Southwestern Resources Corp.
TSX : SWG

Southwestern Resources Corp.

July 18, 2005 17:17 ET

Southwestern Resources Corp.: Positive Preliminary Assessment on Boka 1 Gold Zone, Boka Gold Project, Yunnan Province, China; Conference Call Scheduled

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 18, 2005) - Southwestern Resources Corp. (TSX:SWG) is pleased to announce that Hatch Limited ("Hatch") has completed a preliminary assessment (the "Study") on the Boka 1 Gold Zone located in Yunnan Province, China and concludes positively on the scope for developing a mining operation. The Study, dated June 30, 2005 and which includes resource estimates, was prepared in accordance with the standards and definitions of National Instrument 43-101. A copy of the report will be posted on the Company's website at www.swgold.com and filed on SEDAR.

Management's objectives for the Study were to develop realistic operating parameters in China and apply these operating parameters to assess mining at Boka. The Study addresses a first pass assessment of the resource base at Boka 1 and Boka 7, and the scope of future production. Boka 1 and Boka 7 are two of several targets that have been identified on the Boka Project (see attached map). The Study adopted a conservative approach in estimating grade and tonnage. High-grade gold values were cut to 31 grams per tonne and only 67 drill holes (to April 25, 2005) were used to estimate the resource base. Mineralization is open in all directions at both Boka 1, where drilling continues, and Boka 7. The Study considers the Boka Project to be one of the significant gold discoveries of recent years.

The Study concludes positively on the scope for developing a mining operation with a capacity to support production levels of 200,000 ounces of gold per annum. It recommends that a pre-feasibility study commence immediately. The pre-feasibility study will include further infill and expansion drilling to define the limits of the resources that have been outlined to date at Boka 1 and Boka 7, as well as drilling of the other targets on the Boka Project including Lower Boka 7, Boka 8, Boka 11 and the new targets discovered in the southern portion of the Project area. As the resource base at Boka is further defined, management believes there is scope for potentially significant positive revision of the mining and processing rates described in the Study.



Mineral Resource Estimate, as of April 27, 2005
(0.5 g/t Au cut off, cut to 31 g/t Au)

(Uncut)
Boka 1 North --------
Indicated 4.8 Mt at 2.98 g/t Au equals 0.46 Moz (0.49 Moz)
Inferred 15.9 Mt at 2.75 g/t Au equals 1.41 Moz (1.45 Moz)

Boka 1 South
Indicated 5.7 Mt at 2.79 g/t Au equals 0.51 Moz (0.54 Moz)
Inferred 15.4 Mt at 2.75 g/t Au equals 1.36 Moz (1.65 Moz)

Boka 7
Inferred 14.5 Mt at 2.75 g/t Au equals 1.28 Moz (1.28 Moz)
---------------------- -------- --------
Totals
Indicated 10.4 Mt at 2.88 g/t Au equals 0.97 Moz (1.03 Moz)
Inferred 45.8 Mt at 2.75 g/t Au equals 4.05 Moz (4.38 Moz)

Highlights of the Study

In-pit resources
Indicated 5.1 Mt at 2.93 g/t Au equals 0.48 Moz
Inferred 18.1 Mt at 2.93 g/t Au equals 1.71 Moz

Metallurgical Recovery +90%

Mill Capacity 2.4 million tonnes per year

Overall Strip Ratio 6.7 to 1

Open Pit Mine Life 10 years

Gold Production 200,000 ounces per year

Operating Cost US$12.11 per tonne of ore

Cash Cost US$143 per ounce of gold

Capital Cost Estimate US$139 to US$235 million


Mining

The Study envisages an open pit operation, and also highlights additional underground mining options for future consideration. Within the resources outlined in the Study, Hatch selected a 2.4 million tonnes per annum mining rate to achieve a three grams per tonne gold head grade, with a strip ratio of 6.7 to 1. Given the results of ongoing drilling, such as those released since April 27, 2005, management believes that additional resources will be added at Boka 1 and Boka 7, and will be incorporated into a revised mining plan in the pre-feasibility study.

