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

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

Yukon Zinc's vision is to provide extraordinary 

return for its shareholders by being the best that it 

can within its community. 

2005 Highlights 

Completed CAD$19 million test mining and drilling program on Wolverine Deposit, Yukon. 

Closed CAD$10 million unit and flow-through financing. 

Completed the purchase of a 60% joint venture interest in the Logan Property from Energold Minerals Inc. 

Entered into socio-economic participation agreement with Kaska First Nation. 

Commissioned Hatch Ltd. to complete bankable feasibility study. 

Selected Macquarie Bank as lead for project debt financing. 

Corporate Profile 

Yukon Zinc Corporation is the renamed Expatriate Resources 

Ltd. and is focused on the exploration and development of 

base-precious metals deposits in the Yukon. It is one of three 

companies comprising the Expatriate Group of Companies 

that includes Yukon Zinc Corporation, Pacifica Resources Ltd. 

and StrataGold Corporation. The companies share some 

common management personnel and benefit from the 

aggregate expertise of the Group. 

Yukon Zinc's core asset is its large land holding in the 

emerging Finlayson Massive Sulphide District in the Yukon, 

that contains the exceptionally high grade Wolverine and three 

other deposits. Yukon Zinc also owns a 60% joint venture 

interest in the Logan deposit in the Rancheria District in 

southern Yukon, and recently acquired 100% interest in the Swift 

property located to southwest of Logan. The Logan and Swift 

properties provide a second exploration and development 

opportunity for Yukon Zinc. 

The Yukon Zinc-Silver Project is one of the few medium to 

large zinc-silver development projects on the Pacific Rim that 

can feed the developing shortfall in zinc supply to China and its 

neighbours. Completion of a CAD$19 million advanced 

exploration, underground development and engineering and 

environmental permitting program forms the basis for 

advancing Wolverine to bankable feasibility study. Should 

Yukon Zinc be able to complete project financing in the first 

half of 2006, Wolverine will transition into development and 

start down a path to production that would commence in late 

2007. 

Yukon Zinc's deposits have a significant resource inventory 

containing 3.4 billion pounds of zinc, 329 million pounds of 

copper, 213 million pounds of lead, 84 million ounces of silver 

and 352,000 ounces of gold, making it one of the more 

attractive junior resource companies. 

Through its current 5.6% interest in Pacifica Resources Ltd. it 

has exposure to a broad portfolio of base metals exploration 

properties in the Americas; the most important of which is the 

Selwyn Project that hosts the giant Howard's Pass zinc-lead 

deposits. 

The Company's management team is well known for its 

expertise in the exploration and development of baseprecious 

metals deposits, particularly those of the 

volcanogenic massive sulphide type. Recent additions to its 

management team add considerable mining and 

environmental management expertise. 

PAGE 2 

YUKON ZINC 2005 ANNUAL REPORT

Exploration Properties 

Yukon Zinc Corporation is 

focused on the development 

of the Wolverine deposit as 

the Yukon’s next significant 

zinc-silver mine and the 

exploration of the Finlayson 

Y U 

K O 

N 

Finlayson Project 

Ice Deposit 

District as Canada’s newest 

Volcanogenic Massive 

Sulphide District. 

Wolverine 

Swift 

Logan 

YUKON ZINC 2005 ANNUAL REPORT PAGE 3

Wolverine Project Development 

The Finlayson District is Canada's newest volcanogenic 

massive sulphide (VMS) district and is centrally located in 

southern Yukon. The District has the potential to become a 

major new mining camp supplying base and precious metals. 

Initial exploration in the mid 1990's resulted in discovery of 

three significant zinc-lead-copper-silver-gold deposits. 

The predecessors to Yukon Zinc acquired a large claim 

holding in the Finlayson District following the discovery by 

Cominco Ltd. in 1994 of the Kudz Ze Kayah deposit. 

Following the discovered of the exceptionally silver-rich 

Wolverine deposit in the fall of 1995 the Wolverine Joint 

Venture acquired a very large claim holding in the District. 

Exploration by Expatriate led to discovery of the Ice copper 

deposit in 1996 and Cominco discovered the GP4F deposit in 

1997. 

