Yukon Zinc AR 05 - Yukon Zinc Corporation

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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
Overview 95 M 85 M Trading Volume 93.3M $100 M $90 M Market Capitalization at Year-end 89.3M 75 M $80 M s M illio ns Sha re 65 M 55 M 45 M 42.0M s M illi ons Doll ar $70 M $60 M $50 M $40 M $47.4M 35 M 30.8M $30 M $26.4M 25 M $20 M 15 M 3.99M 7.84M $10 M $2.1M $5.5M 0 M 2001 2002 2003 2004 2005 $0 M 2001 2002 2003 2004 2005 $20 M Equity and Convertible Debenture Financings* $20.0M $30 M Exploration Expenditures $18 M $16 M 15.5M $25 M Mill io ns o f Dolla r s $14 M $12 M $10 M $8 M $6 M rs M ill ions f Do lla $20 M $15 M $10 M 20.3M $4 M $3.68M $5 M $2 M $1.43M $0.355M $0 M $0 M 2001 2002 2003 2004 2005 * Excludes $7.2M raised for StrataGold Corporation in 2003 and $2.1M raised for Pacifica in 2004. $4.30M $2.44M $0.53M $0.30M 2001 2002 2003 2004 2005 Mi ll ions o f Pou n ds 9000 M 7500 M 6000 M 4500 M 3000 M 1500 M 0 M 1191 M 1191 M Zinc Resources Ownership 1936 M 2621 M 7300M 2001 2002 2003 2004 2005 Silver Resources Ownership Acquisitions have provided a steady growth in zinc and silver resources and reserves (includes indirect interest in Pacifica zinc resources). s M illi ons of nce 85M 80M 75M 70M 65M 55M 45M 35M 25M 15M 0 M 45.3M 45.3M 51.3M 80.7M 80.7M 2001 2002 2003 2004 2005 YUKON ZINC 2005 ANNUAL REPORT PAGE 1
Page 4 and 5: Yukon Zinc's vision is to provide e
Page 6 and 7: Wolverine Project Development The F
Page 8 and 9: RED LINE AND GOAL NET NORTH The Red
Page 10 and 11: ICE The wholly owned Ice deposit is
Page 12 and 13: undergoing internal and external re
Page 14 and 15: development in ore to minimize deve
Page 16 and 17: LOGAN DEPOSIT In April 2003, Yukon
Page 18 and 19: CORPORATE INFORMATION Capital Struc
Page 20: A ZINC-SILVER MINE IN THE MAKING Yu

Yukon Zinc AR 05 - Yukon Zinc Corporation

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