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Thursday, 6 September 2012
Selwyn Resources suspends strategic review process
Selwyn Resources (CVE:SWN) said today that it has suspended its previously announced strategic review process, which included a potential sale of the zinc and lead explorer.
"In light of our limited financial resources and the commitments necessary to bring the Selwyn Project to completion, we announced a strategic process on April 17, 2012," said company chairman, Wade Nesmith.
"We have been conducting this process in some of the worst economic times in recent memory, and the process has so far failed to identify a transaction acceptable to the Board."
During the strategic review, the company said its advisers reviewed the potentially interested parties and contacted "a number of them to determine what interest, if any, they had in a possible transaction with Selwyn."
The process quickly focused on engaging Chihong Canada Mining, Selwyn's joint venture partner on the Selwyn project in the Yukon, in discussions regarding the sale to Chihong of the company's interest in the partnership.
Those negotiations, which were initially positive, Selwyn said, did not result in "an acceptable purchase agreement".
The miner noted that Chihong refused to accept terms that Selwyn believed "are fundamental to any agreement that would be in the best interests of its shareholders."
"Management and the Board are committed to doing our best to make this company successful," continued Nesmith.
"External economic forces are making things extremely difficult. In order to secure more time to achieve our near and medium term goals, Harlan Meade, Chief Executive Officer, has been directed to raise additional working capital sufficient to advance the company's business plan."
Last month, Selwyn announced an updated development plan for its Selwyn zinc-lead project in the Yukon after prior feasibility work on the property was terminated.
The new plan includes a 3,500 tonne per day combined mining rate from the XY Central and Don deposits, with increased mill feed grade of 10% to 12% combined zinc and lead content.
Aside from the new mining rate, the updated plan also includes a workforce reduction to 400 from previous estimates - expected to result in lower camp capital and operating costs.
The revised mine plan includes only the XY Central and Don deposits, representing only a small portion of the overall known indicated mineral resources for the Selwyn project, which are currently 185.6 million tonnes grading 5.20% zinc and 1.79% lead at a 2.0% zinc cut-off grade.
The Selwyn project is managed by Selwyn Chihong Mining, a joint venture between Selwyn and Chihong Canada Mining, a subsidiary of Yunnan Chihong Zinc and Germanium Co., one of China's largest mine and smelter operators.
Selwyn is also working on restarting a former zinc-lead mine in Nova Scotia, where it recently announced a boost in resources to one of its deposits.