Expatriate acquired a 60% joint venture interest in the 

Wolverine deposit from Boliden Westmin (Canada) Limited in 

the spring of 1999 and acquired Atna's joint venture interest in 

2004 giving Yukon Zinc a 100% interest in the Wolverine Joint 

Venture lands. Yukon Zinc now owns a 100% interest in 178 

square kilometers of the former Wolverine Joint Venture 

claims and an additional 517 square kilometres in the 

surrounding lands covering much of the favourable 

stratigraphy in the Finlayson District. 

Exploration continued at low levels in 2005 as the focus shifted 

to development activities. Resumption of exploration is 

planned for 2007. 

WOLVERINE BELT 

The discovery of Wolverine in fall of 1995 spawned the 

Yukon's largest ever staking rush and the initial exploration 

fever resulted in discovery of several new areas of 

mineralization that remain largely untested. 

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. 

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 favourable strata are exposed over a strike length of 

more than 20 kilometers on the Wolverine property with 

multiple occurrences of mineralization. Stratigraphic drilling 

has defined several target areas warranting additional drilling. 

WOLVERINE DEPOSIT 

The Wolverine deposit consists of massive sulphides that 

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. In early 2006, a new resource estimate was prepared 

PAGE 4 


following the completion of an additional 59 drill holes during 

definition drilling of the deposit. The Wolverine deposit is open 

down-dip and holes drilled by Yukon Zinc in 2000 intersected 

massive sulphides on the adjacent WOL claims when they 

were under option from Teck Cominco. 

OTHER MINERALIZED ZONES 

Drilling along the more than 20 km long Wolverine horizon has 

intersected significant mineralization in the Sable Zone 

southeast of Wolverine and in the Fisher Zone 8 kilometres 

northwest of Wolverine. Drilling in the Sable Zone has yielded 

thin intersections of high-grade massive sulphide 

mineralization including 0.6 metres of exceptionally highgrade 

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. 

Drilling on the Fisher zone has intersected massive sulphide 

mineralization and extensive alteration. 

selenium content than in the 

Kudz Ze Kayah or Wolverine 

deposits. 

Yukon Zinc's Goal Net and 

Red Line properties also host 

the basal portion of the Kudz 

Ze Kayah sequence. The 

morphology of the felsic 

volcanic rocks hosting these 

targets and the low selenium 

content in the sulphide 

mineralization suggest that 

they are on the lower GP4F 

Horizon. By analogy to other mining districts, the giant 

deposits in the major VMS districts are generally found on the 

lower most mineralized horizon which is considered “elephant 

country”. 

During 2005, the Company acquired the 

right to purchase a 51% interest in the 

Money claims east of Wolverine. The 

claims cover a relatively unexplored 

copper-rich massive sulphide 

occurrence in mafic volcanic strata that 

overlies Wolverine strata. 

KUDZ ZE KAYAH BELT 

The predominantly felsic volcanic rocks 

hosting Teck Cominco’s 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 and is 

interpreted to be lower in the felsic 

volcanic sequence than Kudz Ze Kayah, 

defining a third lower mineralized 

horizon. Mineralization on this lower 

horizon is characterized by much smaller 


PAGE 5

RED LINE AND GOAL NET NORTH 

The Red Line and Goal Net North areas, located 

approximately 20 km southwest of Wolverine, are contiguous 

with strata hosting the nearby GP4F deposit. Drilling in 1996 

on the Red Line property intersected narrow intervals of 

massive and semi-massive sulphides in three drill holes. Reinterpretation 

of the alteration within the rhyolite strata 

suggests an attractive target down dip to the north of the 

known mineralization. 

GoalNet North Area, Finlayson District Yukon 

Goal Net North 

Geological and geochemical surveys during 1998 

and 1999 defined numerous targets over a large 

area on the Goal Net North property. Drilling on the 

property in 2000 intersected narrow massive 

sulphides associated with a strong multi-element 

soil geochemical anomaly. Drill hole GN00-02 

intersected a 0.73 metre section of semi-massive 

sulphide mineralization assaying 3.0% zinc, 1.85% 

lead, 0.14% copper, 63 g/t silver and 0.2 g/t gold 

within gentle dipping quartz porphyry rhyolite strata. 

