Selwyn-Chihong Joint Venture
Selwyn signed a Framework Agrement with Yunnan Chihong Zinc and Germanium Co. Ltd. on December 12, 2009. The binding agrement provides for Chihong to earn a 50% joint venture interest in the Selwyn Project by spending CAD$100 million on exploration and development.
The transaction closed August 2010 and the parties formed a jointly owned Canadian Operating Company named Selwyn Chihong Mining Ltd. (SCML). Selwyn transfered all of its Selwyn Project assets to the Operating Company, to be held in trust for the benefit of Selwyn and Chihong in accordance with their interests in the Joint Venture and Chihong Canada Mining Ltd., a wholy owned subsidiary of Yunnan Chihong deposited CAD$100M into the Joint Venture bank account established by the SCML. All programs and expenditures for the Selwyn Project are approved by SCML and are carried out by SCML. Each of Selwyn and Chihong will have equal representation on the SCML management committee and on the Board of Directors. The prime focus of SCML is to advance the Selwyn Project to bankable feasibility study and secure key development licences.
The agreement includes a provision for Selwyn and Chihong to jointly approach Chinese banks for project financing and to maximize the commercially available debt financing for a non-recourse project debt facility.
Yunnan Chihong is a fully integrated lead and zinc producer with over 60 years of history in exploration, mining, beneficiation, smelting and downstream processing. The company operates several mines in China that provide most of the feed for its modern smelter in Qujing, recovering lead, zinc, precious and rare metals.
Yunnan Chihong is listed on the Shanghai Stock Exchange and has its head office in Qujing, Yunnan Province. Its major shareholder is China Yunnan Metallurgical Group Co., Ltd., a diversified resources company majority owned by the Yunnan Provincial Government. Chihong has C$1 billion total assets and as of August 2010 had a market capitalisation of approximately C$4 billion.
The formation of the Joint Venture with Chihong is seen as a major step towards advancing the Selwyn Project to production. Importantly Chihong shares Selwyn's vision of the Selwyn Project becoming the World's next major zinc-lead mine. The transaction also provides access to the Asian markets for project financing for the Selwyn Project. This is seen as strategically very important in the evolving markets for financing resource development.
To access the news release from December 14, 2009, annoucing the C$100 Million Joint Venture Transaction With Yunnan Chihong Zinc & Germanium Co. Ltd.
please click here (PDF document).
To access the archived teleconference from December 15, 2009, please click here (MP3 file, 50 minutes, 10 seconds).