Southwestern Resources Corp.
TSX : SWG

Southwestern Resources Corp.

November 09, 2006 17:29 ET

Southwestern Resources Third Quarter Project Update

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 9, 2006) - Southwestern Resources Corp. (TSX:SWG) ("the Company") is pleased to provide a quarterly update on its exploration projects in China and Peru as of the end of September 2006.

Boka Gold Project, China

The Company's material project is the Boka Gold Project located in Yunnan Province, China about 65 kilometres by road north of the capital city of Kunming. The Boka Project is held by Yunnan Gold Mountain Mining Co. Ltd. ("Yunnan Gold"), owned 90% by a Southwestern subsidiary and 10% by Team 209 of the Yunnan Nuclear Industry of Yunnan Province ("Team 209"), and is governed by a Sino-Foreign Joint Venture contract between the Southwestern subsidiary and Team 209. Southwestern is contributing 100% of the exploration funds with Team 209 retaining a 10% interest in Yunnan Gold, which was granted a 25 year business license. The Boka Project is comprised of three exploration permits and three mining permits, covering 157 square kilometres, registered in the name of Yunnan Gold.

In the third quarter, 20 drill holes were completed at Boka 1 mainly as infill at Boka 1 North and step out drilling at Boka 1 South. Other work in the quarter also included follow-up sampling in areas of gold in soil anomalies, especially within the Boka 8 and Boka 19 areas.

Subsequent to the end of the third quarter, the Company released assay results for an additional 23 drill holes at Boka 1 and Boka 7. All assay results from the resource definition drilling program at Boka 1 have been received. The updated resource estimate for Boka 1 is now expected to be released before the end of the fourth quarter.

The pre-feasibility study at Boka 1 is focusing on geological modelling and resource estimation, mining and metallurgy, environmental and social impact studies. The pre-feasibility study is being carried out under the direction of Ausenco Limited and is anticipated to be completed by the end of the second quarter of 2007.

Follow-up work in areas of significant gold in soil anomalies resulted in the identification of new mineralized areas at Boka 8 and in the Boka 19 area. At Boka 19, gold mineralization has been followed for some two kilometres within a breccia zone hosted by carbonaceous shales. This alteration/mineralized zone now appears to join with the Boka 7 Lower Zone. In the next quarter, extensive trenching programs will be carried out at Boka 8 and Boka 19 to establish drill targets for further testing.

Liam Gold-Silver Project, Peru

The Liam Project is situated in the Department of Cuzco in the southern portion of the Peru Tertiary Volcanic Belt and located 170 kilometres northwest of Arequipa. The Project is a 50/50 joint venture with Newmont Peru Limited and is comprised of 367,000 hectares of exploration concessions. Southwestern is the manager of the Project. The Project area lies within the Peruvian altiplano at an altitude of 4,470 to 5,370 metres. Liam is accessible by road from the mining community of Orcopampa where an airstrip allows access by charter aircraft from Lima or Arequipa. It is a three hour drive by gravel road to the Liam Project from Orcopampa. During the third quarter, exploration focused on the Astana and Huacullo zones where first phase drilling programs have commenced. By the end of the quarter, 12 holes were completed at Huacullo and two holes completed at Astana. A drilling program is also planned to commence on the Astana West prospect.

Several new areas of gold/silver mineralization were identified during regional evaluation of the large Liam land package. The most important of these new areas is Aluja, located in the north portion of the joint venture area about 33 kilometres north of Cerro Crespo. Four areas of mineralization have been identified in this area. Two areas are related to high sulphidation epithermal alteration in the Alpabamba volcanics and are associated with extensive silicification and anomalous gold over a 1.5 kilometre by 1.5 kilometre zone. The other two areas are associated with vein systems hosted by the overlying Barossa volcanics. A program of geophysics including induced polarization is planned for the fourth quarter.

Accha-Yanque Zinc Project, Peru

The Accha-Yanque Zinc Project, located 120 kilometres south of Cuzco, is situated within a 35 kilometre long northeast-southwest trending belt containing numerous oxide zinc occurrences located along the western margin of the Apurimac Batholith. The Accha Zone has been extensively drilled, with only first-pass drilling at Yanque, Capayocc and Azulcancha.

The Accha-Yanque Project is approaching the pre-feasibility stage and a major drilling program has been planned to infill and expand resources at the Accha and Yanque zones. The Company also intends to drill test the numerous other targets in the Accha-Yanque Belt in 2007. An access agreement with the local community was completed for Accha and the drill permit has been approved. Negotiations have commenced with the local community at Yanque, and once an agreement is reached, an application for drilling will be submitted to the Ministry of Mines.