The sulphides contain very low levels of selenium. A 

second drill hole intersected a similar thickness of 

semi-massive sulphides 400 metres to the 

southeast. 

Goal Net South 

Drilling continued in 2001, with 9 drill holes 

completed on the Goal Net North property. Drill hole 

GN01-5, located 4 kilometres to the south of hole 

GN00-02, intersected low-grade zinc mineralization 

over a 16 metre interval in argillaceous tuff, 

suggesting the presence of an attractive 

mineralized horizon. The wide spaced holes have 

defined one or more favourable horizons of 

mineralization and alteration over 30 square 

kilometres. More drilling is warranted. 

PAGE 6 


GOAL NET SOUTH AND THUNDERSTRUCK ZONE 

Exploration during 2004 focused on the Goal Net South area. 

Surface mapping located a new zone of massive sulphide in 

the Thunderstruck Zone. The mineralization grades 13.2% 

zinc, 5.2% lead, 1.7% copper, 40.7 g/t silver and 0.06 g/t gold 

over 0.3 metres in a gently south dipping zone. Mapping 

followed the zone for 225 metres before loss in overburden 

cover. Three drill holes were completed before winter 

conditions brought an end to drilling in late November. All 

three drill holes intersected narrow zones of high grade 

mineralization over a length of 500 metres downdip from the 

surface discovery. 

Two drill holes were completed in Thunderstruck during 

summer 2004 program to followup the initial thin massive 

sulphides encountered in three of the 2004 drill holes. These 

large stepout holes continue to intersect strongly altered 

mixed felsic volcanic and sedimentary rocks with anomalous 

zinc mineralization. 

FINLAYSON NORTH AREA 

Re-evaluation of the 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 that warrants drilling. 

Wolverine Deposit Plan with Massive Sulphide Drill Hole Intersections and Thickness Contours 

True Thickness of 

massive sulphide 

0 - 2m 

2 - 6m 

6 - 10m 

10 - 16m 

2 metre 

contours 

>4m contour 

(mine plan) 

FOOT claims 

(Yukon Zinc) 

WOL Claims 

(TeckCominco) 

Claim 

Boundary 

Base of the 

Massive 

Sulphide 

Intersection 

(True Thickness) 

Drill Hole 

Not Completed 

(Historical) 


PAGE 7

ICE 

The wholly owned Ice deposit is located 80 kilometres 

northwest of the Wolverine deposit. An inferred resource of 

4,561,863 tonnes grading 1.48% copper has been estimated. 

Much of the resource is near surface and may be amenable to 

open pit mining. Drill of 8.56% copper over 5.9 metres and 

5.2% copper over 20.5 metres define a small high grade core 

of mineralization that could be mined from a shallow decline 

and provide high-grade copper ore for blending with Wolverine 

ores. 

WOLVERINE RESOURCES AND RESERVES 

2005 Yukon Zinc completed 59 surface drill holes to better 

define the resources in the Wolverine deposit and integrated 

this data with the historical drill hole results to produce a new 

Resource Tonnes Zn Ag Cu Au Pb 

Category (%) (g/t) (%) (g/t) (%) 

Measured 509,000 12.17 292.3 1.15 1.47 1.46 

materials. Mill feed to the mill is projected at 4,462,000 tonnes 

grading 11.25% zinc, 1.07% copper, 1.48% lead, 1.56 g/t gold 

and 327 g/t silver. This feed provides approximately 10 years 

of production. Conversion of the Inferred resources into 

mining reserve would add an additional 3.5 years to the 

production plan. 

TEST MINING AND FEASIBILITY STUDY 

In January 2005, Yukon Zinc began mobilizing equipment 

and materials into Wolverine for the undertaking of a 

CAD$19 million advanced exploration program that consisted 

of detailed definition drilling of the resources, engineering 

and environmental studies, and test mining to support the 

completion of a bankable feasibility and project permitting. 

