Selwyn Resources Announces Updated ScoZinc Mine Plan

VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 11, 2013) - Selwyn Resources Ltd. (TSX VENTURE:SWN) ("Selwyn" or the "Company") is pleased to announce results of an update to the December 20, 2012 Preliminary Economic Assessment Update Report ("PEA") for the ScoZinc zinc-lead project in Nova Scotia, Canada. This updated PEA includes an expansion of the mine plan and new metallurgical information based on additional engineering undertaken in first quarter of 2013,and completed at a modest cost of approximately $100,000 as indicated in the Company's May 2013 Information Circular. The detailed economic assessment is classified as a PEA due to the fact that the mine plan includes a small proportion of Inferred mineral resources.

The full text of the report, which meets National Instrument 43-101 standards, will shortly be filed for review on www.sedar.com.

Since announcing the acquisition of ScoZinc Ltd. on February 8th, 2011, Selwyn has updated mineral resources (see August 24, 2012 news release), a 55% and 65% increase of Measured and Indicated Mineral Resources respectively as compared with the prior Mineral Resource inventory (April 6, 2011 news release). The expanded Mineral Resource forms the basis for a revised mine plan and economic model (November 22, 2012 news release). The revised mine plan confirmed a significant increase in mine life for the Main and Northeast pits. This update to the PEA builds on that mine plan and incorporates a proposed underground mining operation between the Main and Northeast open pits, and blending of the high grade material with the lower grade open pit mineralization in years 5 and 6 of the mine plan. Updated equipment capital and operating cost estimations by a major mine equipment supplier have also been included in the PEA along with the new metallurgical data.

Dr. Harlan Meade, President and CEO of Selwyn Resources Ltd ("Selwyn") states; "The recently completed work by our ScoZinc team has further enhanced the mine plan and demonstrates the attractive economics for the restart of the mine, when metal prices strengthen from current levels as concentrate supply is forecast to tighten. The improvements provide for a balancing of mine grades over the current 8-year mine life. With the reduction of operating costs, ScoZinc is well positioned on the cost curve for development projects. The reasonable next steps at ScoZinc would be to focus on the further expansion of the mine plan with addition of the Getty deposit and pursuit of other opportunities to reduce operating costs."

As metal prices are forecast to improve from current levels, the new updated PEA, Base Case metal pricing of US$1.00/lb zinc and US$1.10/lb lead is used and are well within the range of metal price forecasts identified with a large number of analysts and banks for the period 2014 and beyond (see Metal Prices and Economic Sensitivity).

The highlights include:

• Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first five years of operations averages CAD $24.1 million per annum, a 43.7% increase.
• Pre-tax NPV 5% of CAD $61.3 million, a 58.3% increase (NPV 8% - CAD $52.4 million, a 61.3% increase);
• After Tax NPV 5% of CAD $51.9 million, a 44.5% increase (NPV 8% - CAD $44.4 million, a 47.4% increase);
• Pre-tax Internal Rate of Return (IRR) of 49.0%, a 34.0% increase (after-tax IRR of 46.2%, 30.2% increase);
• C1 zinc cash cost of production (after deducting credits for lead) for the first five years is CAD $0.55/lb, a 16.6% decrease (Life of Mine C1 zinc cash cost of CAD $0.51/lb, a 19.6% decrease);
• Payback of Capital in 1.56 years, a 30.4% decrease;
• 2,500 tonnes per day mill processing plan;
• Unit operating costs of $50.35 per tonne milled for the first five years, a 4.8% decrease ($40.84 per tonne milled for the life-of-mine, a 3.5% decrease);
• Mine and mill restart capital expenditures (CAPEX) of CAD $32.8 million, 7.1% increase (including $1.4 million in contingency and $3.2 million working capital);
• Base Case zinc and lead prices of US$1.00 and US$1.10/lb respectively;
• Exchange rate of 1.02 Canadian dollar to 1 US dollar;

The following table compares the results of the new updated Preliminary Economic Assessment with the previous Nov 22, 2012 updated PEA based on the current metal prices of US$1.00 for zinc and US$1.10 for lead, and assumes an all equity basis.

