Potential to expand the mineral resource
The Selwyn project contained an indicated resource of 86.6 million tonnes,
grading 4.93 percent zinc and 1.73 percent lead, with an added inferred
resource of 215.4 million tonnes grading 4.71 percent zinc and 1.48 percent
lead. The company drilled over 100 holes in a major programme this year,
and numerous intercepts are showing encouraging assays with a combined
zinc and lead content of over 14.0 percent. These results suggest Selwyn can
expand its mineral resource estimates and improve upon the average grade.
An increased project scale
Selwyn plans to commence a prefeasibility study next year but in the
meantime, its exploration success suggests an increased project scale. Under a
revised scenario, a Selwyn mine would supplement a large open pit operation
with feed from underground mining.
Declining metal prices and the US dollar point to lower potential revenues
Zinc prices have been slipping since early this year and the price of lead has
been in decline since early fall. Like-for-like potential revenues are lower still
when expressed in Canadian dollars, due to the weakness of the US dollar that
has been evident throughout the past year.
Higher costs
The potential for underground mining improves the economics of the Selwyn
project, but the expanded mine plan would carry added capital and operating
costs. Further, all mining developments are facing considerable inflationary
pressures that are resulting in capital cost increases of twenty percent or more,
with comparable increases in unit operating costs. Minimising cost increases
will be a major challenge for Selwyn during its prefeasibility study.