An important part of the test mining was confirming mining 

conditions as they relate to mining costs and ore recovery. A 

decline was made to the upper part of the Lynx deposit and then 

drifting and cross-cutting on the ore to provide bulk sample 

material and geotechnical information. This work confirmed that 

Indicated 4,002,000 12.03 359.4 1.16 1.71 1.58 

Total 4,511,000 12.04 351.5 1.15 1.68 1.57 

Inferred 1,694,000 12.16 385.1 1.23 1.71 1.74 

National Instrument 43-101 compliant resource estimate. The 

Measured and Indicated resources total approximately 4.5 

million tonnes which are the basis of the mining reserve. There 

is also 1,694,000 tonnes of Inferred resources that need 

additional in-fill drilling to improve their confidence level. The 

Inferred resources are largely within the deeper portion of the 

deposit, and are open across the claim boundary onto the 

WOL claims owned by TeckCominco. 

The resources are not particularly sensitive to cutoff grade and 

the new mining reserves include almost all of the Measured 

and Indicated resources. Mining of the Measured and 

Indicated resources is estimated to include approximately 

18% of external dilution. It is planned to crush this run-of-mine 

material to minus one inch and process it through a dense 

media separation (DMS) plant to remove less dense waste 

rock conditions were better than expected; particularly in the 

periphery of the massive sulphide mineralization. 

In June 2005, Yukon Zinc commissioned Hatch Ltd. to 

undertake a bankable feasibility study. As at March 31, 2006, 

the detailed feasibility study was near completion and 

PAGE 8 


The first sulphide rock through the portal 

entrance comes 10 years plus a week from 

the discovery date of the deposit. 


PAGE 9

undergoing internal and external review to finalize capital and 

operating costs. 

Considerable additional metallurgical testwork was completed 

in 2005 to finalize process design and determine recoveries 

and product quality. This testwork completes a long history of 

metallurgical testwork that commenced in early 1996. 

Early test work identified abnormally high selenium content in 

the test concentrates. In the late 1990's high selenium 

contents were considered a possible impediment to their 

saleability; particularly for the zinc concentrate. The recent 

dramatic increase in selenium price from US$4.00 per pound 

to more than US$50 per pound, combined with the serious 

shortfall in zinc concentrates, has resulted in much increased 

interest in the concentrates. Recenty, all smelters contacted 

have expressed interest in the Wolverine concentrates and it 

is apparent that Wolverine concentrates can be readily sold. 

Discussions are now focused on removal of selenium penalty 

on concentrates and possible price participation in sale of 

recovered selenium. 

The copper and lead concentrates from Wolverine are very 

rich in silver and gold increasing their value and marketability. 

Furthermore, the byproduct credit for silver and gold 

significantly reduces the cash cost of producing zinc. 

In late 2004, Yukon Zinc began the evaluation of application of 

dense media separation (DMS) technology in an effort to 

manage mining dilution to maximize mill efficiency and output. 

The testwork conducted at SGS Lakefield Research indcates 

that the application of this simple gravity technology would 

provide a very effective pre-concentration step. The DMS 

process provides for efficient rejection of less dense waste 

materials from the dense ore. Testwork indicates recovery of 

approximately 98% of base metals and 95% of precious 

metals in the dense “sink” portion together with “fines” 

products. 

Successful application of DMS technology at Wolverine 

should reduce mill process costs on a unit of production basis. 

However, the main benefit will be in mining where it provides a 

means of removing waste material from ores prior to 

processing. The effective removal of waste allows mining to 

maximize recovery of the high-grade ores; particularly, where 

excessive dilution with waste rock occurs due to multiple 

bands of massive sulphide mineralization, hangingwall failure, 

contamination of ore with footwall material and in the mining of 

thin massive sulphide lenses. Application of DMS at Wolverine 

will allow the mining of thinner zones of ore and simple 

upgrading before milling, therefore increasing mining reserves 

and increasing mine life. These thinner ores are commonly 

more precious metals rich, which adds significant additional 

precious metals recovery. 

Planned Development Schedule 

Scoping Study 

Exploration 

Eis 

Test Mining 

Underground Drilling 

Feasibility 

Financing 

Detailed Engineering 

Production Decision 

Procurement 

Site Preparation 

Construction 

Startup 

Operations 

2004 2005 2006 2007 

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 

Jan 

PAGE 10 


APPLICATION OF DMS TECHNOLOGY

The Environmental Assessment Report was filed 

on October 28, 2005, and is now being reviewed 

by the regulators and general public. 

