Liam Project, Peru
The Liam Project is a 50/50 joint venture between Southwestern and Newmont Peru Limited and is comprised of 365,000 hectares of exploration concessions, which represents the largest single block of exploration ground in Peru. Located in the prolific Tertiary Volcanic Belt of southern Peru, about 170 kilometres northwest of Arequipa, the Liam Project area is underlain by 14 known gold and silver mineralized zones of various genetic types discovered during regional exploration. The area lies within the Peruvian Altiplano at an altitude of 4,470 to 5,370 metres and is accessible by road from the mining town of Orcopampa, which has an airstrip allowing for chartered aircraft access. It is a two-hour drive on well-maintained gravel roads from Orcopampa to the Liam Project area which is also accessible by a network of road systems from Lima.
Cerro Crespo/Cerro Quescha
The joint venture partners have completed 10,000 metres of drilling on this project, the results of which indicate that the northwest-southeast trending Cerro Crespo ridge is entirely mineralized. The ridge is comprised of hydrothermal and magmatic breccias containing pervasive alunite and vuggy silica. On the top of the ridge, in high-grade silver zones, abundant black acanthite (silver sulphide) is observed in the breccias and an intersection of 2,110 grams per tonne silver over 1.5 metres was returned in one of the Cerro Crespo drill holes. The Cerro Crespo mineralized zone was block modelled and preliminary pit shells generated. Under an open pit mining scenario, the waste to ore strip ratio would be very low. Cerro Queshca is located approximately one kilometre north of Cerro Crespo and is comprised of six zones of outcropping gold/silver mineralization associated with typical high sulphidation vuggy silica. In places the Queshca gold mineralization is high grade in zones associated with late hematite fracture fillings. Drilling has shown the six zones to be isolated, and these zones are possibly remnants of an eroded much larger high sulphidation epithermal system. The Company plans to complete a National Instrument 43-101 mineral resource estimate on Cerro Crespo/Cerro Queshca and complete further metallurgical testing.
Numa West was discovered in 2006 during regional exploration in the northeast corner of the Liam Project exploration concessions. The partners consider Numa West to be a highly significant silver prospect and are working toward fast tracking the first phase drilling program. Silver and lead/zinc mineralization at Numa West occurs within a 2,500-metre-long breccia zone within limestones, and geochemistry suggests that it is epithermal in nature. The breccia varies from 5 to 50 metres in width, and there is also potential that mantoe-type mineralized zones occur at depth within favourable horizons. It appears that the breccia structure is vertical. Rock chip sampling along the length of the breccia zone returned exceptional silver grades with high lead and zinc in places. A total of 163 rock chip samples were collected within the breccia zones and assayed at an average of 460 grams per tonne silver. This is an exceptionally high silver value for such an extensive zone. All of the breccia seen at surface is oxidized, and well developed limonite/goethite zones after extensive sulphides are common. The joint venture partners have secured an access agreement with the local community and have now submitted an application for a drilling permit. During March 2007 a program involving extensive trenching, channel sampling and induced polarization geophysics was initiated and is anticipated to be completed during the second quarter of 2007. Once the drilling permit is received, drill rigs will be mobilized to site. It is anticipated that the drilling program will start in the second quarter of 2007.
The Huacullo area is underlain by an area of low sulphidation veins and breccias trending northwest-southeast and hosted in the Alpabamba volcanics. Five separate vein/breccia systems have been identified, the largest extending for 2,000 metres and varying between 1 to 20 metres in width. Vein textures and trace element geochemistry are similar to veins being mined in the district. Four drill holes spaced 150 to 700 metres apart were completed on the largest vein, and one hole was drilled in each of the four other veins. Results from this phase of drilling were positive with one hole in the southernmost vein system returning an intersection of 1.05 metres grading 22.4 grams per tonne gold and 70.60 grams per tonne silver. Several other holes contained narrow (0.45 to 1.62 metres) intersections of over 100 grams per tonne silver. Follow-up drilling will be conducted in 2007.
