Southwestern Resources Corp.

Southwestern Resources Corp.

March 24, 2009 08:13 ET

Southwestern Announces Plan of Arrangement With Hochschild Mining

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 24, 2009) - Southwestern Resources Corp. (TSX:SWG) ("Southwestern" or the "Company") is pleased to announce that, further to its press release dated March 10, 2009, it has entered into an Arrangement Agreement (the "Arrangement Agreement") with Hochschild Mining plc ("Hochschild") providing for the acquisition by Hochschild, directly or indirectly, of all of Southwestern's issued and outstanding common shares by way of a plan of arrangement under the Business Corporations Act (British Columbia) (the "Arrangement").

The cash consideration of $0.50 per share to be paid to Southwestern shareholders under the Arrangement represents a 144% premium to the closing price of Southwestern's shares on the Toronto Stock Exchange ("TSX") on March 9, 2009, the day prior to the initial announcement of the letter agreement respecting the Arrangement, and a 121% premium to the weighted average trading price of Southwestern's common shares on the TSX for the 20 trading days prior to such announcement.

The Company's board of directors has received a fairness opinion from Canaccord Capital Corporation, which provides that the consideration to be received by Southwestern's shareholders pursuant to the Transaction is fair, from a financial point of view, to such shareholders. After an evaluation conducted by an independent committee, Southwestern's board has determined that the Arrangement is fair to its shareholders and is in the best interests of the Company and has resolved to recommend that Southwestern's shareholders vote in favour of the arrangement.

Completion of the Arrangement is subject to customary conditions, including, among other things, approval of the Arrangement by 66 2/3% of the votes cast in person or by proxy at a special meeting of the Company's shareholders and the receipt of required court approvals. The Company anticipates the meeting to occur on or about May 8, 2009 and the Arrangement to be completed shortly thereafter. Pursuant to the Arrangement Agreement, among other things, Southwestern has agreed to pay Hochschild a break fee in the amount of $440,000 if the Arrangement Agreement is terminated in limited circumstances, which include the acceptance of a "superior proposal", as defined in the Arrangement Agreement.

About Southwestern

Southwestern is a Vancouver-based mineral exploration company engaged in the identification, acquisition, evaluation and exploration of gold, silver and base metals mineral properties. The Company has a number of significant projects, including the Liam gold-silver project in Peru. Southwestern is a reporting issuer in British Columbia, Alberta, Manitoba, and Ontario and trades on the TSX under the symbol SWG.

About Hochschild

Hochschild is a leading precious metals company listed on the London Stock Exchange (HOCM.L for Reuters / HOC LN for Bloomberg) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild currently operates five underground epithermal vein mines, four located in southern Peru and one in southern Argentina and one open pit mine in northern Mexico. Hochschild also has one early stage development project in Mexico and fifteen longer-term prospects throughout Latin America. Hochschild has over forty years experience in the mining of precious metal epithermal vein deposits.

Forward-looking Statements

Statements in this news release that are forward-looking statements are based on the current expectations, beliefs, assumptions, estimates and forecasts about the Company's business and the industry and markets in which it operates. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements due to a number of factors, including but not limited to, the Company's access to additional capital to fund future activities, the loss of mineral properties or the inability to obtain mining licenses, the inherently risky nature of the Company's activities and its lack of experience in bringing an exploration property into production, its ability to repatriate any earnings, foreign exchange fluctuations, the political stability and economic uncertainty of those areas in which the Company carries on operations and the lack of infrastructure in those areas, title risks, the risks and uncertainties associated with joint ventures and the Company's reliance on third parties, statutory and regulatory compliance, the adequacy and availability of insurance coverage, the Company's dependence upon employees and consultants and fluctuations in mineral prices and other risks detailed in the Company's filings with the Canadian Securities Authorities. In addition, there is no assurance that the abovementioned transaction will complete.

These risks, as well as others, could cause actual results and events to vary significantly. The Company expressly disclaims any intent or obligation to update these forward-looking statements, unless the Company specifically states otherwise.

Contact Information

  • Southwestern Resources Corp.
    Timo Jauristo
    Interim President & CEO
    (604) 669-2525
    Southwestern Resources Corp.
    David Black
    (604) 669-2525