PERMITTING, ENVIRONMENTAL & COMMUNITY AFFAIRS 

Yukon Zinc resumed permitting of Wolverine development in 

summer 2004. The Company submitted its B Water License 

Application in July 2004 and received the license in early 2005. 

The B Water License and the amended Mining Land Use 

Permit are the permits associated with the test mining 

program. 

for issuance of the Mining License in June of 2006. The Type A 

Water License required for operation of a mine and mill is 

expected in October 2006. 

In the fall of 2004, the Company made application for an A 

Water License and submitted a Project Description Report in 

support of a Quartz Mining License application for 

development of Wolverine. The Yukon Government has 

appointed a Project Coordinator to coordinate the review of 

submissions and ensure the smooth working process for 

review of permitting documents. 

The Environmental Assessment Report was submitted in 

October 2005 and has progressed through initial regulatory 

screening and public consultation. The permitting is on track 

In July 2005, the Company completed a socioeconomic 

participation agreement with the Ross River Dena Council. 

The agreement addresses the concerns of local aboriginal 

people whose traditional territory the Wolverine deposit is 

located in and provides for their participation in the economic 

and social benefits of the development and operation of 

Wolverine as a mine. Their support is greatly appreciated and 

the Company looks forward to working with them to maximize 

benefits to their members and our shareholders. 


PAGE 11

development in ore to minimize development costs and to 

achieve almost total recovery of the resource. The mining plan 

provides a large number of working stopes at all times. Natural 

blending of the ores as a result of mining from several areas at 

any one time provides additional benefits. 

The run-of-mine ores will be crushed to minus one-inch and 

fed through the DMS plant to produce approximately 1250 

tonnes per day of mill feed for grinding and flotation to produce 

copper, lead and zinc concentrates. The concentrates will be 

trucked 850 kilometres to the port of Stewart in British 

Columbia for shipment to the smelters of Asia. 

Completion of the bankable feasibility study is scheduled for 

early April. Its completion provides the basis for securing 

project financing. Macquarie Bank was selected in December 

2005 to lead the debt financing and metal hedging activities. 

WOLVERINE PRODUCTION AND DEVELOPMENT PLAN 

The feasibility study is premised on mining 1470 tonnes per 

day by simple cut and fill underground mining methods, 

extracting the entire mineralized zone. Mining will proceed 

with alternating primary and secondary stopes, utilizing paste 

backfill for filling of the primary stopes prior to mining the 

secondary stopes. The mining plan has most of the 

Construction is expected to begin in July 2006, after receipt of 

the Mining License. Assuming the timely completion of project 

financing and commencement of construction, production is 

schedule to start in late 2007. Commissioning of the mine and 

mill is expected to be complete by yearend and full production 

reached by January 2008. 

Internal 

estimates of 

concentrate 

production 

based on 

application of 

dense media 

separation 

(average of first 

three years). 

Production 

Estimates based on 

Average of first three 

Years production 

Zinc 80,160 t 43,850 t 

Copper 15,260 t 3,970 t 

Lead 9,350 t 3,900 t 

Silver (in concentrate) 

Gold (in concentrate) 

1250 tpd Undiluted Ore* 

Concentrate 

Contained 

Metal 

4,430,000 oz 

16,930 oz 

*Metal production forecast on basis of former mine plan, 

and subject to change with new production schedule to be 

based on new resource and mining reserve and optimized 

production plan. 

PAGE 12 


FINLAYSON DISTRICT EXPLORATION & DEVELOPMENT 

2006 EXPLORATION PLAN 

The Finlayson District contains potential for discovery of 

significant additional resources of zinc, copper, lead, silver 

and gold that could form the basis of a long life mining camp. 

The following table provides a summary of the resources of the 

Wolverine and other deposits in the Finlayson District, along 

with Logan. It is expected that over time consolidation may 

occur in the District providing development synergies. 

Yukon Zinc's initial priority is to advance Wolverine to 

development. A parallel but separate initiative is to reinstate 

the exploration discovery track that ended in 1997 due to 

concerns on selenium and low metal prices. Exploration of the 

Finlayson District is planned to resume in 2007. 

The development of Wolverine will provide the new 

infrastructure that will facilitate future development in the 

District. The successful construction and operation of 

Wolverine would provide the base for development of a long 

life sustainable mining future in the Finlayson District. 

