(EXHIBIT
99.1)

Renewal
Annual Information Form

S o
u t h w e s t e r n R e s o u r c e s C o r p .

For the
year ended December 31, 2004Dated as of March 21, 2005



COVER
PAGE



i


TABLE OF CONTENTS




COVER PAGE
    ITABLE OF CONTENTS
    IIGLOSSARY OFTERMS
    1PRELIMINARYNOTES
    3FORWARD-LOOKINGSTATEMENTS
    3CORPORATE STRUCTURE
    4NAME, ADDRESS ANDINCORPORATION
    4INTERCORPORATERELATIONSHIPS
    4GENERAL DEVELOPMENT OF THE BUSINESS
    5THREEYEARHISTORY
    5DESCRIPTION OF BUSINESS
    6GENERAL
    6MINERALPROJECTS
    7RISKFACTORS
    27DIVIDENDS
    33DESCRIPTION OF CAPITAL STRUCTURE
    33GENERALDESCRIPTION OFCAPITALSTRUCTURE
    33MARKET FOR SECURITIES
    33TRADINGPRICE ANDVOLUME
    33DIRECTORS AND OFFICERS
    34NAME, OCCUPATION ANDSECURITYHOLDING
    34CONFLICTS OFINTEREST
    34AUDIT COMMITTEE
    35LEGAL PROCEEDINGS
    40LEGALPROCEEDINGS
    40INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
      TRANSACTIONS
    40INTEREST OFMANAGEMENT ANDOTHERS INMATERIALTRANSACTIONS
    40TRANSFER AGENTS AND REGISTRARS
    40TRANSFERAGENTS ANDREGISTRARS
    40MATERIAL CONTRACTS
    40MATERIALCONTRACTS
    40INTERESTS OF EXPERTS
    40NAMES OFEXPERTS
    40INTERESTS OFEXPERTS
    40ADDITIONAL INFORMATION
    41ADDITIONALINFORMATION
    41




ii


Glossary of
Terms

Aeromagnetic/Airborne Magnetic- Measurement of the earth's
magnetic field from an aircraft for the purpose of recording the magnetic
characteristics of rocks.

Assay-
An analysis to determine the presence, absence or quantity of one or more
chemical components.

Base
Metal- A metal,
such as copper, lead, nickel, zinc or cobalt.

Belt- A
specific elongate area defined by unique geologic characteristics.

Breccia-
Rock fragmented into angular components.

Carbonate- A rock composed principally of calcium carbonate (CaCo3).

Claim/Concession
(Mineral/Mining)– The area that confers mineral exploration/exploitation rights to the
registered holder under the laws of the governing jurisdiction.

Copper– A ductile,
malleable base metal with a myriad of uses in construction (piping, wire) and
electronics due to its high electrical and thermal conductivity and good
resistance to corrosion.

Diamond
Drilling/Drill Hole- A method of obtaining a cylindrical core of rock by drilling with a
diamond impregnated bit.

Dip- The
angle at which a stratum is inclined from the horizontal.

Dyke- A
tabular body of igneous rock cross cutting the host strata at a high angle.

Epithermal- A hydrothermal deposit formed close to surface at low temperature and
pressure.

Fault- A
fracture in a rock along which there has been relative movement between the two
sides either vertically or horizontally.

Felsic-
Igneous rock composed principally of feldspars and quartz.

Formation- A body of rock
identified by lithological characteristics and stratigraphic
position.

Gabbro–
A fine to coarse, dark coloured crystalline igneous intrusive rock composed
mainly of calcic plagioclase, clinopyroxene and sometimes olivine.

Geochemistry/Geochemical- Study of variation of chemical
elements in rocks or soil.

Geology/Geological– Study of the Earth’s history
and life, mainly as recorded in rocks.

Geophysics/Geophysical- Study of the earth by
quantitative physical methods, either by surveys conducted on the ground, in the
air (by fixed wing aircraft or helicopter) or in a borehole or drillhole.

Gold– A
heavy, soft, ductile, malleable precious metal used in jewelry, dentistry,
electronics and as an investment.

Grams per tonne
(g/t)– A unit
of measurement commonly used to quantify the concentration of precious metals.

Hectare-
A square of 100 metres on each side.

Igneous– A
classification of rocks formed from the solidification from a molten
state.

Intrusive/Intrusions- Said of an igneous rock that
invades older rocks.

Mafic-An igneous rock composed chiefly
of dark iron and manganese silicate minerals.