	Previous PEA (Nov 22, 2012 news release)	Current PEA
Mill Processing Rate (tonnes per day)	2,500	2,500
Unit Operating Costs (per tonne milled) for first five years	$52.89	$50.35
Unit Operating Costs (per tonne milled) for life of mine	42.31	$40.84
Restart Capital (including contingency and working capital)	$30.6 M	$32.8 M
Zinc Price (US$/lb)	$1.00	$1.00
Lead Price (US$1/lb)	$1.10	$1.10
Exchange Rate (CDN$ to US$)	1.00	0.98
Pre-Tax NPV (at 5%)	$38.7	$61.3
Pre-Tax NPV (at 8%)	$32.5	$52.4
After-Tax NPV (at 5%)	$35.9	$51.9
After-Tax NPV (at 8%)	$30.1	$44.4
Pre-Tax Internal Rate of Return	36.5%	49.0%
After-Tax Internal Rate of Return	35.5%	46.2%
Payback	2.24 years	1.56 years
Zinc C1 Cash Cost/lb, for first five years	$0.66	$0.55
Zinc C1 Cash Cost/lb for life-of-mine	$0.64	$0.51
Annual Average EBITDA for first five years	$16.8 M	$24.1 M
Zinc Treatment Charge/tonne concentrate	$190	$190
Lead Treatment Charge/ tonne concentrate	$100	$150

Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Restart Plan and Capital and Operating Costs

The updated PEA was completed by Selwyn and ScoZinc senior personnel responsible for mine restart and operations, independent industry consulting metallurgical and mining engineers, and technical experts with a world-leading mine equipment supplier. The updated PEA considers the sequential development of two open pit operations in close proximity to the existing mill and an underground operation to extract high grade mineralization between the lower limits of the two pits. The zinc-lead mill feed will be processed by standard flotation methods to produce clean, high-grade zinc and lead concentrates. The economic evaluation is based on a mineral resource inventory from production records and the updated mineral resource technical report dated August 24, 2012 (see SEDAR filing dated August 24, 2012).

The ScoZinc mill has undergone significant refurbishment and improvements since Selwyn assumed ownership of the property in June 2011. Selwyn has undertaken more than $8 million in engineering, definition drilling, permitting, mill and mine infrastructure refurbishment and surface rights acquisition. An additional approximate $32.8 million is required for refurbishment and modernization to increase the mill throughput to 2,500 tonnes per day, pre-stripping of waste material in the Main pit and other start-up costs, including approximately $4.6 million in contingency and working capital. Additional drilling at the Northeast and Getty deposits has the potential to increase mineable resources, lower waste to ore ratios and defer lower grade mineralization to later in the mine's life.

The capital and operating costs included in the PEA were derived by estimating detailed costs for the mill refurbishment, updating the known historical operating costs from the open pit operations conducted by the previous operators (2007 to 2009), recent detailed cost estimates from equipment suppliers and estimated costs for the proposed underground operation. The use of recent vendor quotes and historical operating data, as a basis for the PEA, is considered a more accurate approach than the methods typically used in scoping studies for greenfield projects.

Metal Prices and Economic Sensitivity

The current outlook for zinc and lead prices is very positive with a widespread expectation of significant improvements from the year to date average price of US0.89/lb for zinc and US0.99/lb for lead, in the later part of 2013 and beyond. Numerous groups are forecasting a tightening of mine supply over the next several years that could result in higher zinc and lead prices. The following table illustrates the impact on the operational plan with variations in zinc and lead prices. As common in such sensitivity analysis, the base assumptions are unchanged as metal prices are adjusted. The economic analysis excludes any cost for financing the project.

Metal Price Sensitivities Analysis

Zinc/Lead	NPV Pre-Tax		NPV After-Tax		IRR %		Payback
Price US$/lb	NPV 5%	NPV 8%	NPV5%	NPV 8%	Pre-Tax	After-Tax	Period
0.80/0.90	-31.4M	-31.6M	-31.4M	-31.6M	0.0%	0.0%	9.71
0.90/1.00	15.0M	10.4M	15.0M	10.4M	17.3%	17.3%	2.66
1.00/1.10	61.3M	52.4M	51.9M	44.4M	49.0%	46.2%	1.56
1.10/1.20	107.7M	94.4M	84.1M	73.7M	76.2%	68.7%	1.12
1.20/1.30	154.1M	136.4M	116.2M	102.8M	101.5%	89.2%	0.84
1.30/1.40	200.5M	178.4M	148.2M	131.8M	125.9%	108.8%	0.65
1.40/1.50	246.8M	220.4M	180.1M	160.7M	149.6%	126.1%	0.57
Wood Mackenzie Forecast 2014 to 2021 Annual Metal Prices and Treatment and Refining Charges
Aggregate forecast prices and TC/RC's	222.6M	195.1M	163.1M	142.8M	95.8%	84.1%	1.28

The selection of Base Case pricing of US$1.00/lb for zinc and US$1.10/lb for lead is based solely on a review of 17 institutions with recent price forecasts for zinc and lead for 2014 and beyond. The sensitivity chart illustrates key economic parameters for various price scenarios that investors may wish to consider.

