Southwestern to spin out Zincore Metals

Vancouver After reviewing various options to maximize the value of its zinc assets, Southwestern Resources (SWG-T) has decided to spin out a new zinc company through an initial public offering (IPO) in the coming months. The company has already approved the transfer of its zinc assets to Zincore Metals, currently a wholly owned subsidiary, and will file a preliminary prospectus for the IPO later this month.

Southwestern President John Paterson stated that the rationale for the creation of a pure zinc company was to “unlock the inherent value” in the company’s wholly owned zinc assets. These include the Accha-Yanque zinc oxide property in southern Peru, the Minascassa zinc-copper property 400 km southeast of Lima, Peru, and the Sayani lead-zinc property, 25 km southeast of Minascassa.

Southwestern will remain the largest shareholder of the new zinc company. Funds raised through the IPO will be used to advance the various properties with the goal being to become a leading low-cost zinc metal producer, starting with the Accha-Yanque property.

The 14,230-hectare Accha-Yanque project covers nine zinc oxide prospects, including two hosting historic resources drilled by previous operators. Ongoing work is aimed at defining resources to meet National Instrument 43-101 reporting guidelines, expanding known mineralization, and examining mining, milling and infrastructure requirements as part of a pre-feasibility study. The oxide mineralization is believed to be amenable to hydrometallurgical solvent extraction-electrowinning processing techniques.

Southwestern will focus its efforts on the advanced, 90%-held Boka gold project in Yunnan province, China. A pre-feasibility study is under way and will include new resource and reserve estimates, along with engineering and environmental studies related to potential mine development.

A previous scoping study examined an open-pit operation that would produce 200,000 oz. gold annually, at cash costs averaging US$143 per oz., for at least a decade. Capital costs ranged from US$139 million to US$235 million. The proposed Boka mine plan was based on indicated resources of 5.1 million tonnes at 2.93 grams, or about 480,000 contained oz., plus a further 18.1 million tonnes at 2.93 grams in the inferred category, for an additional 1.71 million contained oz.

In partnership with Inco (N-T, N-N), Southwestern is exploring a large land package surrounding the Boka project for “Norilsk-type” nickel-copper-platinum group elements (PGEs) mineralization. The company is also exploring for porphyry copper-gold deposits in southern Yunnan province under a joint venture with a unit of Newmont Mining (NEM-N, NMC-T).

In Peru, Southwestern will retain the Antay copper-molybdenum porphyry project situated 150 km southeast of Cuzco, within the Tintaya-Bambas copper belt. Anglo American can earn a 70% interest by completing a feasibility study and subscribing for US$5 million of Southwestern shares.