Magnetic
Survey- A
geophysical survey conducted on the earth’s surface that measures variations in
the earth's magnetic field caused by variations in rock type or geological
structures.

Mapping–
The art and science of recording geological observations on a map.

Metallurgical– The science and technology of extraction of metals from their ores and
the refining of metals.

Metamorphism/Metamorphic- A process whereby the
composition of rock is adjusted by heat and pressure/A class of rock affected by
metamorphism.

Mineralization- The concentration of metals and their chemical compounds within a body
of rock.

Ore-
Rock containing mineral(s) or metals that can be economically extracted to
produce a profit.

Orogen/Orogeny– A belt of deformed rocks through folding and faulting, in many places
accompanied by metamorphic and intrusive rocks that form mountains/the process
of mountain building.

Outcrop-
An exposure of bedrock at the surface.

Porphyry- A rock consisting of larger crystals embedded in a more compact finer grained
groundmass.

Prospecting– The art and
science of searching for mineral deposits.

Proterozoic- The youngest part of the Precambrian from 2450 - 570 million years
ago.



1


Pyroxene– A
calcium/sodium ferromagnesium silicate. One of the major rock forming
minerals.

Quartz-
A mineral composed of silicon dioxide.

Sediment- Solid material
that has settled down from a state of suspension in a liquid. More generally,
solid fragmental material transported and deposited by wind, water or ice,
chemically precipitated from solution, or secreted by organisms, and that forms
in layers in loose unconsolidated form.

Sedimentary-Pertaining to or containing
sediment or formed by its deposition.

Shear- A
planar zone of deformed rock caused by the movement of the rock.

Sill-A tabular body of igneous rock
conforming to the last strata.

Soil
Sampling-
Systematic collection of soil samples at a series of different locations in
order to study the distribution of soil geochemical values.

Strike-
Direction or trend of a geologic structure.

Structure/Structural- Pertaining to geological
structure, ie folds, faults, etc.

Sulphide/Sulphidation- A group of minerals in which
one or more metals are found in combination with sulfur/rock that has been
sulphidized.

Ultramafic– A dark coloured igneous rock containing less than 45% silica and
characterized by mafic minerals, such as olivine, amphibole and pyroxene.

Vein- A thin
sheet-like intrusion into a fissure or crack, commonly bearing quartz /a small
vein or cluster of veins.

Volcanic- Descriptive of rocks originating from volcanic activity.

Zinc– A
lustrous, bluish-white base metal used primarily as an alloy of brass and bronze
and galvanized steel in the automotive industry to protect from
corrosion.



2


Preliminary
Notes

The Annual Information
Form (“AIF”) is prepared in the form prescribed by National Instrument 51-102F2
of the Canadian Securities Administrators and is hereby filed with the British
Columbia, Alberta, Manitoba and Ontario Securities Commissions and The Toronto
Stock Exchange.

All information in this
AIF is as of March 21, 2005, unless otherwise indicated.

All information stated
to be incorporated by reference in the Annual Information Form is filed on SEDAR
website (www.sedar.com).

Forward-Looking
Statements

This AIF contains
certain forward-looking statements and information relating to the Company that
are based on the beliefs of its management as well as assumptions made by and
information currently available to the Company. When used in this document, the
words “anticipate”, “believe”, “estimate” and “expect” and similar expressions,
as they relate to the Company or its management, are intended to identify
forward-looking statements. This AIF contains forward-looking statements
relating to the business and affairs of the Company. Such statements reflect the
current views of the Company with respect to future events and are subject to
certain risks, uncertainties and assumptions. Many factors could cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements that may be
expressed or implied by such forward-looking statements. Important factors are
identified in this AIF under the heading “Description of Business -- Risk
Factors”. Other factors include, among others both referenced and not referenced
in this AIF, changes in general economic conditions and changes in business
strategy. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated or
expected, and the Company does not intend to, and does not assume any obligation
to, update these forward-looking statements.



3


CORPORATE
STRUCTURE

Name, Address
and Incorporation

Southwestern Resources
Corp. (“Southwestern” or the “Company”) was incorporated as "Southwestern Gold
Corporation" under the Company Act (British Columbia) on June 18, 1990, by the
registration of its Memorandum and Articles. The Company's name was changed in
2001 to its present name to more accurately reflect the nature of the Company's
business.

