Canada Zinc seals strategic partnership with Chinese company

The crippling economic crisis means many cash-strapped juniors are resorting to strategic partnerships with base-metals companies in Asia to raise the money they need.

Take Canada Zinc Metals (CZX-V, MTSZF-O), which raised $4.9 million in a non-brokered private placement of its shares with a state-owned enterprise in China’s rural Anhui province.

Tongling Nonferrous Metals Group Holdings is purchasing a 13% equity stake in the Vancouver-based junior, picking up 11.5 million units at a price of 42.5¢ per share.

Each unit is made up of one share and one half of a share-purchase warrant. Each whole warrant entitles Tongling to buy, at any time within 24 months after closing the deal, one share of Canada Zinc Metals at a price of 60¢ during the first year and 80¢ the second year.

The proceeds will be used to pay for further exploration and advancement of the company’s properties and for working capital purposes.

The news sent Canada Zinc’s share price up 1¢ or 4.6% to 23¢ apiece. The company has a 52-week trading range of 11¢-$1.18 per share.

Tongling is one of China’s largest copper smelting companies and is involved in exploration, mining, ore processing, smelting and refining, as well as products processing of copper, lead, zinc, gold, silver and other non-ferrous and rare metals.

The Chinese company is active in exploration, mining, ore processing, smelting and refining, as well as product processing of copper, lead, zinc, gold, silver and other non-ferrous and rare metals. Based in the city of Tongling in China’s eastern Anhui province, Tongling trades on the Shanghai Stock Exchange.

Canada Zinc’s Akie property and its prospective land package in the Kechika Trough represents a long-term district development opportunity, according to Tongling’s chief engineering officer, Li Dongqing.

The Akie claim block in northeastern British Columbia covers 6,400 hectares and hosts the Cardiac Creek deposit. Akie lies within the southernmost part (Kechika Trough) of the extensive Paleozoic Selwyn Basin, one of the most prolific sedimentary basins in the world for the occurrence of sedimentary exhalative (SEDEX) silver-lead-zinc and stratiform barite deposits.

Inmet Mining Corp. (IMN-T) drilled on the Akie property from 1994-1996 and Canada Zinc started its drill program there in 2005 and together the two companies have identified a significant body of baritic-zinc-lead SEDEX mineralization at the Cardiac Creek deposit.

Canada Zinc has filed a National Instrument 43-101 resource on the property defining an inferred resource of 23.6 million tonnes grading 7.6% zinc, 1.5% lead, and 13 grams silver per tonne (at a 5% zinc cut off grade).

Canada Zinc also owns 100% of a dominant land position within the southernmost portion of the Kechika Trough, a total of 78,526 hectares in 233 claims. These claims extend northwestward from the Akie property for a distance of 125 km and overlie areas of black shales and associated mineral occurrences of the highly prospective Upper Devonian Gunsteel formation.