Selwyn Resources Ltd. (SWN:TSX-V) has closed a CDN$100 million joint venture transaction with Chihong Canada Mining, a wholly owned subsidiary of Chinese company Chihong Zinc & Germanium Co, for the development of a major zinc-lead mining operation in the Yukon.
Selwyn Chihong Mining, split-owned by Selwyn and Chihong, will be the operator of the joint venture agreement. The $100 million will be used to pay for pre-development programs of the venture and Chihong will earn a 1% interest for each $2 million of the funds spent.
“Selwyn is very pleased to have Chihong as our new strategic partner. Chihong is an experienced and accomplished fully integrated zinc-lead mining and smelting company — one that shares our vision of the Selwyn Project becoming a major new zinc–lead mining operation,” said Selwyn president and CEO Dr. Harlan Meade.
The management committee for the partnership has already approved, in principle, a pre-development program budget totalling $89 million for 2010 and 2011. These funds will be used for the advancement of permitting, completion of the Wardrop Engineering Feasibility Study, and related engineering and resource definition drilling from both surface and underground. Surface drilling is planned to continue into early 2011.
The plan is to undertake initial underground development and advanced exploration on the NI 43-101 compliant mineral resources of the deeper parts of the XY Central deposit in early 2011. This work will further support the upgrading of Inferred resources to both Measured and Indicated categories. In addition, it is anticipated that surface diamond drilling will resume on the Don deposit to allow for upgrading of Inferred resources to both Measured and Indicated categories in the NI 43-101 compliant mineral resources.
Thus far, more than $100m has been spent on the exploration and development of the project. Drilling has defined 15 mineralized zones over 38 kilometres of the known mineralized trend. NI 43-101 compliant mineral resources include Indicated resources of 154.35M tonnes, grading 5.35% zinc and 1.86% lead containing 18.19 billion pounds of zinc and 6.32 billion pounds of lead; and Inferred resources of 234.15M tonnes grading 4.57% zinc and 1.42% lead containing 23.57 billion pounds of zinc and 7.32 billion pounds of lead.
Chihong Zinc & Germanium Co. is controlled by China Yunnan Metallurgical Group, a Chinese state-owned enterprise based in Kunming, China. Chihong owns and operates several zinc-lead mines in Yunnan province and a fully integrated zinc and lead metallurgical facility in Qujing, Yunnan.