Selwyn joint venture to evaluate a smaller tonnage high grade mine plan in Yukon

Selwyn Resources (CVE:SWN) said Monday that its joint venture for the zinc-lead project in the Yukon has decided on a change of direction with regards to the ongoing feasibility study.
The Selwyn project in the Yukon is being developed by Selwyn Chihong Mining, the joint venture company formed by Selwyn and Chihong Canada Mining in August 2010 to advance the property to NI 43-101 compliant feasibility status, and if warranted, to production.
The joint venture said that it has decided to evaluate the property as a 3,500 tonne per day operation, focused on underground mining of the higher grade sections in the XY Central and Don deposits.
This new development plan under consideration uses selective mining methods, and has relied on detailed mine development and costing information from the feasibility-level work completed to date, Selwyn said.
"This recent analysis suggests that the new development plan has a good probability of providing a satisfactory economic return," it added in a statement.
Previously, Tetra Tech Wardrop was hired by the joint venture in January 2010 to complete a feasibility study for the Selwyn project with the development of an 8,000 tonne per day underground mine operation, initially focused on the XY Central and Don deposits.
But with current market conditions, and with the technical and engineering data consolidated to date, the joint venture company said that an 8,000 tonne per day development concept will not provide "an economic return".
Selwyn Chihong Mining is expected to hand over a detailed implementation plan and budget for an updated economic assessment of the new plan to the management committee during this quarter.
In January 2007, Selwyn completed a preliminary economic assessment (PEA) for the Yukon project, which considered an open pit plan of mining at 20,000 tonnes per day.
However, since the initial PEA was prepared, there have been significant movements in exchange rates, as well as in metal prices and capital and operating cost assumptions, rendering the PEA as no longer viable.
Selwyn said investors should not rely on the findings of that economic study.
In March, the company hired Cutfield Freeman & Co as advisors to help in evaluating its financing and strategic options relating to the Selwyn project and its ScoZinc mine in Nova Scotia.
The mandate includes the consideration of all financing alternatives including debt, equity and other financial instruments, as well as concentrate off-take finance, partnership arrangements, corporate restructuring and sale alternatives for Selwyn and its mineral projects.
Cutfield also plans to enter into discussions with industrial groups that may have an interest in purchasing Selwyn, the company said.
Earlier this month, Selwyn announced an updated mineral resource estimate for its XY West deposit, highlighting the expansion of its inferred category resources to 12.75 million tonnes grading 4.42% zinc and 1.40% lead.
The updated NI 43-101 report included drill results from the 2010 and 2011 definition drilling and exploration work programs at the XY West deposit.
Selwyn noted that the XY West deposit is a key component due to its close proximity to the adjacent XY Central deposit, which has an inferred mineral resource of 44.11 million tonnes grading 4.10% zinc and 1.29% lead.
The updated 12.75 million tonne inferred estimate for XY West used a base case 2.0% zinc cut-off grade, and includes 3.27 million tonnes of higher grade zinc-lead mineralization grading 7.71% zinc and 2.23% lead at a 5% zinc cut-off grade.
The company said the global mineral inventory in the inferred category increased 4.4% as a result, corresponding to an increase of 0.94 billion pounds of zinc and 0.24 billion pounds of lead at a 2% cut-off grade.
Even with the significant number of testing already done, the XY West deposit remains open for future expansion. The 2012 mineral resource update is the first to fully model the zinc-lead mineralizing system at the deposit.
Since acquiring the Selwyn project in 2005, the company said it has made nine major deposit discoveries that are potentially amenable to open pit and/or underground mining methods.
All of these deposits remain open for expansion.
The total indicated mineral resources at the Selwyn project are 180.69 million tonnes grading 5.25% zinc and 1.83% lead for a metal content of 20.91 billion pounds of zinc and 7.30 billion pounds of lead.
The inferred mineral resources have increased to 226.88 million tonnes grading 4.44% zinc and 1.37% lead for a metal content of 22.23 billion pounds of zinc and 6.84 billion pounds of lead.
Selwyn also unveiled additional drill results from the Don Connector target at its Selwyn project in May, including hole DON-233, which intersected 27.85 metres true thickness, grading 6.09% zinc and 1.87% lead, including 10.87 metres grading 8.95% zinc and 2.62% lead.