Selwyn to look at 3,500 tonne per day option for the Selwyn zinc-lead project in the Yukon as it also looks to make a deal happen on all or part of its assets.
Selwyn Resources (TSX-V: SWN) may need to rethink its corporate slogan "A Zinc-Lead Giant in the Making" following a massive downsizing of its namesake project in the Yukon.
Selwyn said on Monday the Selwyn project would not fly as an 8,000-tonne-per-day mine given the results of a feasibility review by the joint venture company - between it and Chihong Mining - that owns the project. Selwyn stated that given such factors as zinc and lead prices and market conditions the 8,000-tonne-per-day Selwyn project "will not provide an economic return."
Now in lieu of that scenario Selwyn said it would consider the project at less than half the rate, 3,500 tonnes per day, in ongoing feasibility work.
It is the second time Selwyn has cut the project scope down so drastically. Selwyn initially proposed the project as a 20,000-tonne-per-day open pit project in a 2007 scoping study. But then in 2010 it shifted gears to take a look at an underground operation - the 8,000 tonne per day case - that would tackle higher grade portions of the numerous deposits that make up the Selwyn project.
Now with 8,000-tonnes-per-day scratched off the drawing board, Selwyn said the new 3,500-tonne-per-day permutation "has a good probability of providing a satisfactory economic return."
In the same press release outlining the change to project scope, Selwyn also said it had engaged Cutfield Freeman to advise it "in evaluating its financing and strategic options in relation to the Selwyn Project and the ScoZinc mine (its other chief asset)." Selwyn said it would consider debt, equity and other ways of financing and that it had given Cutfield Freeman the green light to talk to buyers interested in Selwyn.
The project comes with sizeable zinc-lead resources in a series of deposits that also contain notable high-grade pockets. In all indicated resources are 181 million tonnes @ 5.25 percent zinc and 1.83 percent lead about the same again in inferred resources. Within that, however, there are some 16 million tonnes @ 10.25 percent Zn and 4.23 percent Pb, in indicated resources, and 28 million tonnes @ 8.71 percent Zn and 2.74 percent Pb, in inferred resources.
The larger resource may not, however, be as much an attraction anymore. Selwyn made clear its original scoping that covered the larger open pit operation was no longer relevant. "Since the initial PEA (scoping study) was prepared there have been significant movement in exchange rates, metal prices and capital and operating cost assumptions that would make the development plan described in the PEA no longer viable and investors should not rely on the findings of that economic evaluation," Selwyn stated
On news of the change in project scope Selwyn's shareprice was down 17 percent as of presstime to C$0.10 on moderate trading volume.