Newmont buys $6.75 million worth of Southwestern Shares

Vancouver — Southwestern Resources (SWG-T) announced that it has inked a Letter of Intent with Newmont Mining (NMC-T) for half of its interest in the Liam project in Peru.

According to the agreement, Newmont will purchase 450,000 Southwestern common shares at a price of $15 per share for a total proceeds of $6.75 million. Newmont has agreed, for a period of 12 months, not to sell the Southwestern shares and to exercise its voting rights as directed by Southwestern. At press time common shares of Southwestern closed at $19.75

In addition, Newmont can earn a 50% interest in Southwestern’s 3,50 sq. km Liam project area by spending US$5 million over a three-year period, with a minimum annual expenditure of US$1 million. This must include 5,000 metres of diamond drilling.

Newmont has the option to earn an additional 10% interest in the project by producing a positive feasibility study. Another 10% will be granted, for a total of 70%, by funding all the costs to place the property into commercial production.

The Letter of Intent also provides that Newmont and Southwestern will form the Liam regional joint venture and both parties will contribute exploration concessions they own, covering a total of 625 sq. km. Southwestern will act as operator for the regional joint venture, and both companies will fund 50% of the initial US$5 million of expenditures over a five-year period.

Newmont stands to earn up to a 70% interest in the regional properties by producing a positive feasibility study and funding all costs to commercial production.

The Liam project is host to a northwest-southeast trending mesa-shaped ridge, dubbed Cerro Crespo, that projects 200 metres above the surrounding landscape. The ridge has dimensions of 750 metres by 250 metres and is underlain by a complex system of hydrothermal breccias associated with vuggy silica, alunite, sulphur and barite.

Also on the property is a second alteration zone, known as Queshca. It is situated about 800 metres north of Cerro Crespo and hosts similar surface concentrations of gold and silver. The Queshca zone is underlain by the same complex breccias as those observed at Cerro Crespo and intense high sulphidation alteration. Queshca extends for 1,200 metres in an east-west direction and varies from 150 metres to 600 metres in width.

Southwestern recently completed the first phase of drilling (2,000 metres in 12 holes) at the Cerro Crespo prospect. Highlights from assay results for the first six holes are as follows;

• Hole LI-01 cut 120.0 metres averaging 0.1 gram gold per tonne and 148.8 grams silver, starting from surface. This included a 37.5-metre section that averaged 0.1 grams gold and 357.6 grams silver. The hole bottomed in mineralization.
• Hole LI-02 cut 130 metres averaging 0.4 gram gold and 61.1 grams silver. This included a 28.5-metre interval that averaged 236.5 grams silver. The hole bottomed in mineralization.
• Hole LI-03 cut 153.2 metres averaging 1.0 grams gold and 70.9 grams silver, starting from the surface. This included a 48-metre section that averaged 1.6 grams gold and 124.2 grams silver. The hole bottomed in mineralization.
• Hole LI-04 cut 64.5 metres averaging 0.9 gram gold and 38.7 grams silver, starting from the surface. This included a 16.5-metre section that averaged 1.6 grams gold and 55.2 grams silver.
• Hole LI-05 cut 144.0 metres averaging 1.1 grams gold and 61.3 grams silver, starting 4.5 metres down-hole. This included a 37.5-metre section that averaged 3.0 grams gold and 171.7 grams silver.
• Hole LI-06 cut 54 metres averaging 1.3 grams gold and 44.1 grams silver, starting from surface. This included a 16.5-metre section that averaged 3.2 grams gold and 52.4 gram silver.

All of the mineralization in the first six drill holes is oxidized. Assays are still pending for holes Li-03-07 to Li-03-12.

Southwestern has recently initiated a second phase of drilling, (1,500 metres in 10 holes). Since a number of holes in the first phase program ended in mineralization, some of these holes will be deepened as part of the second phase program.

The company is also in the midst of a reconnaissance mapping and geochemical rock sampling program at the Queshca prospect. This work has extended the Liam alteration-mineralization system and resulted in the discovery of a number of new gold-silver zones.

At the Queshca prospect, gold-silver mineralization is associated with areas of intense alteration, specifically, vuggy silica, alunite, sulphur and barite. This alteration occurs within various types of breccia similar to that found on the Cerro Crespo prospect area. Mineralization also occurs in strong structural zones and stockworks associated with felsic domal features. Southwestern reports that rock chip sampling over an area measuring 2,500 metres by 1,200 metres has returned some encouraging values. Highlights of some of these include;

• 0.25 metres averaging 4.56 grams gold per tonne and 57.87 grams silver per tonne.
• 0.55 metres averaging 8.34 grams gold and 124.0 grams silver.
• 0.25 metres averaging 11.80 grams gold and 108.0 grams silver.
• 0.25 metres averaging 10.95 grams gold and 181.0 grams silver.
• 1.50 metres averaging 6.50 grams gold and 23.8 grams silver.
• 1.50 metres averaging 2.24 grams gold and 90.2 grams silver.
• 0.60 metres averaging 2.14 grams gold and 14.6 grams silver.
• 0.50 metres averaging 4.12 grams gold and 49.8 grams silver.
• 1.80 metres averaging 11.90 grams gold and 17.7 grams silver.
• 2.0 metres averaging 4.72 grams gold and 5.9 grams silver.
• 0.5 metres averaging 83.5 grams gold and 32.3 grams silver.
• 2.0 metres averaging 4.34 grams gold and 10.4 grams silver.
• 0.85 metres averaging 10.90 grams gold and 26.2 grams silver.
• 0.5 metres averaging 4.11 grams gold and 49.8 grams silver.
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