Pacifica to spin off non-Selwyn projects

Vancouver — Aspiring zinc developer Pacifica Resources (PAX-V, PCFRF-O) plans to reorganize itself into a pair of new companies to better realize market value for its mineral projects outside of its lead-zinc Selwyn project in the Yukon.

The proposed plan would see Pacifica change its name to Selwyn Resources to hold the namesake, advanced-stage project in the Howard’s Pass District of eastern Yukon.

A new company, Savant Exploration, would then be created to hold Pacifica’s non-core precious and base metals projects in Canada, the U.S. and Chile. Shares received from the transferred assets would then be distributed to Pacifica shareholders through a plan of arrangement.

Pacifica envisages the reorganization as similar to Expatriate’s formation of Pacifica and Yukon Zinc (YZC-V, YZCCF-O) in late 2004 that also included the previous creation of StrataGold (SGV-T, SAGDF-O) in 2003.

Completion of the proposed plan, subject to shareholder and regulatory approvals, is expected by June 2007.

Pacifica completed a $21-million exploration, environmental and engineering program on Selwyn in 2006, leading to a recently completed preliminary assessment study for the project.

The study shows positive preliminary economics for a large-scale open-pit zinc-lead operation at Selwyn. Proposed development includes a 20,000-tonne-per-day mine feeding a standard mill and flotation circuit to produce zinc and lead concentrates. Use of a dense media separation circuit to upgrade mill feed is also modelled.

A pretax net present value of $836 million is calculated using an 8% discount plus zinc and lead prices of US$1.10 and US50 per lb., respectively. A 32.2% pretax internal rate of return is forecast, and with lead factored in as a byproduct credit, the zinc cash break-even cost is US48 per lb.

The study is based on indicated resources of 33.5 million tonnes grading 5.52% zinc and 2.1% lead in five zones. An additional 112.9 million inferred tonnes average 5.4% zinc and 2.1% lead. Zinc and lead metal prices of US70 and US40 per lb., respectively, were used in the resource calculation.

Initial capital spending of $685 million (including $30 million of working capital) would be needed to put Selwyn into production. With an estimated 12.7-year mine life, the operation is expected to produce about 278,000 tonnes (613 million lbs.) zinc and 93,000 tonnes (205 million lbs.) lead in concentrates annually (using a 5-year average).