The Finlayson District is Canada's newest massive sulphide district. It has the potential to become a major new mining camp supplying base and precious metals. The mid-Paleozoic volcanic and sedimentary rocks hold the promise of hosting large tonnages of high-grade massive sulphides. Similar volcanogenic massive sulphide districts have been very productive in Canada and abroad, and have enjoyed long histories of discovery and development.

FINLAYSON DISTRICT

DEPOSITS IN THE FINLAYSON

The initial discovery of the Kudz Ze Kayah deposit was made by Cominco Ltd. in 1994. This was followed by the discovery of the Wolverine deposit in 1995 by Westmin and Atna. These discoveries led to the largest staking rush in the history of the Yukon. Yukon Zinc discovered the copper-rich Ice massive sulphide deposit in 1996 and Cominco discovered the GP4F deposit in 1998. Drilling by Yukon Zinc in 2000 made a new discovery of massive sulphides on the Goal Net Property immediately south of the GP4F deposit.

Yukon Zinc (Expatriate) acquired a 60 percent interest in the Wolverine Joint Venture from Boliden Westmin (Canada) Limited in 1998. (This became a 100% interest in May 2004.) In March 2000, Yukon Zinc negotiated a purchase agreement with Cominco Ltd to acquire a 100% interest in the Kudz Ze Kayah and GP4F deposits and surrounding mineral lands. In September 2001, the agreement to purchase Kudz Ze Kayah was terminated.

Yukon Zinc currently owns 100% interest in more than 3500 claims including a 100% interest in the Wolverine deposit in the Finlayson District. The claims cover more than 750 square kilometres and much of the favourable stratigraphy in the Finlayson District.

The Wolverine deposit is a classic volcanogenic massive sulphide (VMS) deposit hosted in felsic volcanic and argillaceous sedimentary rocks of probable mid-Paleozoic age. The massive sulphides occur in two tabular semi-continuous lenses. Drilling from 1995 to 1997 defined a resource in all categories (Westmin Resources Ltd., 1998) of 6,237,000 tonnes grading 12.66% zinc, 1.55% lead, 1.33% copper, 371 g/t silver and 1.76 g/t gold. Drilling in 2000 and 2004 have provided additional definition of the deposit.

Along strike of Wolverine is the Sable Zone, which consists of thin intersections of high-grade massive sulphide mineralisation. The discovery hole intersected 0.6 metres of exceptionally high-grade massive sulphides grading 13.3% zinc, 0.8% lead, 0.8% copper, 416 g/t silver and 1.9 g/t gold. The mineralization is similar to that forming the periphery of the Wolverine deposit.

The predominantly felsic volcanic rocks hosting the Kudz Ze Kayah deposit are interpreted to be slightly older than those hosting the Wolverine deposit. The GP4F deposit occurs approximately five kilometres to the southeast of Kudz Ze Kayah. The GP4F deposit appears to be lower in the felsic volcanic stratigraphy than the Kudz Ze Kayah deposit and may therefore be defining a lower horizon. Importantly, mineralization on this lower horizon has much lower selenium content than in the Kudz Ze Kayah or Wolverine deposits.

The initial discovery of semi-massive sulphides in 1999 led to drilling of 13 drill holes in 2000 and 2001 in the Goal Net North area. A new occurrence of massive sulphide mineralization was found in the Goal Net South area during summer 2004 mapping, and has been named the Thunderstruck discovery.

The Goal Net North and South areas cover an area of about 10 by 16 kilometres hosting a thick sequence of felsic volcanic and volcaniclastic rocks correlated with the lower portion of the Kudz ze Kayah belt. The large number of zinc occurrences suggest potential for significant accumulations of massive sulphide mineralization.

Re-evaluation of Yukon Zinc's Box claims during summer 2002, defined an attractive target for drilling. An area of strong acid leaching of rhyolite strata has been identified within an extensive lead geochemical anomaly.