Exploration in the Finlayson District during 2006 will be 

modest with a small amount of drilling planned for the Money 

claims and minor work in support of ongoing claim 

assessment. A small amount of continued exploration is 

planned on the Company's claims in the Rancheria District in 

southern Yukon. 

RANCHERIA DISTRICT 

The district hosts numerous carbonate-hosted zinc-lead-silver 

deposits with similarities to the major manto deposits of 

Mexico with its world class silver districts. The Logan deposit is 

unusual as it occurs within a granitic intrusion in this terrane. 

Further west of the platformal carbonate strata are mixed 

volcanic-sedimentary strata that host zinc-copper-lead-silvergold 

occurrences including the Swift property. 

District Reserves and Resources, March 2006 

Wolverine 1 Ice 2 Logan 3 Kudz Ze GP4F 5 Kona 6 TOTAL 

Kayah 4 

CONTAINED 

METAL 

Ownership 100% 100% 60% 100% 100% 100% 

Yukon Zinc Yukon Zinc Yukon Zinc TeckCominco TeckCominco Pacific Ridge 

Tonnes 4,511,000 4,500,000 13,080,000 13,720,000 1,500,000 8,200,000 

Zn % 12.04 5.10 6.0 6.40 

Cu % 1.15 1.48 0.9 0.10 2.1 

Pb % 1.57 1.61 3.10 

Au g/t 1.68 1.38 2.0 0.73 

Ag g/t 351.5 23.7 139.2 90 

Zn pounds 1,197,372,000 0 1,470,644,500 1,814,826,700 211,641,600 4,694,484,800 

Cu pounds 114,367,000 146,825,300 0 272,224,000 3,306,900 393,521,000 930,244,200 

Pb pounds 156,136,000 0 0 486,978,000 102,513,900 745,627,900 

Au ounces 243,600 0 0 608,720 96,450 192,000 1,140,770 

Ag ounces 50,979,000 0 9,996,000 61,401,200 4,340,300 126,716,500 

1. Wolverine Resource ( Measured and Indicated ) Zukon Zinc Corporation, January 10, 2006; also 1,694,000 tonnes of Inferred resources 

grading 12.16% zinc, 1.23% copper, 1.74% lead, 1.71 g/t gold and 385.15 g/t silver. 

2. Ice Indicated Resource Derry, Michener, Booth and Wahl, 1998. 

3. Logan Inferred Resource, Hatch Associates Ltd, March 24, 2004. 

4. Kudz Ze Kayah Indicated Resource, Hatch Associates Ltd. November 2000 Prefeasibility Study Report 

5. GP4F Geological Resource (Inferred) Cominco Ltd. 1999 Annual Report 

6. Kona Geological Resource, Pacific Ridge Exploration Ltd. 


PAGE 13

LOGAN DEPOSIT 

In April 2003, Yukon Zinc entered into an agreement with 

Energold Minerals Inc. to acquire a 60% interest in the Logan 

deposit located in south central Yukon. Exploration in the late 

1980's defined an Inferred resource of 12,300,000 tonnes 

grading 6.17% zinc and 26 g/t silver in the Main zone of the 

Logan deposit (Stammers, 1989). 

The Logan deposit consists of fracture and vein hosted zincsilver 

mineralization within a granitic intrusion. The 

mineralization is up to 90 metres thick making it attractive for 

open pit mining. A re-estimation of resources using a block 

model method was completed by Hatch Associates Ltd. in July 

SWIFT PROPERTY 

The recently acquired Swift Property is situated approximately 

55 kilometres southwest of Logan and covers a 20 kilometre 

long belt of anomalous soil geochemistry. Numerous massive 

sulphide occurrences and boulders have been identified in till. 

2005. Hatch estimated an Inferred resource of 13,080,000 

tonnes grading 5.1% zinc and 23.7 g/t silver in the Main Zone. 

Previous exploration has also defined low grade zinc 

mineralization in the East and West Zones that require more 

drilling to better define resources. Drilling in the deeper parts of 

the Main Zone includes intersections of up to 9 metres grading 

10.07% zinc and 65.2 g/t silver that could be amenable to 

underground mining. The deposit remains largely unexplored 

at depth and along strike. 

