Is another Asian gold project about to be derailed by "deficiencies in control procedures"? If not derailed, the Boka project in China's Yunnan Province is at least tottering after turmoil in the front office and suspicions that assay results have been fudged.
The Boka project is 90% owned by SOUTHWESTERN RESOURCES CORP. of Vancouver. Work was in the pre-feasibility stage when the company was forced to withdraw all its previously announced results and advise the public that such "results should not be relied upon."
In its 2006 annual report, Southwestern said the property had measured and indicated resources totalling 31.2 million tonnes at 3.05 g/t Au plus inferred resources of 8.9 million tonnes at 2.66 g/t Au in the Boka 1 North and Boka 1 South deposits. The mineralized material contained over 3.8 million oz. An additional inferred resource of 14.5 million tonnes grading 2.76 g/t was also noted for the Boka 7 deposit.
The admission by Southwestern that "the integrity of certain drill core samples was compromised" is far from saying the samples were salted. But the same phrase might have described the problems BRE-X had at its Indonesian project before that company collapsed in 1997.
Southwestern may survive this problem because it made a public disclosure in a timely manner. CEO John Paterson has resigned and the manager at the Boka site has been replaced. Nonetheless, public trust and the company's stock price are spiralling downward. Since the announcement was made on July 19, the share price has dropped from a little over $6.00 to a mere $2.40. Gone are the glory days when Southwestern shares hit the $20.00 level in late 2003.
There is gold at Boka. The question now is "how much?" Once that is reliably answered, Southwestern can get on with raising funds for development or selling the property.