Vancouver — In a significant step towards financing the polymetallic Wolverine project, Yukon Zinc (YZC-V, YZCCF-O) has secured a US$140-million senior debt facility from Barclays Capital.
Yukon Zinc president and CEO Harlan Meade says the commitment from Barclays is a major step forward for the company.
“It’s not often that a bank like Barclays agrees to lend US$140 million to a company with a market capitalization of $75 million,” Meade says. “It’s a huge vote of confidence for the project, particularly given the current state of financial markets.”
To cash in on the debt facility, Yukon Zinc has to raise the remaining US$110 million of the US$250-million total working capital required to develop the Wolverine mine, located in the southeastern part of the Yukon. The capital requirement estimate includes working capital, financing fees, debt service during construction, and an additional US$25 milllion for potential cost over-runs.
Meade is pleased the company was able to obtain more than half of the Wolverine working capital at a reasonable interest rate and without issuing shares.
“We acquired the financing without diluting shareholder value,” he says. “So if we can do as good a job on the second part of the financing as we did on the first, then I think shareholders will think that it’s been worth the wait.”
Meade says the remaining US$110 million will come from a mixture of subordinated debt and equity, and while the company is working with potential underwriters, nothing has yet been finalized.
The Wolverine project hosts proven and probable reserves of 5.15 million tonnes grading 9.66% zinc, 0.91% copper, 1.26% lead, 281.8 grams silver per tonne, and 1.26 grams gold. Average annual production for the first three years, based on a mining rate of 1,700 tonnes per day, is forecast at 116 milion lbs. zinc, 10 million lbs. copper, and 13 million lbs. lead in concentrates containing 4.9 million oz. silver and 20,200 oz. gold.
The mine life is currently pegged at 9.5 years. Upgrading inferred resources could add another three years.
Yukon Zinc expects to make a production decision in late fall, following completion of the necessary outstanding financing.
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