Drilling to resume at Poracota

Southwestern Gold (SWG-T) and partner Teck (TEK-T) are poised to begin the third phase of drilling at their Poracota gold property in southern Peru.

The property is part of the Cotahuasi joint venture.

To date, the partners have sunk 35 holes on the 12,300-ha property, most of which have been concentrated on the Zone B. Gold mineralization there has been traced along a gently dipping, tabular body with an average gold grade of 3 grams per tonne.

The zone, which remains open in all directions, has a strike length of about 800 metres and a downdip extent ranging from 100 to 400 metres.

Zone B comprises upper and lower zones of mineralization. Results of drilling of the upper zone include: 18.5 metres of 2.29 grams gold and 5.52 grams silver in hole 4; 38.7 metres of 1.3 grams gold and

7 grams silver in hole 9; and 26.1 metres of 6.6 grams gold and 5.1 grams silver in hole 22.

The lower zone of mineralization, which is of lower grade, is up to 31 metres thick. Only two holes have intersected this lower zone, returning 9.95 metres of 0.86 gram gold and 5.52 grams silver. Further drilling is planned.

Geological mapping, sampling and geophysics have identified four surface gold anomalies coincident with large areas of hydrothermal alteration. Three principal zones have been defined, including:

* Zone A, the northernmost zone, which covers an area measuring 250 by 250 metres;

* Zone B, 700 metres north of Zone A, which measures 1,300 by 500 metres; and * Zone C, 1 km south of Zone B, which measures 350 by 150 metres.

Gold in those zones is associated with disseminated pyrite, native sulphur and limonite. Mineralization is hosted in a hydrothermally altered, Tertiary-aged volcanic and sediment package, and is semi-concordant with prevailing stratigraphy.

Teck and Southwestern will test whether gold mineralization from Zone B extends southward to Zone C, as well as drill the later zone itself. Plans also call for metallurgical testing of the upper portion of Zone B.

Each partner will provide funding for the project until a feasibility study is undertaken, whereupon Teck will assume all costs. Should the project proceed to production, the company can earn an additional 20% interest by paying US$7.5 million.

Elsewhere in Peru, Southwestern has discovered two geochemically anomalous gold zones with grades ranging from 0.2 to 1 gram. The zones occupy the Liam property — part of the Soteco joint venture, owned equally by Southwestern, Teck and Cominco Peru. Liam is 190 km northwest of Arequipa.

The zones there are geologically similar to those at Poracota, 40 km to the southeast. Silver, arsenic, antimony, mercury, bismuth and lead anomalies are coincident with the gold.

The two zones have been defined by geochemical and geophysical surveys. One of the anomalies measures 1,300 by 500 metres; the other, 1,300 by 1,000 metres. Drill-testing will begin next year.

Southwestern also plans to farm out a 51% interest in its Accha lead-zinc property in Peru to Australian-based Savage Resources. In order to earn its interest, Savage must spend US$5 million over the next four years and drill a minimum of 1,000 metres during the first year.

Savage can increase its holding by 9% by funding a bankable feasibility study, and by an additional 10% by taking the project to production.

Four zones of Mississippi Valley-style mineralization have been discovered there to date, though only one area has been tested.

Previous drilling on the Tetiminas zone intersected oxide-sulphide zinc-lead mineralization hosted in Cretaceous limestones. Each of four holes collared at the zone intersected mineralization. Highlights include: 13.7 metres of 17% zinc and 1.1% lead; 23.1 metres grading 10.2% zinc and 0.5% lead; 22 metres of 18.9% zinc and 4% lead; and 37.4 metres grading 1.7 % zinc and 0.3% lead.

That zone was tested over a strike length of 300 metres and to a depth of 100 metres. Mineralization remains open along strike and at depth.

In the future, the partners will endeavor to expand the Tetiminas zone, as well as test the remaining three zones.