Newmont buys into Southwestern

Vancouver — Newmont Mining (NEM-N) will buy 450,000 shares of Southwestern Resources (SWG-T) at $15 per share for total proceeds of $6.75 million. Newmont has agreed, for 12 months, not to sell the shares and to exercise its voting rights as directed by Southwestern.

Newmont will also acquire half of Southwestern’s interest in the Liam gold-silver project in Peru by spending US$5 million over three years. The major can increase this to 60% by producing a positive feasibility study, and to 70% by bringing the project to production.

Newmont and Southwestern will form the Liam regional joint venture, with the latter to act as operator.

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

A second alteration zone, Queshca, is 800 metres north of Cerro Crespo (but on the same property) and hosts similar surface concentrations of gold and silver. Queshca is underlain by the same complex breccias as those observed at Cerro Crespo; it extends for 1,200 metres in an east-west direction and varies in width from 150 to 600 metres.

Southwestern has completed the first phase of drilling (2,000 metres in 12 holes) at the Cerro Crespo prospect. Highlights from the first six holes are as follows:

— Hole 3 cut 153.2 metres averaging 1 gram gold and 70.9 grams silver, starting from surface. This included a 48-metre section that averaged 1.6 grams gold and 124.2 grams silver. The hole bottomed in mineralization.

— Hole 5 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 grams gold and 171.7 grams silver.

— Hole 6 cut 54 metres averaging 1.3 grams gold and 44.1 grams silver, starting from surface.

All the mineralization in the first six drill holes is oxidized. Assays are still pending for holes 7 to 12.

Southwestern recently began a second phase of drilling, consisting of 1,500 metres in 10 holes. Several holes in the first phase ended in mineralization, and these will be deepened in the ongoing, second phase.

Reconnaissance mapping and geochemical rock sampling at Queshca has extended the Liam alteration-mineralization system and resulted in the discovery of several 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.

Chip sampling over an area measuring 2,500 by 1,200 metres has returned some encouraging values, including 1.5 metres of 6.50 grams gold and 23.8 grams silver, and 2 metres of 4.72 grams gold and 5.9 grams silver.