Selwyn Resources completes acquisition of Scotia mine, to restart operations

Selwyn Resources (CVE:SWN) announced Wednesday that it has completed its $10 million acquisition of ScoZinc, which owns the Scotia lead-zinc mine in Nova Scotia.
Selwyn said it plans to shortly raise US$30 million of debt financing to provide US$20 million in capital to restart the Scotia Mine, with the remainder to be used for working capital.
A new mine plan and economic model is currently in preparation for the Scotia Mine, based on a recent NI 43-101 compliant resource estimate.
Operations are planned to resume at the Main deposit, with efforts to expand reserves, and the company also intends to expand the mine life with the development of the Northeast and Getty deposits.
At a base case 1.5% zinc equivalent cut-off value, the Main Zone is now projected to have measured and indicated resources of 2.89 million tonnes, grading 4.2% zinc and 1.9% lead, plus an inferred resource of 1.57 million tonnes, grading 3.3% zinc and 1.3% lead.
Meanwhile, the Northeast Zone is estimated to have an indicated mineral resource of 1.58 million tonnes grading 4.21% zinc and 2.22% lead, plus an inferred resource of 1.88 million tonnes grading 2.7% zinc and 1.86% lead, at a 2% zinc equivalent cutoff value.
Selwyn said that definition drilling of the Main and Northeast deposits are targeted to define sufficient mineral resources and reserves to support upwards of 10 years of production at the Scotia Mine.
According to a recent engineering review, there is potential for the mill to produce up to 3,000 tonnes per day, up from the historic rate of 2,200 tonnes per day, as it would allow the processing of lower grade ores.
This improved mining and processing rate is anticipated to reduce the cash cost of production and improve the overall project economics.
The acquisition of the Scotia mine is expected to provide the company with cash flow to fund the development of its Selwyn project in the Yukon Territories, under a joint venture with Chihong Canada Mining.
“The completion of the acquisition of the shares of ScoZinc Limited marks a turning point, as it provides an early opportunity for Selwyn to join the ranks of the producers," said president and CEO Dr. Harlan Meade.
"The projected cash flows from the re-start of the Scotia Mine expected in early 2012 are strategically important to the securing of debt and equity for the development of the Selwyn Project.
Selwyn has already added several key hires to its senior management to undertake the restart of the Scotia mine.
The Scotia mine is located approximately 50 kilometres northeast of Halifax, within a lease that consists of 615 hectares of mineral rights, as well as five exploration licences for a total of 1,473 hectares.