The Company filed a
transition application pursuant to the newBusiness Corporations Act(British
Columbia) on April 23, 2004, whereupon its Memorandum and Articles became
referred to as its Notice of Articles and Articles. On June 3, 2004, the Company
amended its Notice of Articles to increase its authorized share capital to an
unlimited number of common shares without par value and to remove certain
pre-existing provisions of the Notice of Articles, the effect of which was to
permit special resolutions of the Company to be passed by a two-thirds (instead
of the previous three-quarters) majority of shareholders present in person or by
proxy at a meeting. On the same date, the Company adopted new Articles which
incorporated some of the more flexible provisions of the Business Corporations
Act, including permitting directors to approve certain changes to the Notice of
Articles, Articles and share structure and a change of the Company's name
without requirement for shareholder approval. The amended articles also provide
that shareholders’ meetings may be held by electronic means and in jurisdictions
outside British Columbia if authorized by directors’ resolution. The quorum for
shareholders’ meetings is one shareholder present in person or represented by
proxy.

The address of the
registered and records office, as well as the Company’s corporate head office
and principal place of business is Suite 1650 - 701 West Georgia Street,
Vancouver, British Columbia, Canada V7Y 1C6. The Company is a reporting issuer
in British Columbia, Alberta, Manitoba and Ontario.

Intercorporate
Relationships

The corporate structure
of Southwestern, its active subsidiaries, the percentage ownership in such
subsidiaries as at the date of this AIF and the jurisdiction of incorporation of
such corporations are set out in the following chart.



4


GENERAL
DEVELOPMENT OF THE BUSINESS

Three Year
History

Over the course of the
past three years the Company has conducted its exploration activities
principally in China and Peru.

During 2002, the Company
wrote off $4.5 million in mineral property costs relating to projects that were
abandoned in Peru and China.

In April 2002, the
Company entered into an agreement to sell its 50% interest in the Poracota
Property in Peru for US$4.5 million payable, in installments, by 2006. To date,
all installments have been received with the final US$3.9 million due in
February 2006.

In November 2002, the
Company’s subsidiary, Canadian Southwest Gold Inc. (“CSG”) entered into an
agreement (the “JV Contract”) with Brigade 209 of the Nuclear Industry of Yunnan
Province, China (“Team 209”) regarding the Boka Gold Project in China. Pursuant
to the JV Contract, CSG and Team 209 established a joint venture company (the
“JV Company”) to own the exploration permits and mining permits and in order to
conduct exploration of the Boka Gold Project. In 2004, CSG earned its 90%
interest in the JV Company by contributing to that company US$4,010,000 and
making a payment equivalent to US$1.7 million to Team 209. Team 209 retains a
10% carried interest in the JV Company. See “The Boka Gold Project” under the
heading “Mineral Projects” in this AIF.

In August 2003 pursuant
to an underwriting agreement with Raymond James and Octagon, the Company issued
1,532,375 Common Shares at a price of $10 per share for gross proceeds of
$15,323,750. Proceeds from the financing were allocated to exploration of the
Boka Gold Project and for general working capital.

In November 2003 the
Company executed a joint venture agreement with Newmont Peru Limited Sucursal
del Peru (“Newmont Peru”) pursuant to which Newmont can earn a 50% interest in
the Company’s 100% owned Liam Core Zone by spending US$5 million over three
years. See “The Liam Gold-Silver Project” in this AIF. In addition, Newmont Peru
Limited (“Newmont Delaware”) and the Company executed the Liam Regional Joint
Venture Agreement under which both parties contributed exploration concessions
in Peru covering a total area of 81,789 hectares. This area has now been
expanded to 91,195 hectares. Southwestern is the operator of the Regional Joint
Venture and both parties are funding 50% of the initial US$5 million of
exploration expenditures over a five year period.

Concurrently with the
execution of the Newmont agreements, the Company also closed a non-brokered
private placement with Newmont for the purchase of 450,000 common shares of the
Company at $15 per share for proceeds of $6,750,000.

During 2004, the Company
acquired 1.4 million shares of Maxy Gold Corp. pursuant to the exercise of 1.4
million warrants at a price of $0.40 per share at a total cost of $560,000 and
137,000 shares of Aurora Platinum Corp. (“Aurora”) pursuant to the exercise of
137,000 warrants at a price of $2.50 per share at a total cost of $342,500. The
Company also acquired 1.5 million shares of Superior Diamonds Inc. (“Superior”)
at a price of $0.40 per share at a total cost of $600,000.

