Vancouver — Southwestern Resources (SWG-T, SWGGF-O) has slashed the resource estimate for its troubled Boka gold project in Yunnan province, China.
Triggered by the discovery earlier this year that assay results from the project had been tampered with, an independent review has produced an inferred resource estimate of 5.5 million tonnes grading 1.9 grams gold per tonne for the Boka 1 North and South zones. With about 337,000 contained ounces gold, the new tally comes in at less than one-tenth the resource touted in late 2006.
The calculation used a 1-gram gold cutoff grade, with grades capped at 18.95 grams gold and 17.1 grams gold for the North and South zones, respectively.
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 detected manual and deliberate changes to its assay database — resulting in inflated gold grades. Last year’s estimate pointed to more than 3 million contained ounces gold.
As a result, the company brought legal action against its former CEO and qualified person, John Paterson, and certain affiliated companies, for fraud; breach of fiduciary, statutory and contractual duties; and insider trading, seeking to recover all damages and losses. Southwestern also recently obtained a court injunction freezing Paterson’s assets, as well as his wife’s.
Paterson bailed from the company in mid-June, citing personal reasons (T.N.M., July 2-8/07). The move came a day after Southwestern announced a delay in the prefeasibility study for Boka.
Through its Chinese counsel, Southwestern 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 with Team No. 209 of the Yunnan Nuclear Industry of Yunnan province. The JV company, Yunnan Gold Mountain Mining, is 90%-owned by Southwestern’s subsidiary and 10% by Team No. 209, which has a carried interest.
Southwestern shares have recently slumped to a new low around 90 after touching a 52-week high of $10 in December 2006.
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