometres south on the Akie property. Teck has the right under the Agreement to assign its rights to the Teck/Korea Zinc’s Cirque joint venture.
Peeyush Varshney, President & CEO of the Company, commented “This transaction with Teck is very significant as it continues to highlight the premium zinc assets of Canada Zinc Metals and focuses market attention on the strategic properties we hold in the Kechika Trough. This deal adds to the already noteworthy investment in the Company by Lundin Mining (TSX: LUN) and Tongling Nonferrous Metals of China.”
“We are very pleased to partner with Teck on the exploration and possible future development of the Pie, Cirque East and Yuen properties. We have done a significant amount of work highlighting the prospectivity of the Kechika Trough and now that effort is paying off with this investment and option deal.”
About the Optioned Properties
The Pie property consists of 36 mineral claims covering a total of 11,680 hectares. The property is located between Teck/Korea Zinc’s Cirque deposit and the Company’s Cardiac Creek deposit. Sporadic exploration activity has occurred on the Pie property since 1978 with a total of over $4 million in recorded expenditures, including work done by Canada Zinc Metals since 2007. Work includes over 4,700 geochemical samples, mapping, geophysics, trenching, and over 7,000 metres of diamond drilling in 24 drill holes. Two thrust-bound panels of prospective Gunsteel Formation shale covering a significant portion of the Pie claims have been mapped to date in the central and western (West Pie) claims areas. Geochemistry suggests potential for further unexplored Gunsteel shale in areas of poor exposure, including at East Pie.
Two areas of the Central Pie property have been drill tested on a reconnaissance basis and have intersected significant widths of nodular to bedded barite and nodular to disseminated pyrite typical of SEDEX Zn-Pb-Ag mineralization. Drill Hole P-06-07 intersected extensive intervals of laminated pyrite and nodular barite over its entire length and selective sampling by the operator of the day returned up to 0.8% Zn and up to 15.1 g/t Ag. Drilling along strike of P-06-07 to the NW and SE continued to intersect significant intervals of laminated pyrite and nodular barite. The best intercept in historical drilling at Pie was in 80-1 with vein-hosted mineralization returning 2.0 metres of 2.93 % zinc from a depth of 46.1 metres. High zinc grades were returned in channel samples from the Pie Breccia showing, with up to 27.8% zinc and 4.8% lead. The Pie Breccia showing is yet to be tested by drilling.
Geological mapping by the Company on the West Pie target area has defined a new prospective panel of interpreted Gunsteel Formation shale with demonstrated evidence of SEDEX style mineralization including nodular barite, laminated pyrite and iron oxides. This western panel also hosts the GPS bedded barite showing located on the western edge of the Akie property, and is situated along strike from the Cirque deposit. Soil and silt geochemistry surveys outlined continuous zinc-silver +/-lead anomalism over the entire 8 kilometer strike length of the West Pie panel. Rock grab samples returned up to 7.5% zinc at West Pie. Soil and silt geochemistry surveys also outlined silver +/- zinc+/- lead anomalism at East Pie showing, which is open along strike.
Last Year the Company filed a NI 43-101 technical report on the Pie Property which included a $1.2 million budget for additional exploration, including drill testing at Central and West Pie. The reader is referred to www.SEDAR.com to review the report.
The Yuen property consists of 19 mineral claims that cover over 4,000 hectares and is located just 10 kilometres northwest along strike of the Cirque deposit. Historical exploration since 1979, totaling over $1 million in expenditures, has focused on several showings including China Ridge and Noel Creek where soil surveys outlined large Ba-Pb-Ag anomalies worthy of follow-up. Limited drilling has been completed on the property with 8 drill holes totaling over 1,400 metres. Elevated zinc and lead values were returned from large intervals of nodular to laminated barite and pyrite in Gunsteel shale, a similar setting to the proximal pyrite facies found stratigraphically above the Cardiac Creek deposit. The property has been largely dormant since 1982 apart from one short program in 1994 and two drill holes in 2006, one of which was terminated early due to onset of winter. More work is warranted to follow-up on drill-tested SEDEX style mineralization and examine soil anomalies that have yet to be tested.
The Cirque East property consists of 3 mineral claims totaling 1,930 hectares and is located to the northeast of the Cirque deposit. The prospective shale of the Gunsteel Formation is aligned along the same central panel of Gunsteel that hosts the Cardiac Creek deposit, the Pie showings and Teck and Korea Zinc’s Elf and Fluke showings. Limited work during the early 1980’s included mapping and some targeted soil sampling that identified Zn, Pb and Ba anomalies in the Gunsteel shale and the underlying Kwadacha reef limestone. More work is required to accurately map the extent of the Gunsteel shale in this area. It is expected that the recently acquired VTEM Airborne Geophysical data will assist in defining the Gunsteel shale in areas of poor exposure.
Gunsteel shale has been identified in several thrust-imbricated parallel panels in the Southern Kechika district. The western panel extends northwest from the GPS zone (on the Akie property) through the Cirque deposit onto the Yuen property, a continuous strike length of over 25 kilometres of prospective SEDEX host rock. Similarly, Gunsteel shale on the central thrust-imbricated panel aligns the Elf, Cardiac Creek, Fluke, Pie and Cirque East properties, covering a strike length of over 35 kilometres of Gunsteel. Limited work at Pie and Akie suggest the presence of an eastern Gunsteel panel.
The Akie Zn-Pb-Ag Project
The Akie property is situated within the Kechika Trough, the southernmost area of the regionally extensive Paleozoic Selwyn Basin and one of the most prolific sedimentary basins in the world for the occurrence of SEDEX zinc-lead-silver and stratiform barite deposits.
Drilling on the Akie property by Canada Zinc Metals since 2005 has identified a significant body of baritic-zinc-lead SEDEX mineralization known as the Cardiac Creek deposit. The deposit is hosted by siliceous, carbonaceous, fine grained clastic rocks of the Middle to Late Devonian Gunsteel Formation.
The Company has outlined a NI 43-101 compliant mineral resource at Cardiac Creek, including an indicated resource of 12.7 million tonnes grading 8.4% zinc, 1.7% lead and 13.7 g/t silver (at a 5% zinc cut-off grade) and an inferred resource of 16.3 million tonnes grading 7.4% zinc, 1.3% lead and 11.6 g/t silver (at a 5% zinc cut-off grade).
Ken MacDonald P.Geo., Vice President of Exploration, is the designated Qualified Person as defined by National Instrument 43-101 and is responsible for the technical information contained in this release.
The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.
ON BEHALF OF THE BOARD OF DIRECTORS
CANADA ZINC METALS CORP.
PEEYUSH VARSHNEY, LL.B
CEO & CHAIRMAN