In March 2004, the
Company issued 1,150,000 common shares at a price of $35.50 per share and
received gross proceeds of $40,825,000 pursuant to an underwriting agreement
with Raymond James Ltd., Octagon Capital Corporation, Haywood Securities Inc.
and National Bank Financial Inc. The Company is utilizing the proceeds to fund
its exploration programs in China and Peru, to generate new projects and to
supplement working capital.



5


In June 2004, the
Company received shareholder and regulatory approval for a two-for-one stock
split. All share issuances described above are on a pre-split basis. The shares
commenced trading on a split basis on June 15, 2004.

In December 2004, the
Company signed an option agreement with Anglo American Exploration Peru S.A.
(“Anglo”) on Southwestern’s 100% owned Antay Project. Under the terms of the
agreement, Anglo can earn 55% of the Antay Project by funding US$5 million in
exploration expenditures over a five year period. Anglo has a further option to
earn 70% of Antay by funding 100% of a bankable feasibility study. In a separate
transaction which is subject to regulatory approval, Anglo American Exploration
BV (“Anglo BV”) agreed to acquire US$5 million worth of Southwestern shares over
a five year period payable in US$1 million increments. The first and second year
subscriptions are a firm commitment. Anglo BV has the right to elect not to
subscribe in respect of the third, fourth and fifth year subscriptions.

DESCRIPTION OF
BUSINESS

General

Southwestern is a
mineral exploration company engaged in the identification, evaluation,
acquisition and exploration of mineral properties with the potential to host
gold, silver and base metals. The Company holds interests in mineral properties
in China and Peru.

The Company’s principal
property in China is the Boka Gold Project in Yunnan Province, which covers an
area of approximately 162 square kilometres of exploration concessions and
mining leases located about 150 kilometres north of the capital city of Kunming
in north central Yunnan Province. A drilling program, initiated in late 2002, is
ongoing.

The Company’s principal
property in Peru is the Liam Gold-Silver Project located 190 kilometres
northwest of the city of Arequipa. The Liam Gold-Silver Project is comprised of
the Liam Core Project, covering an area of 3,500 hectares and the Liam Regional
Project which covers an area of 81,789 hectares.

Southwestern has also
entered into other joint venture agreements with third parties including Anglo,
Inco Limited and Southern Peru Copper Corporation, and holds directly other
properties in the Tintaya-Bambas copper-gold skarn/porphyry belt of southern
Peru.

The Company holds a
15.7% interest in Aurora, a TSX Venture Exchange listed company exploring for
nickel-copper-platinum-palladium as well as other metals in Canada (Ontario and
Québec).

The Company also became
a direct shareholder of Superior when Superior acquired all of the issued and
outstanding common shares of Canabrava Diamond Corporation (“Canabrava”) in
November 2003 and the Canabrava shares which the Company held were exchanged for
shares of Superior. The Company directly holds 19.8% of Superior.

In addition, the Company
holds equity interests in a number of other mineral exploration companies all of
which are listed on the TSX Venture Exchange.

All of the Company's
properties are in the exploration stage without any assurances that commercially
viable mineral deposits or reserves exist in any of the Company's properties
until further work is done and a final evaluation concludes economic and legal
feasibility of development.

The Company conducts its
exploration independently as well as through option or joint venture agreements
with third parties, referred to as joint ventures, whereby a third party earns
an interest in the Company’s property by fulfilling terms as outlined in the
agreement. The majority of jointventure agreements are structured
in such a way as to allow an interested party to earn an interest in a project
by making certain expenditures on the Company’s properties over a period of
time. The Company is also involved in exploration through option or earn-in
agreements whereby it makes option payments and/or provides 100% of the
exploration funding in order to earn a controlling interest in a project owned
by a third party.



6


The Company finances its
activities with the proceeds from private offerings, public offerings, interest
income and through joint ventures.

In order to carry out
its business activities in Canada, Peru and China, the Company employs
approximately 50 people on either a salaried or contract basis. The Company also
engages various other independent contractors from time to time to supply work
on specific projects and exploration programs.

Mineral Projects

The Boka Gold
Project

Information on the Boka
Gold Project, Yunnan Province, China set out herein has been obtained from the
National Instrument 43-101F1 compliant technical report entitled “Technical
Report, Southwestern Resources Corp., Boka Gold Project, Yunnan Province, China”
by L.D.S. Winter, P.Geo., dated February 11, 2005.

