Selwyn Resources (CVE:SWN) announced this morning 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.
In late 2010, the company, in joint venture with Chihong Canada Mining, started a feasibility study with Tetra TechWardrop incorporating an 8,000 tonne per day underground mining and processing facility.
In April of this year, however, this work was stopped due to conclusions the project was not "technically or economically feasible" as the 8,000 tonnes per day operation from two mines could not be achieved within reasonable constraints beyond 4 to 5 years.
The company said the lower mined grade could not support the high mining, metallurgical processing and transportation costs that had been estimated for the location.
Today, Selwyn updated its plan after internal engineering studies over the last three months, using the mineral resource estimate reported earlier in August, combined with a host of independent work.
The joint venture used a status report from Tetra Tech delivered in July, which excludes a financial analysis, and provides only a primary database and cost sourcing for continuing work by Selwyn and Chihong.
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.
Selwyn also said that independent qualitative analysis of drill core also provided a geotechnical update that allows for larger than 10 metre mine openings, and the use of lower cost underground mining methods.
Mine production planning is in progress, with mining costs ranging from $45 to $55 per tonne of mill feed.
In addition, waste rock from underground development is scheduled as mine backfill to reduce capital and operating costs as well as to minimize the environmental footprint.
The miner said other changes include those to the metallurgical flowsheet, which are expected to reduce power consumption, with less material to regrind and improved lead flotation performance.
Average metallurgical recoveries are estimated at around 83% of the contained zinc and 70% of the contained lead. As a result, the milling cost is expected to be between $30 and $35 per tonne of mill feed.
Alternative port facilities at Skagway and Stewart have been included in the revised transportation plan, to further minimize the project's capital and operating costs.
The joint venture also plans to relocate the milling complex near the tailings storage facility and the Don mine to consolidate the infrastructure and simplify site logistics.
Combined mining and milling costs of less than $90 per tonne are anticipated, with an overall combined cost of around $150 per tonne.
Selwyn noted in its statement that the joint venture is developing an internal project team to reduce project overheads for pre-production and construction.
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 Don deposit estimate was updated in August and is now known to contain an indicated mineral resource of 41.8 million tonnes grading 5.35% zinc and 1.87% lead at a 2.0% zinc cut-off grade, which includes a higher-grade subset of 16.4 million tonnes grading 7.26% zinc and 2.62% lead at a 5.5% zinc cut-off.
The XY Central deposit estimate remains unchanged since last published in September 2011, with an indicated mineral resource of 29.9 million tonnes grading 6.35% zinc and 2.69% lead at a base case 2.0% zinc cut-off grade. This mineral resource is only for three of six lenses that comprise the XY Central deposit.
Selwyn said the joint venture decided to focus on a mine devleopment plan that initiates mining the largest of the known high-grade resources, which are contained in the XY Central and Don deposits.
These resources extend to depths of at least 350 metres at XY Central and 700 metres at Don, warranting underground mining. The aim is to establish a small-tonnage, high grade operation from which to expand on later.
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.
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