Selwyn Resources Ltd.

Selwyn Resources Ltd.

March 02, 2010 13:10 ET

Selwyn Updates Progress on Joint Venture Transaction With Yunnan Chihong Zinc & Germanium Co. Ltd.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 2, 2010) - Selwyn Resources Ltd. (TSX VENTURE:SWN) ("Selwyn") is pleased to update investors with respect to its progress towards completion of the agreement whereby Yunnan Chihong Zinc & Germanium Co. Ltd. ("Chihong") will acquire a 50% interest in a joint venture for the Selwyn Project (see December 14, 2009 news release) (the "Transaction"). The parties have undertaken substantive negotiations towards finalization of the joint venture operating and shareholders' agreements. To provide more time to complete the agreements, in both English and Chinese, the parties have extended the exclusivity period within which to complete these agreements, until April 1, 2010.

Highlights of the Transaction include:

  1. All of Selwyn's mineral and other assets associated with the Selwyn Project will be made subject to a new Canadian Joint Venture ("Joint Venture") between Selwyn and Chihong.
  2. A new company ("Operating Co.") will be established, owned 50% by each of Selwyn and Chihong, to act as the operator to carryout the programs of the Joint Venture. The Board of Operating Co. will have equal representation from each of Selwyn and Chihong.
  3. Chihong will deposit CDN$100,000,000 in cash to a bank account set up by Operating Co., which funds will be used to fund programs of the Joint Venture. Chihong will earn a 50% interest in the Joint Venture by expending these funds on pre-development programs associated with completion of a bankable feasibility study and permitting.

The parties continue on target for Closing of the Transaction in May 2010. Chihong has informed Selwyn that it has received some of the government approvals required for Closing, but that other approvals are still required to be obtained prior to the proposed Closing, and Closing is contingent upon obtaining those approvals.

Selwyn continues to advance the Selwyn Project while targeting June 2010 for commencement of the Joint Venture programs. Wardrop Engineering has been engaged to undertake a bankable feasibility study (see January 5, 2010 news release) while other engineering groups are working on engineering studies to support the feasibility study and environmental permitting. Selwyn made application for a Type B Water Licence in the fall of 2009 and expects to receive the licence, which is required to undertake initial underground development, in April 2010.

Upon completion of the Transaction, the Joint Venture intends to undertake initial underground development and advanced exploration on the NI 43-101 compliant mineral resources of the XY Central deposit. This work will be designed to upgrade Inferred Resources to both the Measured and Indicated categories from both surface and underground diamond drilling platforms. The underground development will also provide an exceptional exploration platform for the Joint Venture to explore the core of the Synclinal Structure that hosts the high-grade mineralization because these areas of high mineral potential are too difficult to test from surface. In addition, it is anticipated that surface diamond drilling will resume on the Don deposit to allow for upgrading to NI 43-101 compliant Inferred resources to both the Measured and Indicated categories.

The Selwyn Project represents one of the largest undeveloped resources of zinc and lead in the world and is uniquely located in the politically attractive and stable jurisdiction of the Yukon. It is therefore both a unique opportunity and a strategic asset that could provide a long term secure supply of zinc and lead to the markets of the Pacific Margin.

This news release contains forward-looking statements concerning the proposed transaction with Chihong, the future financing and development of the Selwyn Project, the objectives of exploration activities to be carried out at the Selwyn Project and Selwyn's future prospects in maintaining its 50% interest in the Selwyn Project. These statements are based on assumptions and judgments of management regarding future events or results that may prove to be inaccurate as a result of failure to complete the proposed transaction with Chihong, whether due to an inability to reach agreement on the terms of the formal documentation or the failure to obtain necessary regulatory or other required approvals, the failure of exploration activities to upgrade Inferred resources to Measured and Indicated categories, the failure of Selwyn to raise funds to enable it to meet its pro rata share of expenditures for the Selwyn Project and other risk factors, both financial and technical, that are beyond Selwyn's control. There can be no assurance that such forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Selwyn Resources Ltd.
    Dr. Harlan Meade
    President and CEO
    (604) 801-7240 or Toll-free: 1-888-989-9188
    Selwyn Resources Ltd.
    Jasmin TamDoo
    Manager of Investor Communications
    (604) 801-7240 or Toll-free: 1-888-989-9188
    (604) 689-8355 (FAX)