Processing

Metallurgical test work on four 200 kilogram samples from Boka 1 showed that the ore is free milling with greater than 90% recoveries at a coarse grind. A total of 22 composite core samples are presently being treated at SGS-Lakefield to provide further metallurgical data. Initial gravity tests on high-grade sulphide ore showed that 45% of the gold could be recovered in a gravity circuit.

Run-of-Mine ore would first be crushed in a jaw-crusher then ground in a semi-autogenous grinding (SAG) mill followed by secondary grinding in ball mills. According to the Study, the milled ore would then be put through a conventional carbon in leach (CIL) processing circuit.

Infrastructure - Site Layout

The Boka Project is easily accessible by paved highway and gravel road from the city of Kunming, capital of Yunnan Province. The Provincial government is currently undertaking a major upgrading of roads in this area and by the end of 2006, modern paved highways will be completed from Kunming to a point approximately six kilometres east of the Boka Project area.

Site layout presently outlines three tailings facilities within uncultivated zero discharge basins. The planned tailings facilities are located up to six kilometres from the plant site, and have the capacity to contain 175 million tonnes of material. Two waste dump sites have been chosen within one to three kilometres from the mine site to create as little disturbance as possible within and around the town of Boka. Hauling of waste and sub-grade material from pits at a lower elevation to dumps above and away from drainage will be accomplished by a series of overland conveyors. The main power grid is located 1.5 kilometres east of the mine site. This power grid has a capacity of 150,000 kva and is more than sufficient to support the modelled mining operation.

John Paterson, President of Southwestern states, "We are very pleased with the positive preliminary assessment of the gold resources defined to date at Boka, particularly the estimated low cash costs. With further step-out drilling at Boka 1, systematic drilling at Boka 7 and testing of other targets we anticipate increasing the present resource base substantially. We will commence a pre-feasibility study shortly, which will benefit from additional drilling. Nine drill rigs are currently on site drilling at Boka 1, and will continue with infill and step-out drilling at Boka 1, and commence step-out drilling at Boka 7, and drill testing of other targets. The Study also identified the potential to develop a high-grade underground mine in conjunction with an open pit mine. As part of the pre-feasibility study, the Company will develop underground access to define these high-grade zones."

The Hatch report was prepared and supervised by Callum Grant (P.Eng.) and Paul Hosford (P.Eng.), independent qualified persons as defined under National Instrument 43-101. As required by that instrument, the scope of the Study is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment in the Study will be realized.

Conference Call

John Paterson, President of Southwestern Resources, will host a conference call to discuss the results at 8:00 a.m. PST (11:00 a.m. EST) on July 19, 2005. The conference call access details are:

Call in numbers: 1-416-695-9753, 1-877-888-4605 (toll-free)

The call will be webcast and can be accessed at Southwestern's website at www.swgold.com. Playback will be available until August 2, 2005 on 1-416-695-5275, 1-888-509-0081 (toll-free), and will also be available on the Company's website.

Southwestern Resources Corp. is exploring in several countries for precious and base metals. The Company has a number of significant projects 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., as well as the 100% owned Accha Zinc Project in Peru. The Company 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.

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 Corporation'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.

To view the attached map please click on the following link: http://www2.ccnmatthews.com/database/fax/2000/swg.pdf


Contact Information

  • Southwestern Resources Corp.
    Timo Jauristo
    VP, Corporate Development
    (604) 669-2525
    (604) 688-5175 (FAX)
    or
    Southwestern Resources Corp.
    John G. Paterson
    President
    (604) 669-2525
    (604) 688-5175 (FAX)
    or
    Southwestern Resources Corp.
    Daniel G. Innes
    VP, Exploration
    (604) 669-2525
    (604) 688-5175 (FAX)
    info@swgold.com
    www.swgold.com