Selwyn Resources (CVE:SWN) provided an update to its shareholders Tuesday on the progress of the feasibility study for its flagship Selwyn project in the Yukon, as well as the financing of the restart of the ScoZinc mine in Nova Scotia and other corporate developments.
In late March, the company announced it had retained a specialist
corporate finance mining firm to act as its financial advisor as the
company prepared to move into the next phase of development at its
Selwyn zinc-lead project in the Yukon.
Cutfield Freeman & Co. is assisting Selwyn in evaluating its
financing and strategic options relating to the Selwyn project, which is
held in a joint venture between Selwyn and Chihong Canada Mining, a
subsidiary of Yunnan Chihong Zinc & Germanium Co. of China.
Aggregate joint venture expenditures to March 31, which have been
funded through $100 million of joint venture earn-in funds provided by
Chihong, were approximately $88 million.
The $12 million of remaining earn-in funds are being used for the
final Howard’s Pass Joint Venture purchase payment, and to complete a
bankable feasibility and continued engineering and permitting
activities, the company said.
Selwyn said that refinements to the feasibility study will focus on
the reduction of operating costs at the mill, and optimization of the
mining sequence, with the finalization of the feasibility study now
expected in late 2012.
Work continues to evaluate concentrate shipping alternatives and the
use of LNG as an alternative for generation of power for mine
operations. The latter has the potential to significantly reduce energy
costs, the company said.
In addition, Selwyn is undertaking its own evaluation of adding open
pit operations to the initial mine development plan as a part of a
refinement of the feasibility study published in November 2011.
Last month, the company released drilling results from nine
metallurgical holes at the XY Central deposit at the Selwyn project,
where highlights included a thick, high grade section of 45.08 metres
true thickness grading 7.57 percent zinc and 2.65 percent lead,
including 6.19 metres of 26.41 percent zinc and 10.34 percent lead in
Global Indicated mineral resources for the 93, 94, and 95 lenses of
the XY Central deposit total 29.9 million tonnes grading 6.35% zinc and
Currently, the company is working on updating the mineral resources
of the XY West deposit, with Selywn expecting an increase when
Global indicated mineral resources in the Don deposit consist of 36.9
million tonnes grading 5.63% zinc and 2.11% lead. On Monday, Selwyn
said that drilling in the Don Connector target between its Don and Don
East deposits at its Selwyn project confirmed thick zinc-lead
The company said all 14 exploration holes on the target were focused
on confirming the direct link between the two adjacent deposits, which
would provide opportunities for future engineering studies as it
advances the feasibility study for the project.
With regards to permitting, the company noted that the Selwyn project
has not formally entered the environmental permitting process for the
development of a mining operation. Finalization of the environmental
assessment report for the Selwyn project is awaiting the completion of
the mine development plan.
Selwyn expects the review of the environmental report to take at
least one year, and said it will be followed by the regulatory phase of
granting key licenses for mine and infrastructure construction.
The venture's preferred access route for transportation of mine
equipment, supplies and concentrates to the Selwyn project is the
historic Howard's Pass Access Road that was developed in the late 1970s.
The company has proposed to refurbish this road and replace bridges and
culverts to provide for all season access for the Selwyn project.
Selwyn said it has also entered into preliminary discussions with the
Naha Dehé Dene Band located at Nahanni Butte in the Northwest
Territories. The parties are negotiating a cooperation agreement in
respect of Selwyn Chihong's activities on the southern part of the
Howard's Pass Access Road, which is on the band’s property.
Meanwhile, at its Nova Scotia operations, the company has maintained
that its ScoZinc mine is expected to provide the company with cash flow
for advancing the Selwyn property in the Yukon.
Monday, the company announced it closed a $10 million secured debt
facility with Waterton Global Value, L.P., to contribute to activities
at the Nova Scotia-based mine.
Selwyn has already drawn down $2 million under the debt facility,
which allows ScoZinc to draw down a total of $3 million of the principal
amount prior to receiving the industrial authorization for the
southwest expansion of the main pit at the ScoZinc mine from the Nova
Scotia government. Selwyn said it expects the industrial authorization
ScoZinc has a measured and indicated resource of 2.8 million tonnes
grading 4.2 percent zinc and 1.9 percent lead. 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.
Since Selwyn aquired the Sco Zinc mine in 2011, it has spent $7
million on mill and mine refurbishment, engineering, permitting,
purchase of surface rights and exploration activities.
During this period, the company has pursued the approximate $30
million in debt and equity required for the restart of the ScoZinc mine.
Although numerous proposals have been evaluated, Selwyn said it has
been unable to secure the required capital for the restart of
The company said that efforts have been frustrated due to a variety
of economic conditions related to volatility in the debt markets and
generally weaker zinc and lead prices over the past 12 months.
Ongoing discussions are primarily with industrial groups who are
interested in acquiring a secure supply of high grade zinc and lead
Selwyn said that zinc and lead prices are expected to improve in the
later part of this year and in early 2013 and should offer additional
financing opportunities for the restart of the ScoZinc mine.
The company said its primary focus, however, remains the exploration
and development of the properties that make up the Selwyn project.
The Selwyn project is believed to host the largest undeveloped
zinc-lead deposit in the world, with initial mine development to focus
on 16.06 million tonnes of indicated mineral resources grading 10.06
percent zinc and 4.23 percent lead, and 26.7 million tonnes grading 8.81
percent zinc and 2.81 percent lead.
Selwyn’s working capital was approximately $1.5 million as at April
1, 2012, not including any draw down under the debt facility.