Selwyn signs deal with Kaska

The company, which joined with a Chinese backer in 2010 to form the Selwyn Chihong Mining joint venture, is hoping to develop a lead-zinc mine in eastern Yukon.

It’s taken about five years but Selwyn Resources has signed a deal with the Kaska First Nations.

The company, which joined with a Chinese backer in 2010 to form the Selwyn Chihong Mining joint venture, is hoping to develop a lead-zinc mine in eastern Yukon.

The property, called the Selwyn Project, straddles the N.W.T. border.

Because of its location, the company has needed to reach agreements with the Sahtu and Dehcho First Nations in the N.W.T., as well as the Ross River Dena Council and the Liard First Nation in Yukon.

The company has already signed an agreement with the Sahtu and are negotiating with the Dehcho, said company CEO Harlan Meade on Monday.

On this side of the border, Selwyn was able to forge a relationship with the Ross River Dena Council fairly early on, but faced strong opposition from the Liard First Nation.

The Kaska nation even tried to stop further work on the proposed mine in Yukon’s Supreme Court.

Justice Ron Veale sided with Selwyn in July 2011, stating that the consultation and environmental assessment done was adequate.

In the fall of last year, all Kaska First Nations, including those in B.C., signed a collaboration agreement that simplified Selwyn’s dealings with the Kaska.

“Once that Kaska Collaboration Agreement was completed then negotiations were done in a fairly timely manner,” said Meade. “It only took us three or four months to finish. It certainly made a big difference because then everyone got the same agreement. I think that was important for trust between the First Nations but it was also important for us to know that we had all the different groups being considered. We really needed all Kaska to work collectively, that way it’s much easier to manage.”

The agreement with the Kaska is only an interim one, however.

It covers the company’s activities to date, in terms of exploration, said Meade.

The interim agreement covers things like jobs and training, general co-operation and communication and how environmental concerns will be managed with the company and the First Nations, he said.

It will work as a decent framework for the eventual socio-economic participation agreement, which will cover the actual production and mine.

Meade would not talk about whether royalty sharing would be incorporated into that full agreement.

“Certainly that’s on every First Nation’s wish list,” he said. “But in some cases it makes sense, particularly if they own the land because there’s been a settlement, but we have no comment on that.”

Neither of Yukon’s Kaska nations have settled their land claims.

But negotiations for the final, full agreement have already started, said Meade.

One meeting has already been held and both the Kaska and the company want to use the momentum from signing this interim agreement to get the full agreement signed “as quickly as possible,” said Meade.

With the Selwyn Project itself, the company is looking to have its bankable feasibility study completed by the end of this year, with submissions to the Yukon Environmental and Socio-economic Assessment Board by early next year, said Meade.

But all of that is for a project half the size of what was originally expected.

Since 2010, Selwyn intended to build an underground mine that would produce 8,000 tonnes of ore per day. But on May 28, it announced it will be cutting those plans in half.

The new scheme will employ 250 workers, also half the original projection.

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.

“What we’re doing is bootstrapping the property to get better project economics with the initial mine development,” said Meade in the spring. “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 mean a longer life for the project.

Advanced exploration work has confirmed the project’s potential, said Meade.

“Everything’s just a little smaller,” he added.

Selwyn has blamed mineral prices and global debt levels for their scaling down.

Contact Roxanne Stasyszyn at roxannes@yukon-news.com

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