September 14, 2016

Amended Technical Report to be filed

CZN-TSX
CZICF-OTCQB

VANCOUVER , Sept. 14, 2016 /CNW/ - Canadian Zinc Corporation (TSX: CZN; OTCQB: CZICF) reports that, as part of its ongoing financing and concentrate marketing activities for its 100% owned Prairie Creek lead, zinc, silver mine in the Northwest Territories , the Company has identified an error in the life-of-mine economic model included in its 2016 Preliminary Feasibility Study.

The error caused an overstatement in gross smelter revenue to $3.7 billion from $3.3 billion , over the projected 17-year life of the Prairie Creek Mine. The gross metal value of production (using the same assumptions) remains unchanged. The overestimation resulted from the inclusion in the economic model of smelter revenue for bi-product metals in primary concentrates that may not be payable, depending on final concentrate contract terms.

All other inputs into the economic model and all technical aspects of the 2016 Preliminary Feasibility Study ("PFS") remain unchanged, including all mineral resource and reserve estimates, mining plans and production rates and estimates of capital and operating costs and assumptions on concentrate treatment charges and penalties. However, royalties and taxes payable also reduce by $153 million over the projected life of the mine, partially offsetting the impact of lower revenue.

"It is important to note that the error in the economic model has no impact on reserve estimates, metal production or mine life and, notwithstanding the reduction in revenue, the revised financial results remain strongly positive and continue to demonstrate a robust project with undiscounted cumulative cash flow of $710 million at metal prices of US$1.00 /lb for zinc and lead and US$19 /oz for silver", said John Kearney , Chairman and Chief Executive. "The revised financial model yields a Pre-tax NPV of $284 million at an 8% discount rate, with an IRR of 23%, and a Post-tax NPV of $155 million , with a post-tax IRR of 18%."

Revised Financial Analysis

The net effect on projected cash flows of the adjustment in smelter revenue, with all other factors and inputs remaining unchanged, at metal prices of US$1.00 /lb for zinc and lead and US$19 /oz for silver and Cdn/US exchange rate of 1.25:1, results in an undiscounted cumulative cash flow of $710 million at the base case with a Pre-tax Net Present Value ("NPV") of $284 million , using an 8% discount rate, with an Internal Rate of Return ("IRR") of 23% and a Post-tax NPV of $155 million , with a post-tax IRR of 18%, compared to a NPV of $509 million using an 8% discount rate, with an IRR of 32%, and a Post-tax NPV of $302 million , with a Post-tax IRR of 26%, as originally reported in the PFS. The pre-tax payback period increases from three years to four years out of the projected 17 year mine life.

The table below shows revised Pre and Post-tax NPVs, at 5% and 8% discount rates, and Internal Rates of Return (IRR), all at a Cdn/US exchange rate of 1.25:1 and demonstrate the sensitivity and leverage of the Prairie Creek Mine to various metal price scenarios.

An Amended Technical Report in accordance with National Instrument 43-101 Standards for Disclosure for Mineral Projects ("NI 43-101") will be prepared and filed on SEDAR as soon as possible as part of which the economic model will be rechecked again.

The summary of the impact of the overstatement in the calculation of smelter revenue in the economic model presented in the 2016 Preliminary Feasibility Study and the summary of the revised financial cash flow model reported in this news release are preliminary and subject to further review, restatement and/or confirmation in the Amended Technical Report.

2016 Preliminary Feasibility Study
The 2016 PFS and the Prairie Creek Property Prefeasibility Update NI43-101 Technical Report (filed on SEDAR on May 12, 2016 ) were completed by AMC Mining Consultants ( Canada ) Ltd., ("AMC") and Tetra Tech Inc. with input from Canadian Zinc personnel and consultants. Canadian Zinc personnel were primarily responsible for the financial model and inputs and the financial analysis and for Section 22 "Economic analysis" of the Technical Report.

The 2016 PFS was undertaken to incorporate the increased mineral resources and mineral reserves, construction and use of an all season road, advanced engineering details and updated capital and operating costs.