Vancouver – Southwestern Resources (SWG-T, SWGGF-O) has greatly reduced the resource estimate for its troubled Boka gold project in Yunnan Province, China.
Following a new independent review, triggered by discovery of assay certificate manipulation earlier this year, an inferred resource estimate of 5.5 million tonnes grading 1.9 grams gold per tonne is now tabled for the Boka 1 North and South zones using a 1 gram gold cut-off grade. Grades were also capped at 18.95 grams gold and 17.1 grams gold for the North and South zones respectively.
With about 337,000 contained oz. gold, the new tally comes in at less than one-tenth the resource touted in late 2006.
The new resource uses reconstructed and validated assays but does not factor in any data from past underground workings where small-scale artisanal miners targeted high-grade gold mineralization.
In mid-2007 Southwestern Resources discovered manual and deliberate changes were apparently made to its assay database – resulting in inflated gold grades.
As a result, the company initiated legal action against its former CEO and Qualified Person, John Patterson, and certain affiliated companies, for fraud, breach of fiduciary, statutory and contractual duties and insider trading seeking to recover all damages and losses.
Patterson bailed from the company in mid-June 2007 citing personal reasons (T.N.M., July 2/07). The move came the day after Southwestern tabled news of delays in its Boka pre-feasibility study.
Through its Chinese council Southwestern also launched similar legal action against its former Boka project general manager John Zhang.
The 157-sq. km Boka project is held through a Sino-foreign joint venture between Southwestern and Team No. 209 of the Yunnan nuclear industry of Yunnan province. The JV company Yunnan Gold Mountain Mining is held 90% by Southwestern’s subsidiary and 10% by Team No. 209 that has a carried interest.
Shares of Southwestern Resources have recently slumped to a new low at the 90-level after touching a 52-week high of $10.00 in December 2006.
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