Zinc and lead explorer Selwyn Resources (CVE:SWN) said Tuesday it reached agreement with Waterton Global Value, L.P. for a $10 million principal amount, non-revolving secured debt facility for its wholly-owned subsidiary, ScoZinc Ltd.
The company said the money will be used by ScoZinc and Selwyn for general corporate purposes, including activities at the ScoZinc mine in Nova Scotia.
The establishment of the loan is subject to the approval of the TSX Venture Exchange.
"This standby debt facility provides Selwyn with more flexibility in meeting its general and project financial needs," said Selwyn president and CEO Dr. Harlan Meade.
In mid February 2011, Selwyn entered into an acquisition agreement to purchase all the assets of ScoZinc fromAcadian Mining Corporation (TSE:ADA).
The assets included the past-producing Nova Scotia mine and 12,256 hectares of mineral claims covering much of the prospective geology in the Windsor Basin. The acquisition was officially completed in June 01, 2011.
In February of this year, Selwyn unveiled additional drill results from its 2011 drill program on the southwest extension of the main pit at the ScoZinc project, which confirmed lead-zinc mineralization.
ScoZinc has a measured and indicated resource of 2.8 million tonnes grading 4.2 percent zinc and 1.9 percent lead.
Selwyn said it expects the completion of debt facility documentation and an initial funding of up to $3 million to occur on or about April 10, 2012.
The loan allows ScoZinc to draw down on the principal amount for a period of 20 months from the initial funding date, except that after the initial $3 million is drawn down, no additional draws may be made until the industrial authorization for the southwest expansion of the main pit of the ScoZinc mine is issued by the Nova Scotia provincial government.
This authorization is expected to be issued in the second quarter of 2012, the company said.
The company also said the loan provides for the issuance of transferable warrants to Waterton Global to purchase a total of 25.0 million shares of the company for a term of five years, with an exercise price of 17 cents per share.
The warrants will be subject to a four month hold period.
Selwyn’s primary focus remains the exploration and development of the properties that make up the Selwyn project in the Yukon, by the joint venture comprised of Selwyn and Chihong Mining Canada Mining.
The Selwyn project hosts large tonnages of zinc-lead mineralization that have the potential for large-scale production.
Selwyn continues to work toward the restart of the ScoZinc mine, which it expects will provide cash flow to fund development at its Selwyn project in the Yukon.
Recent drilling results from ScoZinc were from the Gays River deposit on the property, and included hole MNZ-009, which intersected 7.60 metres grading 8.22 percent lead and 0.79 percent zinc, including 2.60 metres grading 20.32 percent lead and 1.94 percent zinc.
The company’s shares were flat on Tuesday afternoon at 15 cents.
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