In June 2006, Southwestern announced the launch of a new zinc company, Zincore Metals Inc. ("Zincore"), to maximize the value of its zinc assets, including the Accha-Yanque, Minascassa and Sayani properties in Peru. On October 26, 2006, Zincore filed a final prospectus for an initial public offering ("IPO") to raise $19 million by issuing 38 million shares at $0.50 per share, with a 30 day underwriters' option to purchase up to 2 million additional shares at the IPO price to cover over-allotments, if any. Southwestern holds 38,600,000 common shares of Zincore, representing a 51.74% interest prior to the exercise of any over-allotments. Zincore has received conditional approval for the listing of its common shares on the Toronto Stock Exchange ("TSX") under the symbol ZNC, subject to Zincore fulfilling all the final listing requirements of the TSX. The IPO is expected to close on or about November 8, 2006.

Antay Project, Peru

The Antay Copper-Molybdenum Porphyry Project, comprised of 50,000 hectares of exploration concessions, is situated within the Tintaya-Bambas Copper Gold Belt and is accessible by road from Cuzco located about 150 kilometres northwest of the Project area. The Antay Project is 100% owned by Southwestern and is subject to a joint venture agreement with Anglo American Exploration Peru S.A. ("Anglo"). Under the terms of the agreement, Anglo can earn up to 70% of the Project by completing a bankable feasibility study and subscribing for US$5 million worth of Southwestern shares (116,262 shares worth US$1 million have been issued to date).

Anglo has completed surface work, including induced polarization geophysics on the Ccora Sur Porphyry Zone. Four drill holes were completed at Ccora Sur without any significant results.

Sayta is a target in the north of the concessions, and will be tested with sampling, geophysics and drilling once an agreement with the local communities has been reached and a drilling permit issued.

About Southwestern

Southwestern Resources is a Vancouver-based mineral exploration company engaged in the identification, acquisition, evaluation and exploration of gold, silver and base metals mineral properties in China and Peru. At the end of June 2006, the Company had working capital of $52.3 million, total assets of over $100 million, and no long-term debt. Southwestern Resources is a reporting issuer in British Columbia, Alberta, Manitoba, and Ontario and trades on the Toronto Stock Exchange under the symbol SWG.

In conjunction with this quarterly project update, the Company plans to file a quarterly Management's Discussion and Analysis and Financial Statements on the SEDAR website at www.sedar.com.

Additional information is provided in the Company's audited consolidated financial statements for the year ended December 31, 2005 and the Company's Annual Information Form and Information Circular, also at www.sedar.com.

Quality Control - China

Southwestern has implemented a quality control program to ensure best practice in lithogeochemical sampling and analysis of soil, rock chips, trench, tunnel and drill core samples.

All drill core samples (approximately two metre, half-core composites) are shipped directly in security sealed bags to the SGS-China Laboratories preparation facility in Kunming. The entire composite is prepped to -10 mesh and a 500 gram split is sent to the SGS-CSTC Standards Technical Services Ltd. facility in Tianjan for conventional fire assay using a 50 gram charge. Other elements are analyzed using ICP methods at the SGS Canada Inc. facilities in Mississauga, Ontario.

Exploration samples (rock chip, soil, trench and, tunnel) are shipped directly in security sealed bags to the assay laboratory of the Northwest Non-Ferrous Geology Research Institute (ISO 9002) located in Xian, Shanxi Province, China and are digested in an aqua regia acid digestion and analyzed for gold and various other elements using atomic absorption.

The Company submits its own standards as a measure of the accuracy of the analysis. Field duplicates and pulp duplicates are routinely analyzed for precision. Routine assay checks from drill core are made at ALS Chemex in Vancouver, B.C. Sample results are received in batches and not as assays for an entire drill hole.

The exploration program is being carried out by John Zhang, Project Manager for Southwestern in China. John Paterson, President, Southwestern Resources Corp. and a member of AUSIMM is the Project's qualified person as defined under National Instrument 43-101. Paul Schmidt, P. Eng, a highly experienced metallurgical and project manager, has joined the Southwestern team and is responsible for overseeing the preparation of the Boka pre-feasibility study.

Quality Control - Peru

Southwestern has implemented a quality control program, under the supervision of L.D.S. Winter, P.Geo. (independent Qualified Person), to ensure best practice in lithogeochemical sampling and analysis of the trench samples. Samples are crushed at the ALS Chemex preparation lab in Lima, Peru to minus 80 mesh and pulverized to greater than 85% passing 200 mesh.

The pulps are sent to ALS Chemex in Vancouver, BC. ALS Chemex is an ISO 9002 registered laboratory and is preparing for ISO 17025 certification. Samples are digested in an aqua regia acid digestion and are analyzed for 34 elements by ICP-AES. Over-limit gold and silver analyses are further analyzed by fire assay-atomic absorption finish and gravimetric methods respectively.

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.

Contact Information

  • Southwestern Resources Corp.
    Meghan Brown
    Manager Investor Relations
    (604) 669-2525
    (604) 688-5175 (FAX)
    Email: info@swgold.com
    Website: www.swgold.com