Yukon Zinc in $140M Float

Yukon Zinc (YZC-V, YZCCF-O) has announced a $140-million financing for its Wolverine zinc project in the southeastern Yukon.

The money will match a previously arranged project debt facility for Wolverine, which Yukon Zinc arranged with Barclays Capital in early September. The project has been costed out at US$250 million, of which Barclays is providing US$140 million; the new financing will cover the remainder, leaving Yukon Zinc with another $15 million or so for corporate use.

Wolverine, which has a minable reserve of 5.2 million tonnes grading 9.66% zinc, 0.91% copper, 1.26% lead, 282 grams silver and 1.3 grams gold per tonne, is now fully permitted, having received a water licence from the Yukon government in early October. A feasibility study in February said the deposit could produce 53,400 tonnes zinc annually, plus 4,900 tonnes copper, 6,000 tonnes lead, 5 million oz. silver and 20,000 oz. gold annually at a cash cost of around US$570 per tonne zinc (US26 per lb.).

The stumbling block remained financing; going to the stock market for it would have been “too dilutive” at Yukon Zinc’s share price, president Harlan Meade told a group of analysts and brokers earlier this year. The project financing from Barclays provided a senior debt package that allowed Yukon Zinc to look for alternatives to a large equity financing.

The company’s deal with three brokers — Haywood Securities, Paradigm Capital, and Blackmont Capital — splits the financing into three pieces. Equity units will consist of a share and a warrant, convertible units of an unsecured convertible note and shares, and debt units of an unsecured note and shares. The split between the types, and the pricing terms, are still to be arranged, and the agents intended to bring them to market around the end of October.

The agents are receiving 6% of the proceeds of the equity offering, plus 3.75% of the proceeds from the other two offerings, and get broker’s warrants amounting to 6% of the number of equity units they place. Those warrants are exercisable for two years at the issue price of the common shares in the offering.