We have also included an evaluation of the ScoZinc Project using forecast zinc and lead prices by Wood Mackenzie (January 2013) a well-respected UK based institution that provides the mining industry with supply, demand, cost and price forecast information. Importantly, the evaluation utilizing Wood Mackenzie forecasts metal price in conjunction with varying forecast treatment and refining charges. The latter vary with metal prices due to price participation provision that are customary in concentrate smelting contracts, and therefore provides for a more realistic sensitivity analysis. The Wood Mackenzie prices and treatment and refining charges are forecast annually through 2023.

Mining

The two conventional open pits and the proposed underground mine provide a blended feed to the mill. The Main and Northeast pits were optimized by technical staff using MineSight software. The underground mine plan was designed by independent consultants using GEMS software and AutoCAD. Production scheduling is based on an average production rate of 877,800 tonnes per year (or 2,500 tonnes per day) into the mill over an average of 351 operating days per year. The average waste to ore ratio for the life-of-mine open pits is 13.4 to 1 (excluding pre-stripping which is included in the capital costs). Approximately 62% of the waste is readily removed without blasting, including soils that will be used for reclamation, and 22% of the waste is gypsum, which will be stockpiled for possible future sale: no value for gypsum has been used in the PEA. Open pit mine dilution and mining losses are assumed to be 10% and 5%, respectively. In-pit diluted mineral resources are 6,394,000 tonnes grading 3.03% zinc and 1.59% lead.

The underground operation, designed by independent mining consultant Mr. Gerry Beauchamp, is based on Cut and Fill mining with un-cemented backfill, producing 500 tonnes per day of high grade mill feed. A drawdown of the water table in the proposed mine area, would be achieved largely by the pumping associated with the open pit operations. The development of the underground mine access requires a sustaining capital investment of about $11.7 million, most within Year 5 of the overall mining schedule, to develop the access to the high grade zones. Diluted and recoverable underground mineral resources are estimated at 283,000 tonnes grading 6.96% zinc and 3.98% lead. This material will be blended with open pit and stockpile feed to the mill over approximately two years beginning in the second half of Year 5 of the Life of Mine plan.

The addition of underground mine feed results in an approximate average 44.8% increase in zinc and 52.7% increase in lead grade during years 5, 6 and 7 of mine life. Aggregate production from the two open pits and the underground mine is estimated at 6,677,000 tonnes grading 3.20% zinc and 1.69% lead.

Metallurgy

The restart plan provides for modifications to the mill, including redesign and replacement of the crushing circuit, primary screen, concentrate filters and regrind mill. These modifications, together with improved plant availability, will allow average mill feed rates of 877,800 dry metric tonnes (dmt) per annum or 2,500 dmt per day. The projected feed grades for the first five years average 3.76% zinc and 1.96% lead. The projected metallurgical performance for the first five years, based on historical data and recently completed metallurgical test work, provides for a zinc concentrate grade of 57.0% zinc at 87.4% recovery, and a lead concentrate grade of 71% lead at 89.9% recovery. Recent metallurgical test work supervised by independent metallurgist Mr. Jeffrey Austin and conducted by ALS Metallurgy in Kamloops, BC confirmed the potential for improved lead recovery with modest adjustments to the mill and operating parameters. No deleterious minor elements are contained in the concentrates. The products are expected to be readily marketable, given their clean, high-grade nature.

The economic analysis includes costs associated with the planned analysis of mill operations in the pre-production period and first year of operations to investigate process revisions that could lead to increased mill performance. This will include the evaluation and prioritization of modern process controls and equipment upgrades.

Concentrate Marketing and Transport

Based on historical concentrate data, ScoZinc concentrates are expected to be readily marketable, grading 57% and 71% for zinc and lead respectively, with no penalties. Previous concentrate shipments from the ScoZinc mine were shipped to Europe and Asia.

Current infrastructure provides a number of options for the shipment of ScoZinc's concentrate. The final concentrate shipment plan will be determined at a time closer to the commencement of production at the ScoZinc mine. Proximity to port facilities, railway and highways could provide for favourable transportation costs.