John Paterson, President & CEO, states, "Our joint venture partner, Newmont, has completed extensive channel sampling (800 samples) at the Numa West silver prospect and the joint venture is moving rapidly to the drilling phase. We anticipate that drilling will commence in June to test this exciting prospect. The joint venture will be drilling on five zones this summer including the large Aluja high sulphidation gold/silver system identified last year. We are commencing to push a 11 kilometre long road into Aluja in preparation for the drill program."
Pacapausa comprises 7,933 hectares of exploration concessions located immediately south of the Explorador Mine operated by Hochschild Mining PLC. The Property is 100% owned by Southwestern, subject to an option agreement with Minera Oro Vega ("Oro Vega"), the Peruvian subsidiary of International Minerals Corporation, under which Oro Vega can earn a 70% interest in the Project by meeting certain work commitments, completing a feasibility study and financing the Project into production. Five main targets have been defined on the Property, each consisting of silver and gold mineralization within vein, stockwork and breccia zones. The Principal Zone represents the main area of mineralization and has been sampled extensively by the Company and Oro Vega. The southern half of the Principal Zone is underlain by a stockwork/breccia outcropping over an area of 350 by 150 metres. Surface sampling has defined several areas of high-grade silver. Eleven drill holes totalling 2,082 metres were completed during the first quarter. Highlights of the results include: 10.8 metres of 212 grams per tonne silver in hole PACA-009; 1.5 metres of 548 grams per tonne silver in hole PACA-001; and 4.8 metres of 100 grams per tonne silver in PACA-005. For further details see the news release dated April 26, 2007.
John Paterson, President & CEO, states, "We are very pleased with the success of the first phase drilling at Pacapausa. Several holes returned excellent widths of high grade silver mineralization and we look forward to the second phase program."
Bambas Copper Project, Peru
The Company has completed the geophysical survey on its 100% owned Bambas project, which contains three copper/gold skarn/porphyry systems known as the Antilla cluster. The Bambas project is located 35 kilometres northwest of Xstrata’s Las Bambas project where an extensive drilling program has been carried out since 2005. The geophysics has defined several induced polarization coincident chargeability highs-resistivity lows extending at least to 500 metres depth. The Company will now move as quickly as possible to the drill phase.
John Paterson, President & CEO, states, "After three years of exploration, our Bambas project is finally moving to the drilling phase. The Bambas project sits within the prolific Tintaya-Bambas copper belt which is becoming an important world class copper belt."
Antay Project, Peru
The Antay copper-molybdenum porphyry project, comprised of 50,000 hectares of exploration concessions, is situated within the Tintaya-Bambas Copper-Gold Belt and is accessible by road from Cuzco located about 150 kilometres northwest of the Antay Project area. Antay is 100% owned by Southwestern and is subject to a joint venture agreement with Anglo American Exploration Peru S.A. ("Anglo"). Under the terms of the joint venture agreement, Anglo can earn up to a 70% interest in the Project by completing a full feasibility study and subscribing for common shares of Southwestern in a total aggregate amount of US$5 million (to date 116,262 Southwestern common shares for aggregate subscription proceeds equalling US$1 million have been issued to Anglo pursuant to this agreement). During the first quarter of 2007 Anglo continued its efforts to finalize an access agreement with the local community over the Sayta porphyry which is situated in the northern section of the Antay Project.
Quality Control – Peru
Southwestern has implemented a quality control program, under the supervision of L.D.S. Winter, P.Geo. (independent Qualified Person), to ensure best practice in lithogeochemical sampling and analysis of the trench samples. Samples are crushed at the ALS Chemex preparation lab in Lima, Peru to minus 80 mesh and pulverized to greater than 85% passing 200 mesh.
The pulps are sent to ALS Chemex in Vancouver, BC. ALS Chemex is an ISO 9002 registered laboratory and is preparing for ISO 17025 certification. Samples are digested in an aqua regia acid digestion and are analyzed for 34 elements by ICP-AES. Over-limit gold and silver analyses are further analyzed by fire assay-atomic absorption finish and gravimetric methods respectively.
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