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
"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
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
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
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
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%
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
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.