Infrastructure

Excellent infrastructure is in place at the ScoZinc mine. ScoZinc has its own storage and concentrate loading facility at Sheet Harbour with a capacity of 8,500 tonnes, or 1.5 times the expected shipment size. The mine has access to ample grid power and water supply. Paved roads lead to the mine property and there is nearby access to rail.

Environment, Community Relations, and Permitting

ScoZinc operations have enjoyed strong support from local communities and the Nova Scotia government. Permitting of the expansion of the Main pit to the southwest resulted in the granting of Environmental and Industrial Approvals in October 2011 and May 2012, respectively. Existing permits will need to be amended to accommodate further expansion of the Main pit, the start-up of the Northeast pit and underground mining to achieve the approximate eight year mine life projected in the PEA.

Staffing of the restart of operations commenced in 2011 with the appointment of the General Manager (see August 16, 2011 news release). The mine is expected to employ approximately 120 persons during full operations in Q3 2014. The neighbouring communities provide a good source of skilled workers and many former employees remain interested in re-joining operations at ScoZinc.

Project Opportunities

The current mine plan and economic model do not include the Getty Deposit. The current mine plan would be updated following future definition drilling of the near surface portion of the Northeast deposit. As experienced at the adjacent and contiguous Main deposit, the surface drilling in the Northeast deposit is expected to convert Inferred mineral resources into Measured and Indicated categories. An expansion of Measured and Indicated in-pit mineral resources is expected to favourably impact the mine planning for the transition from Northeast deposit to the Getty deposit following the first 7 to 8 years of mining.

Addition of the Getty deposit and expanded mineral resources could add more than 3 years to the current mine life. ScoZinc also has extensive mineral claim holdings in close proximity to ScoZinc operations that have potential for district scale distribution of mineralization... Additional field geochemical surveys of the geophysical targets identified in the airborne survey were undertaken in early 2012; results are being analyzed.

Qualified Persons

This news release has been reviewed and approved by Joseph Ringwald, P.Eng., Vice President Mining with Selwyn Resources Ltd., Jeffrey B. Austin, P.Eng., independent metallurgical consultant, and Gerry Beauchamp, P.Eng., independent consulting mining engineer. All are Qualified Persons under NI 43-101.

Cautionary Note

The PEA is preliminary in nature and includes Inferred mineral resources that are considered too geologically speculative to be subject to economic considerations that would enable them to be categorized as mineral reserves. There is no certainty that the forecast results stated in the PEA will be realized. For a full description of known risks that could materially affect potential development of the ScoZinc zinc-lead project, see Selwyn's Annual Information Form March 28, 2013 under the heading "Risk Factors" which are incorporated by reference herein and are available on www.sedar.com under the Selwyn Resources profile.

Cautionary and Forward-Looking Information Comments

This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation, which is also referred to as "forward-looking statements." Wherever possible, words such as "plans," "expects," or "does not expect," "budget," "scheduled," "estimates," "forecasts," "anticipate" or "does not anticipate," "believe," "intend," and similar expressions or statements that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved, have been used to identify forward-looking information. In particular, this news release describes future events and conditions related to Selwyn's plans for restarting the ScoZinc Mine and further exploration and studies at the ScoZinc lead-zinc project. Forward-looking information is based on management's reasonable assumptions, estimates, expectations, analyses and opinions on the date of this news release. These are based on management's experience and perception of trends, current conditions and expected developments, and other factors that management believes are relevant and reasonable in the circumstances, but which may prove to be incorrect.

Assumptions have been made regarding, among other things, Selwyn's ability to carry on exploration and development activities, the timely receipt of required approvals, operating costs for the ScoZinc Mine, the price of zinc and lead, Selwyn's ability to operate in a safe, efficient and effective manner and Selwyn's ability to obtain financing as and when required and on reasonable terms. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Selwyn's actual results, programs and financial position could differ materially from those anticipated in such forward-looking statements as a result of numerous factors, many of which are beyond Selwyn's control. These factors include, but are not necessarily limited to, results of the restart program at the ScoZinc Mine, exploration and development activities, the interpretation of drilling results and other geological data, the uncertainties of resource and reserve estimations, receipt of permits to conduct mining activities, project cost overruns or unanticipated costs and expenses, the availability of funds, fluctuations in metal prices, currency fluctuations, and general market and industry conditions. There is no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on this information. Selwyn does not undertake to update any forward-looking information, except as, and to the extent required by, applicable securities laws. For more information about the risks and challenges of Selwyn's business, investors should review Selwyn's Annual Information Form dated March 28, 2013 available at www.sedar.com.