Southwestern sells troubled Boka gold project

OTTAWA, May 16 (Reuters) - Southwestern Resources Corp SWG.TO said on Friday it will sell its scandal-ridden Boka Project to Hong Kong East China Non-Ferrous International Mineral Development Co for $9.4 million, nearly one year after saying it could have much less gold than first reported.

In events that echoed the notorious Bre-X gold mining fraud of the late 1990s, Southwestern withdrew previously announced assay results last July because of errors it found in the data.

Unlike Bre-X, samples did not appear to have been tampered with, but Southwestern said changes were made to sample data.

“This sale is an important step in our efforts to rebuild,” Southwestern chief executive Timo Jauristo said in a statement.

“As a result of these challenges, pending litigation and its current capital resources, the company did not believe that it could adequately explore and develop both Boka and its Peruvian properties.”

Southwestern has several projects in Peru, including the Liam gold-silver joint venture with Newmont Mining Corp NEM.N.

Southwestern shares, worth more than C$20 in early 2004 as excitement over Boka peaked, were trading at 55 Canadian cents as the Toronto Stock Exchange opened on Friday.

Under the sale of Southwestern’s 90-percent stake in Boka, it will also receive a 2.7 percent net smelter return royalty on gold production in excess of 6.5 tonnes.

$1=$1 Canadian Reporting by Susan Taylor; editing by Renato Andrade