Lundin Mining Company (fkaLMC)

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YZCCF -- Yukon Zinc Corp...could be a reason for the decline...hog

Yukon Zinc Corporation: Yukon Zinc Revises Feasibility Study

Vancouver, British Columbia CANADA, May 17, 2006 (M2 PRESSWIRE via COMTEX) -- Yukon Zinc Corporation (YZC - TSX Venture), announced the results of a feasibility study on its Wolverine Property on May 9, 2006. In the normal course of preparation of the 43-101 report on the feasibility study a computational error was discovered in the mining portion of the operating costs that were estimated by Yukon Zinc. The result of amending this error is to increase the mining cost from $24.93 to $35.18 per tonne and overall operating costs per tonne mined from $90.26/tonne to $100.51 per tonne.
Yukon Zinc is undertaking a thorough review of all aspects of the feasibility study, which is expected to take several months.

The effect of the change in operating costs will reduce pre-tax cashflows in the feasibility study by $5.5 million per year before any other effects. Yukon Zinc will provide a more detailed review of any other impacts of the change in operating costs as those numbers are confirmed. For the moment, the sensitivity table in the May 9, 2006 news release is being retracted due to the changes in the base case.

The estimated effect on after-tax cashflows is as follows for the differing price scenarios used in the feasibility study.

Annual After Tax Cashflow During First Five Years Of Production (CAD$ millions)

2008 2009 2010 2011 2012

Current Prices old $101.1 $90.5 $81.7 $56.4 $33.2 new $95.6 $85.9 $76.3 $52.5 $26.2

Forward Prices old $80.2 $59.1 $45.7 $39.4 $11.1 new $74.6 $54.2 $40.9 $34.6 $10.4

Moderate Prices old $53.6 $49.3 $43.0 $42.8 $40.6 new $48.1 $44.2 $38.1 $37.9 $35.8

Base Case old $34.2 $30.8 $26.3 $25.6 $22.1 new $28.7 $25.3 $21.1 $20.3 $17.0

The new higher mining costs will increase cumulative life-of-mine operating costs on a pre-tax undiscounted basis by approximately $53.4 million. Assuming no further project cashflow changes (positive or negative), the pre-tax effect of the increase in estimated operating costs is a reduction in project NPV at 10% of $27.1 million. The reduction in project NPV at 10% on an after-tax basis is estimated to range between $17 and $21 million depending on the metal price scenario used. This range is due to the differing benefits of tax sheltering derived from the increased operating costs for each metal price scenario. The effect of the higher operating costs, if any, on the available mining reserve has not yet been thoroughly assessed but at present is not expected to be material.

Note: the table of Wolverine project economic results below has been re-stated to reflect the estimated effect of the higher operating costs.

PRICE SCENARIOS

"Base Case" "Moderate "Forward "Current Prices" Prices" Prices" (April 28/06)

NPV 0% aft-tax C$000s $28,156 $144,413 $61,826 $402,856

NPV 8% aft-tax C$000s ($40,953) $32,767 $611 $187,466

NPV 10% aft-tax C$000s ($50,700) $15,757 ($9,244) $153,811

Internal Rate of Return (pre-tax) % 3.0% 15.7% 10.5% 37.2%

Internal Rate of Return (aft-tax) % 2.5% 12.3% 8.1% 29.8%

Payback Period Yrs 8.5 4.9 4.0 2.4

Annual Cashflow (3 yr avg) C$000s $25,012 $43,994 $58,141 $89,650

Cautionary Note

Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995 and similar Canadian legislation: Except for the statements of historical fact contained herein, the information presented contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and similar Canadian legislation. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes", or variation of such words and phrases that refer to certain actions, events or results to be taken, occur or achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Yukon Zinc to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the actual results of exploration activities, actual results of reclamation activities, the estimation or realization of mineral reserves and resources, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, availability of capital required to place the Wolverine property into production, conclusions of economic evaluations, acceptance of the Hatch feasibility study by lending institutions, changes in project parameters as plans continue to be refined, future prices of commodities, possible variations in ore grade or recovery rates, efficacy and efficiency of the DMS process, failure of plant, equipment or processes to operate as anticipated, accidents, labor disputes and other risks of the mining industry, delays in obtaining governmental approvals, permits or financing or in the completion of development or construction activities, Yukon Zinc's hedging practices, currency fluctuations, title disputes or claims limitations on insurance coverage and the timing and possible outcome of pending litigation, as well as those factors discussed under "Risk Factors" in Yukon Zinc's Annual Information Form for the year ended December 31, 2005. Although Yukon Zinc has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained herein and in Yukon Zinc's other filings incorporated by reference.

Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources: This press release uses the terms "Measured", "Indicated" and "Inferred" Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.

CONTACT: Dr. Harlan Meade, President and CEO Tel: [phone] Tel: [phone] Fax: [phone] e-mail: [e-mail] WWW: http://www.yukonzinc.com

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