Corazon Mining Ltd T.CZN

Dundee Capital Markets: Buy rating and $0.60 target for CZN

[shakerman640]

According to Dundee Capital Markets:

https://personal.crocodoc.com/pldGBaa

Canadian Zinc Corp.

(CZN-T: C$0.21)

March 26, 2015

BUY, Speculative Risk

Dundee target: $0.60

CZN Increases Mineral Resource Tonnage At Prairie Creek

This morning CZN announced a Mineral Resource update for its Prairie Creek Zn-Pb-Ag mine in the Northwest Territories. Total Measured and Indicated resource tonnages increased to 6.6 million tonnes (up ~21% from 5.4M tonnes) at a combined grade of 20% Zn-Pb and 150 g/t Ag (previously ~21% Zn-Pb and 160 g/t Ag). Indicated Resource increases were reported in both the Main Quartz Vein and Stockwork Zone. The current underground diamond drilling program at Prairie Creek is designed to convert part of CZN's Inferred Mineral Resources into the Indicated category for potential inclusion in the updated Pre-Feasibility Study due for release towards the end of Q2/2015.

Higher tonnages, lower grades: The new Mineral Resource base was estimated using a new, more detailed geological model developed over the course of the past year, including results from additional drilling and underground sampling not accounted for in the previous estimate. The changes to the Prairie Creek Mineral Resource base are as follows:

• Measured: 1.3M tonnes at 13.2% Zn, 11.6% Pb and 211 g/t Ag

• Indicated: 5.3M tonnes at 9.5% Zn, 9.0% Pb and 131 g/t Ag

• Measured and Indicated: 6.6M tonnes at 10.2% Zn, 9.5% Pb and 146 g/t Ag

Total Measured and Indicated resources increased by approximately 18% to 6.6M tonnes (from previous 5.4M tonnes). Measured and Indicated resource grades decreased 6% for Zn, 7% for Pb and 8% for Ag.

Underground drilling program: Diamond drilling program is underway, with the goal of upgrading part of the Mineral Resource from Inferred to Indicated classification. Additional Indicated Resources could be included in a new mine plan to support longer mine life.

Updated Pre-Feasibility should be out by end of Q2/15: Following the results of the drill program, a new pre-feasibility study for Prairie Creek will be released. Management noted that the study should be completed by the end of Q2/15.

Bottom Line: We are reiterating our BUY rating and our target of $0.60/share based on a ~0.8x multiple (unch.) to our NAV of $0.76/share. Canadian Zinc offers exposure to potential near-term zinc and lead production from its Prairie Creek project located in the NWT. Prairie Creek has the advantage of having significant pre-existing infrastructure and, as such, has low initial capex inflation risk. We believe that, given the strong underlying fundamentals for zinc and lead, CZN provides potential upside as a high grade partly undeveloped zinc-lead deposit and should be in line for a market re-rating now that all permits are in hand. We believe CZN's Prairie Creek project could begin operations by 2017, pending financing.