Southwestern Resources Corp.
TSX : SWG

Southwestern Resources Corp.

June 06, 2006 10:42 ET

Southwestern Resources Announces Launch of New Zinc Company

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - June 6, 2006) - Southwestern Resources Corp. (TSX:SWG) -

THIS NEWS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S., AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN IN THE U.S., AND THE SECURITIES MAY NOT BE OFFERED OR SOLD IN THE U.S. ABSENT REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933 OR AN EXEMPTION FROM SUCH REGISTRATION.

Southwestern Resources Corp. ("Southwestern") is pleased to announce the launch of a new zinc company, following the previously announced review of alternatives to maximize the value of its zinc assets. The new zinc company, Zincore Metals Inc. ("Zincore"), which is currently a wholly owned subsidiary of Southwestern, will undertake an Initial Public Offering (IPO). Filing of a preliminary prospectus is expected before the end of June.

Southwestern's Board of Directors has approved the transfer of ownership of its 100%-owned zinc deposits in Peru to Zincore. These assets include the 30 kilometre long Accha-Yanque zinc oxide property in southern Peru, the Minascassa zinc-copper property, located 400 kilometres southeast of Lima, and the Sayani lead-zinc property, 25 kilometres southeast of Minascassa.

"The creation of a pure zinc company will unlock the inherent value in Southwestern's zinc assets," said Southwestern's President and CEO, John Paterson. "The capital raised through the IPO, combined with a dedicated management team, will generate a greater focus on advancing the development of these assets. Southwestern will remain the largest shareholder following the IPO and as such, Southwestern shareholders will participate in the new company's opportunities for growth and value creation."

Funds raised through the IPO will be directed toward exploration, resource drilling, pre-feasibility study and feasibility study at Accha-Yanque; exploration at Minascassa and Sayani; the evaluation and acquisition of other zinc mineral properties; general and administrative expenses; costs of the IPO, and working capital.

Southwestern has appointed Canaccord Adams as its lead underwriter to arrange the IPO on an underwritten basis.

Zincore's strategy is to become a leading low-cost zinc metal producer with the immediate objective of advancing its Accha-Yanque property to a development decision. The company has immediate exploration opportunities on its portfolio of properties and will pursue new zinc opportunities in Peru, China and elsewhere around the world.

Accha-Yanque Project

The Accha-Yanque project consists of 14,230 hectares of exploration concessions, where nine zinc oxide prospects have been identified to date. Pasminco Limited completed a scoping study on the Accha deposit in 1999 that identified historical mineral resources defined under the JORC Code, the Australian Code for Reporting of Mineral Resources and Ore Reserves. Drilling by Rio Tinto at the Yanque deposit outlined widespread oxide zinc mineralization.(1) An aggressive exploration program and a comprehensive pre-feasibility study are planned to define resources at Accha-Yanque under National Instrument 43-101 guidelines, to expand known mineralization, and verify preliminary mining, milling and infrastructure requirements. The pre-feasibility study is targeted for completion by mid-2007.

(1) These historical JORC resource estimates have not been reconciled to the mineral resource categories of National Instrument 43-101 and sufficient work has not been done to classify these historical estimates as current mineral resources. Southwestern has not done sufficient work to determine if these historical resource estimates can be relied upon. Southwestern is not treating these historical estimates as current mineral resources as defined by National Instrument 43-101.

About Southwestern

Southwestern is exploring in several countries for precious and base metals. Southwestern has a number of significant projects under way, including the Boka Gold Project in China with Team 209, the Liam Gold-Silver Project in Peru with Newmont Peru Limited, and the Antay Porphyry Copper-Gold Project in Peru with Anglo American Exploration Peru S.A. Southwestern is also exploring for porphyry copper-gold in a large area of southwestern Yunnan Province, China under a joint venture with Newmont Overseas Exploration Limited, and recently entered into a joint venture heads of agreement with Inco Limited for nickel, copper and platinum group metals exploration in China.

Forward-looking Statements

Statements in this release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed under the heading "Risk Factors" and elsewhere in Southwestern's periodic filings with Canadian securities regulators. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. Southwestern does not assume the obligation to update any forward-looking statement.

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