Southwestern seeks to ‘maximize value’ of zinc assets

Vancouver Higher zinc prices and the improved outlook for the base metal have prompted Southwestern Resources (SWG-T) to review opportunities to ‘maximize the value’ of its wholly owned Accha zinc project in southern Peru.

Southwestern is investigating various ways to boost the value of its zinc assets, which could include a potential sale or joint-venture. Late last year, the company sold its 50% interest in the Porocota gold-silver project in Peru to Compania de Minas Buenaventura (BVN-N) for US$4.5 million.

A drilling program is under way at Accha as part of National Instrument 43-101-compliant prefeasibility study. In addition to the advanced Accha deposit, the property hosts multiple oxide zinc-silver-lead prospects along a 30-km-long northeast-southwest trending zone.

A metallurgical review recently confirmed that mineralized material at Accha is metallurgically similar to the Skorpion zinc project in Namibia. As such, testing is modeled after the ‘Skorpion process’, with modifications to suit the Accha material. The company notes that to this point, the metallurgical review has produced favorable results.

Southwestern also owns the Minacassa zinc project in southern Peru, a large zinc-copper system in the northwestern portion of the Tintaya-Bambas fault. The company also holds interests in the Antay copper-gold project and the Liam gold-silver project in Peru, both joint ventures with major companies. The company’s main asset is the 90%-held Boka gold project in China’s Yunnan province. The remaining interest is held by a Chinese partner.

Last year, Southwestern released a scoping study that included initial resource estimates for several zones at Boka. The ‘first-pass’ study examined an open-pit operation that would produce 200,000 oz. gold annually, at cash costs averaging US$143 per oz., for at least a decade. Capital costs ranged from US$139 million to US$235 million, while the strip ratio was estimated at 6.7:1 waste-to-ore.

The proposed mine plan was based on indicated resources of 5.1 million tonnes at 2.93 grams, or about 480,000 contained oz., plus a further 18.1 million tonnes at 2.93 grams in the inferred category, for an additional 1.71 million contained oz. A pre-feasibility study is under way to determine optimum production rates, and potential for underground mining of high-grade resources.