The Logan deposit provides an attractive base feed for a zinc 

mine. Yukon Zinc is evaluating opportunities for discovering 

additional higher grade mineralization to add to the resource 

base at Logan. 

Massive sulphide and oxide mineralization in the Window/Dan 

showing occurs defines at least two distinct units within a 

complex sequence of phyllite, schist, calc-silicate rocks, and 

marble suggestive of stratabound mineralization. Drill results 

from hole SR97-06 include 1.2 metres grading 14.6% zinc and 

0.2% copper and 3.62% zinc over 3.6 metres. This second 

interval includes 0.87 metre intercept grading 13.4% zinc and 

0.1% copper. 

These and other showings suggest that the mineralization is 

characterisitic of a volcanogenic massive sulphide deposit 

environment with has potential for higher grade mineralization 

that could be developed in conjunction with the Logan deposit. 

PAGE 14 


PACIFICA ADVANCING A GIANT ZINC-LEAD DEPOSIT 

After distributing the Pacifica shares received in the plan of 

arrangement to its shareholders in December 2004, Yukon 

Zinc purchased 4.8 million shares of Pacifica providing it the 

initial seed capital to meet listing requirements of the TSX 

Venture Exchange. The plan of arrangement provided for the 

District. It undertook $3.5 million in exploration during summer 

2005 and is aggressively advancing the exploration and 

development of the property. The district scale distribution of 

mineralization indicates a very large stratabound shalehosted 

zinc-lead deposit with potential to exceed 2 billion 

tonnes of mineralization, which if realized, would make it the 

largest zinc-lead deposit in the world. 

sale of Expatriate's claims in the Selwyn Basin in the Yukon, 

Yava property in Nunavut, Tillex in Ontario, Blue Moon in 

California and several properties in Chile. 

Yukon Zinc's $1.2 million investment in Pacifica provided 

initial working capital. Pacifica has recently completed $20 

million of equity financing and has working capital of $21 

million. Yukon Zinc's interest in Pacifica has been diluted to 

5.6% of the issued shares. It also has a warrant for an 

additional 2.4 million shares that expires in late 2006. 

In April 2005, Pacifica acquired the giant Howard's Pass 

deposit in the Selwyn Basin area of eastern Yukon. Through 

staking it acquired additional lands and now owns 40km of the 

NITROSYL TECHNOLOGIES CORPORATION 

Nitrosyl Technologies Corporation, established to hold the 

technology assets acquired from Boliden Westmin Limited. 

Nitrosyl owns 75% of Catalytic Sulphur Corporation that holds 

two US patents and numerous international patents for a novel 

new process for making sulphuric acid and sulphur gascleaning. 

Nitrosyl also owns 50% of Nitrox Metals Corporation 

that holds two US patents and other international patents for 

leaching of zinc and copper in concentrates. Nitrosyl has 

options to increase its interest to 90% in each of the private 

companies. 

YUKON ZINC 2005 ANNUAL REPORT PAGE 15

CORPORATE 

INFORMATION 

Capital Structure 

Symbol: YZC, TSX Venture Exchange 

Issued*: 245,790,654 

Fully Diluted*: 290,240,885 

*as at April 19, 2006 

Major Shareholders 

CMP Resources 11.93% 

Geologic Resources Partners 10.47% 

NCE (Sentry Select) 7.59% 

Mavrix 5.42% 

Auditors 

De Visser Gray 

Chartered Accountants 

Vancouver, B.C., Canada 

Directors and Officers 

President, CEO and Director: Dr. Harlan Meade 

Chairman and Director: Mr. George Stevens 

Director: Mr. Robert Yeoman 

Director: Mr. Walter Segsworth 

Director: Mr. Lorne Anderson 

CFO, Vice-President Corporate Development and Director: Mr. Robert McKnight 

Secretary: Mr. Barry Finlayson 

Vice President, Exploration: Mr. Jason Dunning 

Vice President, Mining: Mr. Richard Goodwin 

Vice President Environmental and Community Affairs: Ms. Pamela Ladyman 

Controller: Ms. Annikki Puusaari 

Solicitors 

Lang Michener LLP, 


Transfer Agent 

Pacific Corporate Trust Company 


Subsidiaries 

Nitrosyl Technologies Corporation 

Finlayson Minerals Corporation 

Investor Relations 

info@yukonzinc.com 

Conversions 

1 hectare (ha) = 10,000 square metres (m2) or 2.471 acres (a) 

