VANCOUVER, BRITISH COLUMBIA, Sep. 29, 2009 (Marketwire) --
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 09/29/09 -- Canadian Zinc Corporation (TSX: CZN)(OTCBB: CZICF) reports that it has conditionally agreed to subscribe for 125 million new shares in Vatukoula Gold Mines plc ("VGM") for an investment of Pounds Sterling 1.5 million (1.2 pence per share).
Canadian Zinc's subscription is part of a share placement by VGM to raise approximately Pounds Sterling 9 million (Cdn $15.75 million). Sprott Asset Management Inc., a substantial shareholder of both VGM and CZN has also subscribed for 124.5 million shares of VGM for an investment of Pounds Sterling 1.5 million.
Canadian Zinc also reports that Viso Gero Global Inc. has exercised its previously announced call option and has purchased from Canadian Zinc 200 million shares of VGM for Pounds Sterling 2 million.
In a separate transaction, Canadian Zinc has exercised its right, upon exercise of the Viso Gero call option, to acquire further shares of VGM and has agreed with VGM to subscribe Pounds Sterling 2 million for 156 million new shares (1.28 pence per share).
Following completion of the VGM financing and CZN's separate subscription, Canadian Zinc will hold 628 million shares of VGM representing approximately 17.2% of VGM's then outstanding shares.
The net placing proceeds will be used by VGM to assist in increasing its' pro rata annual production to in excess of 100,000 ounces by the beginning of the 2011 calendar year. This is expected to be achieved via an increased underground capital development program, allowing access to increased mining faces, increasing both the capacity of tonnage delivered from underground and an increase in delivered grade to the mill. While VGM is confident of reaching its stated objectives there can be no guarantee that they will be achieved.
Vatukoula Gold Mines plc is a UK company, listed on the AIM Market of the London Stock Exchange, which currently owns and operates the Vatukoula Gold Mine located in Fiji.
Tuvatu Option cancelled
Canadian Zinc also reports that it has agreed to cancel its option on the Tuvatu Gold Project in Fiji. Tuvatu is a high grade gold deposit on the island of Viti Levu, Fiji, and located approximately 37 kilometres to the southwest of the Vatukoula Gold Mine.
The Tuvatu Project is currently owned by American Eagle Resources Inc. ("American Eagle"), through its 100% owned Fijian subsidiary Lion One Limited. Under an Option Agreement entered into in May 2009, Canadian Zinc had the option, exercisable at any time until October 31, 2009, to acquire Tuvatu, via amalgamation of American Eagle with a wholly-owned subsidiary of Canadian Zinc under which 16,250,000 shares of Canadian Zinc would have been issued to the shareholders of American Eagle.
Canadian Zinc has now agreed to cancel its option to acquire American Eagle in consideration of the issue to Canadian Zinc of warrants entitling Canadian Zinc to acquire up to 1,250,000 shares (approximately 10%) of American Eagle, at an exercise price of the lesser of $2.00 per share or 25% above the price per share of the initial public offering of American Eagle.
