Mining Explorers 2011: Zazu Metals Corp.

TSX: ZAZ

Chairman and CEO: Gil Atzmon

Vice President, Corporate Development: Matt Ford

Vice President, Exploration: Joe Britton

Analysts predict growing demand in Asia markets coupled with the expected closure of several of the world's largest zinc-producing mines will result in a global shortage of the industrial metal in the coming years. Zazu Metals Corp. hopes zinc mined from its Lik Project located about 22 kilometers (14 miles) northwest of Teck Resources Ltd.'s Red Dog Mine, will help fill this forecasted shortfall. "A consolidation in the zinc industry is definitely under way," said Zazu Metals CEO Gil Atzmon. "Zazu's goal is to have the Lik deposit in operation in time to deliver into this supply deficit."

The ore-body at Lik is divided into two deposits separated by a fault - the near-surface Lik South and the deeper Lik North.

Lik South has an indicated resource of 18.74 million metric tons grading 8.08 percent zinc, 2.62 percent lead and 52.8 grams per metric ton silver; plus an inferred resource of 1.23 million metric tons grading 6.80 percent zinc, 2.12 percent lead and 35 g/t silver.

Lik North contains an additional inferred resource of 5.18 million metric tons grading 9.65 percent zinc, 3.25 percent lead and 51 g/t silver.

A preliminary economic assessment completed by Scott Wilson Roscoe Postle Associates Inc. in 2010 indicates that mining the near-surface Lik South deposit is viable.

The PEA envisions a 5,500 ton-per-day mine and mill with an 8-year mine life.

The engineering firm estimated life-of-mine operating costs of US$75 per metric ton.

The base case assumes metal prices of US$1.00 per pound for zinc, US80 cents per pound for lead and US$16 per ounce for silver.

This demonstrated a pre-tax internal rate of return of 9 percent.

The study identified multiple areas where the project economics could be improved.

JDS Energy and Mining, Inc., mine development specialists with experience in northern climates, has continued to streamline the mine plan as it completes the feasibility study for the Lik deposit.

Hammering out transportation infrastructure is a key component for a prefeasibility study.

Zazu has signed an agreement with the state-owned Alaska Industrial Development and Export Agency to complete due diligence for transportation infrastructure needed to support a mine at Lik.

Under the agreement with the explorer, AIDEA is evaluating its possible role in financing a spur road connecting the Lik deposit to the Delong Mountain Transportation System, a 52-mile-long haul road and port facility that currently handles the concentrate produced by partners Teck Resources Ltd. and NANA Regional Native Corp. at Red Dog.

Zazu will reimburse AIDEA for its cost of conducting prefeasibility activities as part of the evaluation processes.

Teck is a 50 percent joint venture partner at Lik Project.

Zazu has the exclusive right to increase its stake to 80 percent by spending US$25 million on the project by 2018.

Lik has drawn the attention of Lundin Mining, a diversified base metals mining company with operations in Portugal, Sweden, Spain and Ireland.

In February, Zebra Holdings and Investments S.À.R.L, a company owned by a trust settled by the late Adolf H. Lundin, invested C$7.97 million to buy a 19.99 percent stake in Zazu.

With sufficient money in the bank, Zazu launched an aggressive program in June to advance a feasibility study on Lik South and complete drilling on Lik North in 2011.

In early August Zazu received the results from the first two holes of the 2011 program, both drilled at the northern end of the Lik South deposit.

Starting at a depth of 54.3 meters, DDH 205 cut 25.8 meters averaging 7.06 percent zinc, 2.63 percent lead and 20.9 g/t silver.

A second intercept in DDH 205 cut 28.2 meters averaging 4.1 percent zinc, 5.65 percent lead and 38.4 g/t silver from 98.5 meters.

DDH 206 intersected 21.5 meters averaging 10.8 percent zinc, 2.59 percent lead and 46.7 g/t silver.

In September, Zazu released assay results from four holes drilled in the area where Lik South deposit transitions to the deeper Lik North.

The best intercept of the batch, in hole DDH 210, was 16.8 meters averaging 11.2 percent zinc, 3.02 percent lead and 70.1 g/t silver, from a depth of 84.2 meters.

Cash and Short-term Deposits: US$10.29 million (June 30, 2011)

Working Capital: US$9.56 million (June 30, 2011)

Market Capitalization: C$53.43 million (Sept. 28, 2011)

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Ph: 604-878-9298 • Fax: 604-568-9298