Selwyn Resources Ltd.
In most partnerships, people like to know that their collaborator has the same vision as them. As Selwyn Resources Ltd. moves forward on its joint venture with zinc/lead mining and smelting firm Yunnan Chihong Zinc and Germanium Co. Ltd. Chihong, it is confident that both firms have the same goal. “You [need] to make sure that the two parties don’t have two different dreams,” Selwyn Resources President and CEO Dr. Harlan Meade states. “I’m pleased to report that I think we have one dream.”
Based in Vancouver, Selwyn Resources is a base metals exploration and development company. Its core project is Selwyn, located in the eastern Yukon and Northwest Territories that consists of 26,744 hectares of minerals claims and 2,162 hectares of mining lease lands.
Selwyn Resources formed its joint venture with Yunnan Chihong this August, which resulted in the formation of Selwyn Chihong Mining Ltd. The new firm will advance the project and soon start an $85 million of exploration and development program, including definition drilling, engineering, permitting and underground development.
The Best Option
Meade says a joint venture was the best option for Selwyn Resources when developing the project, despite offers to buy the company.
“We didn’t want to sell out,” he recalls. “We felt that the only way we were going to maximize value for our stakeholders was to stay at the table throughout the whole process of advanced exploration, permitting and construction,” he recalls, noting that the company also did not want to do a share-based transaction. “This frustrated many of the groups that wanted to take us over.”
Unfortunately, when Selwyn decided to pursue a joint venture, it found it difficult to partner with a local firm. “There are virtually no major [mining] companies left in Canada,” Meade explains. “They’ve all been gobbled up by major international mining companies.
“We were forced to look overseas where there were not only companies interested in zinc and lead, but also, where the supply of [both] would be strategic to them,” he recalls.
Selwyn partnered with China-based Yunnan Chihong for many reasons, including its own mining capabilities. “They actually operate some reasonably good zinc/lead mines that produce most of the feed for their smelter,” Meade says. “They respected our desire to grow a mid-tier base metal mining company and not sell off control.”
The joint venture format also tends to be more accepted locally, Meade says. It gives Selwyn a say in how the project progresses and how to deal with First Nations and community issues.
Pursuing the Dream
Before forming the joint venture in August, Selwyn had spent $70 million on the project and had taken it to the advanced exploration level.
“We had done a bit of pre-feasibility engineering,” Meade says, noting that the current $85 million program will allow both firms to produce a bankable feasibility, which it expects to have completed in mid-2011.
“The [dream] for Selwyn Resources is very simple – to be standing there at the mine opening ceremony, owning 50 percent of a world-class zinc/lead deposit,” Meade explains. “After that, probable multiple expansions of this deposit [will make it] one of the largest zinc/lead mines in the world. We just need the support of our major shareholders, future new shareholders and joint venture partner as we advance this project and secure the debt financing.”