VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 06/11/13 -- Selwyn Resources Ltd. (TSX VENTURE: SWN) ("Selwyn" or the "Company") is pleased to announce results of an update to the December 20, 2012 Preliminary Economic Assessment Update Report ("PEA") for the ScoZinc zinc-lead project in Nova Scotia, Canada. This updated PEA includes an expansion of the mine plan and new metallurgical information based on additional engineering undertaken in first quarter of 2013,and completed at a modest cost of approximately $100,000 as indicated in the Company's May 2013 Information Circular. The detailed economic assessment is classified as a PEA due to the fact that the mine plan includes a small proportion of Inferred mineral resources.
The full text of the report, which meets National Instrument 43-101 standards, will shortly be filed for review on www.sedar.com.
Since announcing the acquisition of ScoZinc Ltd. on February 8th, 2011, Selwyn has updated mineral resources (see August 24, 2012 news release), a 55% and 65% increase of Measured and Indicated Mineral Resources respectively as compared with the prior Mineral Resource inventory (April 6, 2011 news release). The expanded Mineral Resource forms the basis for a revised mine plan and economic model (November 22, 2012 news release). The revised mine plan confirmed a significant increase in mine life for the Main and Northeast pits. This update to the PEA builds on that mine plan and incorporates a proposed underground mining operation between the Main and Northeast open pits, and blending of the high grade material with the lower grade open pit mineralization in years 5 and 6 of the mine plan. Updated equipment capital and operating cost estimations by a major mine equipment supplier have also been included in the PEA along with the new metallurgical data.
Dr. Harlan Meade, President and CEO of Selwyn Resources Ltd ("Selwyn") states; "The recently completed work by our ScoZinc team has further enhanced the mine plan and demonstrates the attractive economics for the restart of the mine, when metal prices strengthen from current levels as concentrate supply is forecast to tighten. The improvements provide for a balancing of mine grades over the current 8-year mine life. With the reduction of operating costs, ScoZinc is well positioned on the cost curve for development projects. The reasonable next steps at ScoZinc would be to focus on the further expansion of the mine plan with addition of the Getty deposit and pursuit of other opportunities to reduce operating costs."
As metal prices are forecast to improve from current levels, the new updated PEA, Base Case metal pricing of US$1.00/lb zinc and US$1.10/lb lead is used and are well within the range of metal price forecasts identified with a large number of analysts and banks for the period 2014 and beyond (see Metal Prices and Economic Sensitivity).
The highlights include:
-- Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first five years of operations averages CAD $24.1 million per annum, a 43.7% increase.-- Pre-tax NPV 5% of CAD $61.3 million, a 58.3% increase (NPV 8% - CAD $52.4 million, a 61.3% increase);-- After Tax NPV 5% of CAD $51.9 million, a 44.5% increase (NPV 8% - CAD $44.4 million, a 47.4% increase);-- Pre-tax Internal Rate of Return (IRR) of 49.0%, a 34.0% increase (after- tax IRR of 46.2%, 30.2% increase);-- C1 zinc cash cost of production (after deducting credits for lead) for the first five years is CAD $0.55/lb, a 16.6% decrease (Life of Mine C1 zinc cash cost of CAD $0.51/lb, a 19.6% decrease);-- Payback of Capital in 1.56 years, a 30.4% decrease;-- 2,500 tonnes per day mill processing plan;-- Unit operating costs of $50.35 per tonne milled for the first five years, a 4.8% decrease ($40.84 per tonne milled for the life-of-mine, a 3.5% decrease);-- Mine and mill restart capital expenditures (CAPEX) of CAD $32.8 million, 7.1% increase (including $1.4 million in contingency and $3.2 million working capital);-- Base Case zinc and lead prices of US$1.00 and US$1.10/lb respectively;-- Exchange rate of 1.02 Canadian dollar to 1 US dollar;