An agreement with a governmental agency has given
The grant allows Southwestern to earn a 90% interest in 99 sq. km of exploration and mining concessions about 110 km north of the provincial capital of Kunming.
To earn its stake in Boka, the company must spend US$4 million over four years and pay US$1.7 million in the final year of the option period. At least US$500,000 must be spent in the first year alone.
China Yunnan Province Nuclear Industry Team 209 will retain a 10% carried interest after the financial obligations are met. The agency had been conducting a small-scale operation before signing on Southwestern.
So far, Southwestern has completed a preliminary survey of the property using stream-sediment geochemical sampling. More detailed chip samples were taken from two of 36 adits that Team 209 had been driven over the past year and a half.
Gold mineralization is associated with flat to gently east-dipping calcareous siltstones, carbonaceous pelites and dolomite breccias. The stratigraphic units belong to the Heishan formation, which formed in the Middle Proterozoic.
In the XG-23 tunnel, grades varied from less than a tenth of a gram to over 66 grams gold per tonne. Results from the PD-4 adit were less appealing, though one sample yielded nearly 24 grams.
Most of the channels were collected over 1.5 metres or less of each tunnel’s rib, though one was 5 metres long and two others, 6 metres. The samples typically weighed 2 kg each and were taken continually along 87 metres of XG-23 and 79 metres of PD-4.
The adits, which are 1.5 to 2 metres high and spread over a vertical distance of 200 metres, cover 600 metres of the Boka 1 zone’s strike length. The two are more than 210 metres apart.
Nearby surface outcrops and stream sediments were also sampled, and their grades support the presence of widespread mineralization. The rock samples yielded up to 21 grams over 20 metres of outcropping, and stream sediments returned anomalous values over 15 km of drainage ways, in a north-south direction.
Like the adits, the outcrops are found at different elevations. The lowest one, at 1,680 metres above sea level, averages 10.9 grams over 1.5 metres of continuous sampling. The highest outcrop, at 1,832 metres, runs 0.2 gram over 25 metres of channelling.
A follow-up program is under way. All of the existing workings will be sampled and surveyed, and some will be extended 100 metres into the zone. Trenching and diamond drilling is planned as well.
As part of its due diligence, the junior prospected 800 sq. km of surrounding ground, resulting in the discovery of two new showings 3 km north of the minesite, in the same stratigraphic horizon. As a result, Southwestern has been granted the right to explore 560 sq. km of that area, which includes the 15 km-long stream sediment anomaly.
The local and regional program is expected to take 3 months to complete.
Southwestern also is earning an 80% stake in the Yiliang property, which covers 62,000 sq. km of the province. There, it must spend US$3 million by 2006.
The company has begun to comb the western half of the Yiliang property, having explored 15,000 sq. km of the eastern side. Efforts were spent on Permian-aged flood basalts of the Ermeishan formation outcrop.
The basalts are intruded by co-magmatic gabbros and rest unconformably on sulphate-rich dolomites, limestones and black shales of Upper Proterozoic to Cambrian age. The stratigraphical setting is likened to Noril’sk, Russia, where some of the world’s largest massive sulphide deposits are found.
Stream-sediment sampling outlined nickel and platinum-group-element (PGE) anomalies in the basalts themselves, as well as a broad zinc-lead-cadmium anomaly in the younger sediments. Geochemical signatures similar to the latter are associated with nearby, producing zinc deposits.
Southwestern also notes that there are several nickel-copper-PGE prospects in the roots of the gabbros, west of the area of interest, where the basalts have been eroded.
In related news, Southwestern and two shareholders have agreed to amend their escrow agreement. Global Gold, a mutual fund, and John Paterson, who is Southwestern’s president and chief executive officer, can tap 25% of the over 1.67 milion shares being withheld from trading on October 30 and the remainder over the next 18 months, in three equal installments.
On June 30, Southwestern had over $7.4 million in current assets and $93,000 in current liabilities for working capital of $7.3 million. Among its assets are: a 39.1% stake in
Southwestern has over 15.8 million shares outstanding but may reduce that amount by 743,000 shares before the year ends. The normal course issuer bid, which was granted earlier this earlier, gave the company the right to repurchase 840,000 shares.
The shares will be held in the treasury and thus may be reissued at a later date.
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