Howard's Pass District

The Howard's Pass District is a world-class zinc-lead-silver district straddling the Yukon and Northwest Territories border. The mineralization consists of stratiform and stratabound zinc and lead sulphide mineralization within Silurian shales of the Howard's Pass Formation. All known mineralization occurs within a specific stratigraphic unit referred to as the Active Member. The Active Member has been followed for more than 40 kilometres and wherever located it contains significant zinc-lead mineralization.

Exploration by the Howard's Pass Joint Venture during the 1970's and 1980's defined three deposits (XY, Anniv and OP) spread over a 40-kilometer long belt of favourable strata. These three zones on the Howard's Pass Property contain a historical mineral resource ( circa 1983) of 115.4 million tonnes (Indicated resource) grading 5.41% zinc and 2.10% lead (mostly in the XY Zone) plus an additional Inferred resource in excess of 367 million tonnes with a similar grade which are projected for areas where only widely spaced drilling has been performed. These estimates predate current resource estimation standards established by National Instrument 43-101 and should not be relied upon by investors (see the new resource and reserve section for updated resources).

Prior to exploration by Selwyn, all three zones were known to be open at depth and along strike. The ultimate tonnages of zinc and lead mineral resources in the District were estimated at the time to be much larger.

Howard's Pass Acquisition

Selwyn announced a letter of intent to acquire 100% interest in the Howard's Pass Joint Venture properties from Placer Dome (CLA) Ltd. and Cygnus Mines Ltd. (a wholly owned subsidiary of US Steel Corporation) on May 2, 2005. The formal acquisition agreement and initial purchase payments were completed in August.

• Property Purchase Payments to the Howard's Pass Joint Venture participants of $10 million over 7 years: $500,000 initial payment, $1,000,000 on first, second and third year anniversaries, $1,500,000 on fourth, fifth and sixth year anniversaries and final $2,000,000 payment on the 7th anniversary.
• 1% Net Smelter Return royalty on production from Howard's Pass property only
• 20% net profits royalty on start of production capped at $10,000,000 (indexed to Consumer Price Index after 7 years)
• $3.5 million in exploration work commitments in first two years
• Reinvestment Option - Placer and Cygnus have the right to reinvest their Property Purchase Payments in units of the Company at the then current share price. Units consist of one common share and 1/2 warrant priced at 120% of unit price and having a term of two years).

The acquisition agreement is very favourable to Selwyn as it provides clear 100% ownership, subject to the royalty and net profits interest, with no back-in rights to participation in the project by either of Placer or Cygnus. Subsequently, the interest of Placer was transferred to Terrane Metals Corp. To date neither of Terrane or Cygnus have exercised their right to convert Property Purchase Payments into common shares or units of Selwyn.

Historical Exploration and Development Activity

The initial discovery of Howard's Pass was made in 1972 by Placer Development Corporation, and the property was aggressively advanced by the Howard's Pass Joint Venture until 1981. Work by the Joint Venture included drilling of 210 diamond drill holes defining the resources in the XY and Anniv zones. Their work also included test mining of a high grade portion of the XY deposit and extensive metallurgical testwork that included detailed study of on-site advanced metal processing. Placer's work on the project subsided as it focused on growing into a significant gold company and Cygnus, a subsidiary of US Steel Corporation, refocused on its steel-making business.

In 2000, the Howard's Pass property was briefly under option to Copper Ridge Exploration in 2000 that undertook drilling in the Anniv deposits completing 8 drill holes. Copper Ridge also undertook a scoping study on development of Howard's Pass. The study indicated that with large scale production, the Howard's Pass deposits could be economically attractive.