04/22/2013 04:32 EDT | Updated 06/22/2013 05:12 EDT

Selwyn shareholders approve sale of 50% interest in Selwyn project to partner

VANCOUVER - Selwyn Resources Ltd. (TSXV:SWN) shareholders have approved the sale of the company's 50 per cent interest in a project in the Yukon to its joint venture partner amid indications that the bulk of the proceeds may be paid out in the form of a special dividend.

Under terms of the sale agreement, Chihong Canada Mining Ltd. is to pay $50-million in cash for Selwyn's half interest, money the company's management wanted to invest in the restart of its ScoZine mine in Nova Scotia.

However, dissident shareholder Samara Capital Inc. has been pressing for the company to pay the dividend and to also put the Nova Scotia project up for sale.

In a "concerned shareholder information circular" issued last week, Samara advanced the names of three nominees for the Selwyn board while supporting two current board members.

"Given the poor financing environment for junior mining companies and the lack of confidence in Selwyn management, the concerned shareholder believes the appropriate course of action is to return the majority of the proceeds from the sale of the Selwyn project to shareholders and put the ScoZinc project up for sale," it said.

After Monday's meeting, Samara issued another release saying that in addition to approving the sale of the Selwyn project in the Yukon, shareholders also fixed the size of Selwyn's board of directors at five while approving its three nominees to the board.

Consequently, it said if the sale to Chihong closes, the new directors intend see that substantially all cash and cash equivalents are paid out to shareholders after settlement of Selwyn liabilities.

It estimated the payout will be up to 10 cents per share for each of the company's more than 394 million shares.

They will also "immediately launch a strategic review of the ScoZinc project with the goal of selling the asset and paying out the net proceeds to shareholders, or if possible, selling the entire company," the Samara release said.

There was no immediate response from Selwyn management to the Samara account, which said the management-appointed chairman had "improperly purported to adjourn the meeting" after approval of the Yukon transaction.

"The meeting elected a replacement chairman and proceeded with the remaining business of the meeting as set out in the notice of the meeting dated March 22, 2013," it said.

Selwyn management earlier issued its own release saying only that "a number of shareholders had expressed support" for the Samara position.

"The company will be updating the market on its views of the dividend and the timetable for the meeting to consider the annual meeting matters," it said.

On the Toronto Venture Exchange, Selwyn shares closed up half a cent at 7.5 cents Monday.