Selwyn Resources Ltd.
TSX VENTURE : SWN

Selwyn Resources Ltd.

June 01, 2011 09:00 ET

Selwyn Announces Completion of Acquisition of ScoZinc Limited

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 1, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

Selwyn Resources Ltd. (TSX VENTURE:SWN) ("Selwyn") announced today the acquisition of all of the assets of ScoZinc Limited, ("ScoZinc"), including the Scotia Mine in Nova Scotia, through the purchase of all of the shares of ScoZinc. As previously announced, the purchase price for ScoZinc was CAD$10 million, including certain payments made to the Province of Nova Scotia related to increased bonding requirements for an amended reclamation and closure plan for the Scotia Mine and production royalties.

Dr. Harlan Meade, President and CEO of Selwyn, said of the acquisition: "The completion of the acquisition of the shares of ScoZinc Limited marks a turning point, as it provides an early opportunity for Selwyn to join the ranks of the producers. The projected cash flows from the re-start of the Scotia Mine expected in early 2012 are strategically important to the securing of debt and equity for the development of the Selwyn Project that is being jointly advanced with its joint venture partner, Chihong Canada Mining Ltd., a wholly owned subsidiary of Yunnan Chihong Zinc & Germanium Co. Ltd. The commencement of production at the Scotia Mine should act as a catalyst for the revaluation of Selwyn and its Selwyn Project based on discounted future cash flows. Additionally, Selwyn is expanding its management team to undertake the re-start of the Scotia Mine, with the recent addition of several key senior management personnel as an important step in preparing for financing of the Selwyn Project."

Scotia Mine Re-start Plan

Selwyn will shortly embark on the raising of US$30 million of debt financing to provide approximately US$20 million in re-start capital for the Scotia Mine and US$10 million in working capital. A new mine plan and economic model is in preparation to provide a more definitive estimate of operating costs and cash flow projections necessary for securing the approximate US$30 million for the resumption of operations at the Scotia Mine. The new mine plan will be based on the recently reported mineral resources completed to NI 43-101 standards (see May 5 and May 17, 2011 news releases). These mineral resources form the basis of the initial mining reserves for the resumption of open pit operations in the Main deposit and the expansion of mine life with the development of the Northeast and Getty deposits. In the interim, Selwyn is preparing to dewater the open pit and complete permitting for the expansion of the open pit operations at the Main deposit.

Selwyn intends to resume definition drilling of known mineralization adjacent to the Main deposit in an effort to expand reserves and mine life. Drilling is also planned at the Northeast deposit after completion of drilling adjacent to the Main deposit. The Northeast deposit was initially permitted as a high grade underground mine. Extensive diamond drilling of this deposit is planned to adequately define the mineralization for usage in the evaluation of this deposit as an open pit operation. The definition drilling of the Main and Northeast deposits are targeted to define sufficient mineral resources and reserves to support upwards of 10 years of production at the Scotia Mine.

A recent engineering review of the mill indicates the potential for expansion from the historic production rate of 2200 tonnes per day to approximately 3000 tonnes per day. The expanded mill throughput would allow the processing of lower grade ores that were previously not considered economic. Processing of this low grade mineralization in the late stages of previous operations in early 2009, indicated that this mineralization yielded good zinc and lead recoveries and good quality concentrates. The optimization of the mining and processing rate is expected to reduce the cash cost of production and improve overall production economics at the Scotia Mine.

Selwyn's primary focus remains the exploration and development of the properties that make up the Selwyn Project in the Yukon, by the joint venture comprised of Selwyn and Chihong Canada Mining Ltd. The acquisition of the Scotia mine will provide Selwyn with a new opportunity for growth, while expanding its management team and providing cash flow to fund growth and the advancement of the Selwyn Project.

This press release contains forward-looking statements concerning the re-start of production at the Scotia Mine, the raising of debt financing to fund those operations, the expansion of resources at the Scotia Mine and the resulting increase in mine life, the increase in the production rate at the Scotia Mine and the effect of the acquisition off ScoZinc on the price of Selwyn's shares. These forward-looking statements are based on assumptions and judgments of management that may prove to be inaccurate due to factors beyond Selwyn's control, including the results of exploration activities, economic evaluations and engineering studies, the availability of funds in the financial markets on terms acceptable to Selwyn and the public's view of the economic value of the Scotia Mine. Although Selwyn has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking statements, there may be other factors that cause results not to be as anticipated or intended. There is no assurance that such information will prove to be accurate, as future events could differ materially from those anticipated in such information and accordingly, there is no assurance that the raising of debt to fund the re-start of the Scotia Mine, the increase of resources for the Scotia Mine and the resulting increase in mine life, the obtaining of a satisfactory economic re-evaluation for the Scotia Mine based on current mineral resources, the increase in the production rate for the Scotia Mine or the positive re-evaluation of the price of Selwyn's shares in the market place, can be achieved as anticipated. Readers should not place undue reliance on forward-looking statements.

Neither 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.
    Catalin Chiloflischi
    Manager of Investor Communications
    (604) 801-7240 or Toll-free: 1-888-989-9188
    (604) 689-8355 (FAX)
    info@selwynresources.com
    www.selwynresources.com