Selwyn has entered into a sale transaction with Chihong Canada Mining Ltd. to sell its 50% interest in Selwyn joint venture project in Yukon and Northwest territories, for CAD 50.0 Million. The transaction was approved by the Selwyn shareholders at the April 22, 2013 Special Meeting and is expected to be closed in early June 2013 together with the payment of the remaining CAD 40.0 Million.
Selwyn acquired ScoZinc Ltd in 2011 for CAD 10.0 Million and with a plan to re-start operation and join the “Producer group”. The time required to resume production at ScoZinc is approximately 9 months, with an estimated production of 2,500 tpd (Zinc and Lead) mine and mill operations. The Selwyn Board has indicated that it wishes to have the funds from the sale of its interest in the Selwyn Project to fund the restart of ScoZinc mine if warranted and grow of the company as a new base-precious metal producer.
Selwyn Resources suspends strategic review process
"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.