1 tonne (t)= 1.10231 short tons (ton) 

1 troy ounce (oz)= 31.10348 grams (g) 

1 gram/tonne (g/t)= 0.02917 troy ounce/short ton (oz/ton) 

1 metre (m)= 39.37 inches (in) or 3.281 feet (ft) 

1 kilometre (km)= 0.621 miles (mi) 

1 kilogram (kg)= 2.20462 pounds (lb) 

1 ppm= 1 g/t 

ppm = parts per million 

ppb = parts per billion 

PAGE 16 


Z INC MARKETS POISED TO OUTPERFORM OTHER BASE METALS 

After more than 25 years of under performance, zinc is poised 

to outperform due to a chronic supply imbalance. Zinc 

inventories on the London Metal Exchange, concentrate 

buildup at mine sites and hidden metal inventories, estimated 

to total approximately 1.5 million tonnes at their peak in mid 

The expected depletion of zinc metal reserves by the end of 

2006 has led to strong price speculation by hedge funds and 

others, such that zinc has outperformed all of the other base 

metals in the first quarter of 2006. This out performance is 

expected to continue for the remainder of 2006. 

Tonn e s (000) 

11,000 

10,500 

10,000 

9,500 

9,000 

2003, have declined to about 270,000 tonnes by mid April 

2006. 

World Zinc Supply and Demand 

2002 2003 2004 2005E 2006F 

Supply 

The remarkable drawdown of zinc inventories reflects a 

significant supply gap. The production deficit since 2004 is 

forecast to continue through at least 2007. 

Demand 

The decline in LME inventories has fueled a rapid increase in 

zinc price from US$0.32 in 2002 to US$1.46 on April 19, 2006. 

Traditionally, high metal prices have resulted in increased 

production from existing mines and start-up of new mines. 

Close examination of current reserves for Western World 

production illustrates that 40% could be lost by end of 2008 if 

new reserves are not found. This casts a shadow of 

uncertainty over current production, as many of these mines 

are old and tired and reserve addition will be difficult and 

expensive. The future of zinc markets is therefore highly 

dependent on new mines, many of which are facing delays 

due to permitting and financing problems. Although there have 

been new mine construction announcements they are quite 

small and not keeping up with recent annual global increase in 

consumption of approximately 600,000 tonnes. The lack of 

quality new mine projects reflects 30 years of under 

investment in zinc exploration and development. 

Recently, a spokesperson for TeckCominco, stated that the 

World could loose 1.4 million tonnes of current zinc mine 

production by 2011. The affect of this on forecast World Zinc 

Production suggests that zinc supply will struggle for many 

years and support a sustained period of high zinc prices. 

140 

135 

Metal Price Performance 

Zinc 

100 

90 

14,000 

13,500 

World Zinc Concentrate Supply/Demand 

CHR Metals 

Oct 2005 

130 

80 

13,000 

125 

120 

115 

110 

Copper 

Nickel 

105 

100 

Aluminum 

95 

90 

Jan-06 Feb-06 March-06 

70 

60 

50 

40 

30 

20 

10 

0 

% i ncrease fr o m Jan- 

06 

12,500 

12,000 

11,500 

11,000 

10,500 

10,000 

9,500 

2000 

2004 

2005 

2006 

2007 

Base Production 

2008 

Supply-Demand Gap 

Teck Cominco forecast 

loss of 1.4M tonnes of 

current production by 2011 

2009 

0210 

Likely Additions 

2011 

2012 

Most Likely 

Scenario 

Zinc Concentrate Demand 

Base + Likely

A ZINC-SILVER MINE IN THE MAKING 

Yukon Zinc Corporation 

701 - 475 Howe Street 

Vancouver, British Columbia 

Canada, V6C 2B3 

Telephone: 604. 682. 

5474 

Facsimile: 604. 682. 

5404 

International Toll Free: 800 . 8682 . 5474 

www.yukonzinc.com

Yukon Zinc AR 05 - Yukon Zinc Corporation

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