I already have a WatchOSExtension developed under swift, is it possible to connect it to a newely developed xamarin ios project?
I think the watch extension needs to be compiled into the the app bundle so I dont think this can be done (compile swift code into c#, i may be wrong). They also need references to each other see here.
Its like saying "I have found some swift code can I just put this into my xamarin app and it will work?"
No, it is not possible to use a Swift extension with a Xamarin app - this also applies to any form of iOS extension.
You will need to redo your extension with Xamarin. Documentation for watchOS can be found here: https://developer.xamarin.com/guides/ios/watch/getting-started/