Southwestern Resources Corp.
TSX : SWG

Southwestern Resources Corp.

May 24, 2006 08:00 ET

Southwestern Resources and Inco Limited to Form Joint Venture for Nickel Exploration in China

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 24, 2006) - Southwestern Resources Corp. (TSX:SWG) has entered into a Joint Venture Heads of Agreement with Inco Limited (Inco) to carry out mineral exploration for nickel, copper and platinum group metals (pgm), in Yunnan and Sichuan provinces, China. Both companies have been conducting mineral exploration in China for many years, and will each contribute data relating to the area of interest to obtain a 50% participating interest in the Joint Venture. This Joint Venture is subject to the companies executing a definitive agreement.

Southwestern and Inco will contribute to the Joint Venture's exploration program on a pro rata basis, with Southwestern the initial operator. A management committee comprising two members appointed by each party will be formed to direct the exploration programs. The Joint Venture area of interest covers approximately 130,000 square kilometers of land surrounding Southwestern's Boka Gold Project, where the Company is conducting a pre-feasibility study.

Under the terms of the agreement, either party can request that a specific area within the Joint Venture area of interest be designated a specific project, and the parties will form a separate joint venture for that specific project. Inco will have the option to increase its interest in a specific project by 10% (to a total of 60%) by fully funding all costs to produce a positive bankable feasibility study within three years of its election. Inco will also have a second option, exercisable within 90 days of the completion of the feasibility study, to increase its interest a further 10% (to a total of 70%) by thereafter funding all costs of that specific project incurred to the commencement of commercial production.

John Paterson, President of Southwestern, stated, "The Joint Venture with Inco presents an opportunity for Southwestern to work with a strong partner with the technical knowledge, expertise and resources to advance exploration findings in the area. Southwestern has been evaluating the 130,000 square kilometre area of interest for several years, specifically for Norilsk-type nickel-copper-pgm mineralization and a number of prospective areas identified by that work will be the initial focus for exploration. We look forward to a successful relationship with Inco on this project."

Southwestern Resources Corp. has been exploring in China for more than 9 years and is currently conducting a resource expansion drilling program as part of a pre-feasibility study of the Company's Boka Gold Project in Yunnan Province. Southwestern is also exploring for porphyry copper-gold in southern Yunnan Province under joint venture with Newmont Overseas Exploration Limited. The Company has a number of significant joint ventures in Peru including the Liam Gold-Silver Project with Newmont Peru Limited and the Antay Porphyry Copper-Gold Project in Peru with Anglo American Exploration Peru S.A. as well as the 100% owned Accha Zinc Project in Peru.

Forward-Looking Statement

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 the company'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. The company does not assume the obligation to update any forward-looking statement.


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