Yukon Zinc AR 05 - Yukon Zinc Corporation

President’s Message
2005 was a year of significant accomplishment for Yukon
Zinc Corporation as it financed and completed extensive
development work on Wolverine to facilitate the completion
of a bankable feasibility study.
The early part of 2006 will be an exciting time for
shareholders as feasibility results become
known and project financing is secured. It has
been a long time since a junior company has
advanced a base metal project from discovery to
production in Canada. Yukon Zinc appears
poised to stand on that threshold shortly.
In preparation for this transition from exploration
to development and production, your company
has expanded its management team to meet the
challenges ahead, and more additions are
planned as we continue to build management
experience and capacity.
The Company is very pleased to have concluded
a Socioeconomic Participation agreement with
the Ross River Dena Council and its members.
This historic agreement provides for their direct
participation in the economic and social benefits
of the development and operation of the
Wolverine project as a mine and their sharing in
the growth of the Company as a shareholder.
These are major accomplishments that pave the
way for strong cooperation between Yukon Zinc
and the First Nations people whose traditional
territory includes the Wolverine deposit.
The December 2004 reorganization of Yukon
Zinc as the successor to Expatriate Resources
Ltd., and the formation of Pacifica Resources
Ltd., has been successful in creating significant
value for shareholders. Yukon Zinc retains an
5.6% interest in Pacifica and has a warrant to
acquire additional shares in this fast growing
company.
As 2005 came to a close, zinc became the
darling of the market and the price of zinc
increased rapidly and broke through its old high
of US$0.91 per pound set in 1989. Zinc price
rose to US$1.09 per pound, in early February
2006 before correcting, and has now risen to
even higher prices. The rapid rise in the zinc
price is due in part to the sharp decline in zinc
inventories on the London Metal Exchange. All
forecasts are for a significant supply deficit for at
least 2006 and 2007, indicating that zinc prices
are likely to remain high for the next several
years. This creates a very favourable
environment for financing the development of
Wolverine.
In December 2005, Yukon Zinc engaged
Macquarie Bank as lead advisor for project
financing. Due diligence is well underway and on
track for advancing project financing by mid
2006, paving the way for a production decision.
With these positive developments achieved,
Wolverine should be in production in late 2007
as the Yukon's first new zinc-silver mine in many
years.
On behalf of the Board and your management
team I wish to thank all of our shareholders for
their support during the past year. 2006
promises to be a very exciting year for
shareholders as we ready Wolverine for a
production decision and transition towards a
producing mining company.
Harlan Meade, President and CEO