Sale of Interest in the Boka Project

Fri May 16, 2008

Vancouver, BC - Southwestern Resources Corp. (SWG-TSX) ("Southwestern" or the "Company") is pleased to announce that it has entered into an agreement (the "Agreement") to sell its indirect interest in the Boka Project to Hong Kong East China Non-Ferrous International Mineral Development Co., Limited (the "Purchaser").Under the terms of the Agreement, the Company sold all of the shares of its indirect wholly owned subsidiary that holds a 90% interest in the Boka Project to the Purchaser in consideration of net proceeds of approximately U.S.$9.4 million and a 2.7% net smelter return royalty on gold production in excess of 6.5 tonnes.Timo Jauristo, the Company's President and Chief Executive Officer commented that: "This sale is an important step in our efforts to rebuild Southwestern. It will allow us to focus our business energy and resources on our properties in Peru. The nature and location of the Boka Project and issues surrounding the past work thereon, created significant challenges for the Company including, among other things, significant demands for capital and management time, maintaining adequate stakeholder relationships and risks associated with licensing, permitting and title and other country risks. 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 believes that focusing its exploration and development work on its Peruvian properties provides it with the best opportunity to enhance value for shareholders."



Southwestern sells troubled Boka gold project
Fri May 16, 2008 9:51am EDT
OTTAWA, May 16 (Reuters) - Southwestern Resources Corp (SWG.TO: Quote, Profile, Research) 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: Quote, Profile, Research).
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)