Selwyn Resources plans to cut their Yukon project in half.
But investors and workers in the territory needn’t worry, says CEO Harlan Meade.
The company has long touted its deposits at Howard’s Pass, near the N.W.T. border, as “perhaps the largest undeveloped zinc-lead deposit in the world.”
Since 2010, Selwyn has intended to build an underground mine that would produce 8,000 tonnes of ore per day. But on Monday, the company dramatically scaled back these plans.
The new scheme would employ 250 workers, half of original projections.
And, for the project to be profitable, the company will need to target the highest grades of metal. That means a reduced output of 3,500 tonnes per day.
That’s far smaller than earlier plans.
“What we’re doing is bootstrapping the property to get better project economics with the initial mine development,” said Meade. “But that mine development plan uses less than 10 per cent of the overall resources.”
It’s “pretty obvious” that once the up-front costs to build the mine are paid back, the company would expand the project, Meade added.
The more modest mine plans means a longer life for the project.
Advanced exploration work has confirmed the project’s potential, said Meade.
“Everything’s just a little smaller,” said Meade.
Mineral prices and global debt levels have caused the company to curb their ambitions.
Those concerns affect businesses across the globe, and are not specific to the company’s Chinese backers, Yunnan Chihong Zinc and Germanium Co. Ltd.
In fact, Meade has more confidence in Chinese banks than he does in global or North American ones, he said.
“The developed world, as we commonly refer to it, has much too high debt levels and is struggling to meet those debt obligations, whereas on the other side of the world, Asia has generated significant trade surpluses and they have capital that they need to invest,” he said.
“I think the banks are still very solid in China and need to put that money to work, so I don’t see any impediment for accessing Chinese banks.”
The company’s relationship with Yukon’s Kaska First Nations, on whose traditional territory the potential mine would sit, is also becoming more reliable, said Meade.
Initially, the company was able to forge a relationship with the Ross River Dena Council but faced strong opposition with the Liard First Nation, which even tried to stop further work on the proposed mine in Yukon’s Supreme Court last summer.
But Justice Ron Veale sided with Selwyn in July 2011, stating that the consultation and environmental assessment done with the unsigned First Nation was adequate.
In the fall of last year all Kaska First Nations, including those in B.C., signed the collaboration agreement. That means Selwyn will only have to deal with a one-window process.
The company is close to settling a deal with the First Nations, said Meade. He wouldn’t say whether this will be a formal impact-and-benefits agreement.
The deal “will bring some closure to what has been five years of negotiations,” he said. “We have made good progress, and we’re hoping it won’t be too long before we announce the results of our progress.”
The company’s revised plans should make these discussions “a little less stressful,” said Meade.
“There’s certainly enough jobs and opportunities in there to very quickly absorb the skilled labourers that are available within the local Kaska communities,” he said. “I don’t think it really changes that much with respect to our discussions with First Nations, or local communities, for that matter.”
Selwyn has faced setbacks in its plans to reopen Nova Scotia’s ScoZinc mine. This project was supposed to generate cash to help bankroll Selwyn’s work in the Yukon.
Selwyn hoped to reopen the mine by this summer. But it’s had difficulty raising the needed money.
Now, the company may sell the mine, said Meade.
“All we’re saying is that the company has been approached,” he said. “If anything comes from that approach, who knows?”
In the Yukon, Selwyn aims to complete its feasibility study by the end of this year, then start going through the territory’s permitting process, said Meade.
Contact Roxanne Stasyszyn at