PROJECT DESCRIPTION AND
LOCATION

The Boka Gold Project
covers an area of approximately 162 square kilometres of exploration concessions
and mining leases located about 150 kilometres north of the capital city of
Kunming in north central Yunnan Province, South China, at 26o-29'N latitude;
103o-02'E
longitude (approximately 2,000 kilometres southwest of Beijing).

The Project comprises
three Mining Permits (the "Mining Permits"), two of which are contiguous and the
third is nearby, and three contiguous Exploration Permits (the "Exploration
Permits”) covering an area within Dongchuan District (collectively, the Mining
Permits and the Exploration Permits are referred to as the “Boka Property”). The
Mining Permits were issued on March 5, 2003, two of the Exploration Permits were
issued on April 10, 2003 and one Exploration Permit was issued on June 17, 2003.
The three Mining Permits cover a total area of 4.9 km2and the Exploration Permits
cover an area of 157.5 square kilometres within an area of co-operation of 560
square kilometres.

A Letter Agreement was
signed in 2002 between Team 209 and CSG. The Letter Agreement was subsequently
formalized into the JV Contract.

Under the JV Contract,
CSG will provide funds and cooperate with Team 209 in carrying out mineral
resource exploration within a certain geographical area. In China, the right of
mineral exploration and mining is conferred through the issuance of permits.
Team 209 has acquired certain mining exploration permits for the purpose of
carrying out mineral exploration within the area of cooperation.

Under the JV Contract,
Team 209 and CSG have established the JV Company, a Sino-Foreign Cooperative
Enterprise, Yunnan Gold Mountain Mining Co. Ltd. During the first phase, Team
209 transferred the Mining Permits and Exploration Permits to the JV Company to
receive a 30% equity interest in the registered capital of the JV Company.
Canadian Southwest Gold contributed US$3,010,000 to receive a 70% equity
interest in the JV Company.

During the second phase
Canadian Southwest Gold contributed an additional US$1,000,000 to the registered
capital of the JV Company and paid Team 209 compensation totalling US$1,700,000
to earn its 90% interest. During the third phase (which has commenced,
asannounced in
a press release dated December 10, 2004), any increase in the registered capital
of the JV Company will be contributed 100% by Canadian Southwest Gold and Team
209 will not be required to make any contribution to the registered capital to
retain its 10% of the registered capital and its 10% participation ratio of the
JV Company. Canadian Southwest Gold will continue to have 90% of the registered
capital and a 90% participation ratio regardless of increases in the registered
capital of the JV Company.



7


Team 209 is presently
dismantling the vat leach facilities at Boka and the final clean up will be
inspected by the Ministry of Lands and Resources Environmental Division. Tunnel
entrances have been sealed either by cementing the portals closed or installing
metal doors.

The main zones of gold
mineralization outcrop along the western edge of a north-south-trending plateau
between approximately 1,600 metres to 1,850 metres elevation. The Chang Jiang
(Yangze) River, which flows north at an elevation of about 900 metres, lies to
the west of and at the base of the plateau. Gold mineralization is hosted within
carbonaceous shales/slates, ductile-brittle deformation zones as well as
associated structures. The mineralization extends for at least eight kilometres
in a north-south direction and dips to the east in the order of
20oto
40o.
Within this sector, three main areas of mineralization have been identified:
Boka 11 to the north, Boka 1 North and South in the centre and Boka 7 in the
south.

There are no mineral
reserves or resources as yet defined for the Project. In all areas of
mineralization, there are adits and associated stoped areas that have been
excavated by local artisanal miners.

The Mining and
Exploration Permits have been transferred to the JV Company. In 2003 the JV
Company expanded its scope of business and a new business license was issued to
permit the JV Company to explore, develop and mine for gold.

ACCESSIBILITY, CLIMATE,
LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

Access to the Boka
Property is by road. The Property is approximately 280 kilometres north of
Kunming, the provincial capital. From Kunming to Dongchuan takes about 2.5 hours
on a paved highway.

From Dongchuan to the
Property, the road initially follows the Xiaojiang River, then after about 20
kilometres, a series of switchbacks takes the road onto the plateau above the
Xiaojiang River and an additional 10 kilometres leads to the Boka Property camp
on the western side of the plateau.

The Project is
approximately 40 kilometres north of Dongchuan (approximately 2.5 hours) with
transport between the two areas being by vehicle.

The Boka area has a
climate that varies from subtropical at the lower elevations to warm temperate
at the higher elevations. Usually the winter months are cool and dry with
precipitation amounting to 600 millimetres to 1,000 millimetres per year falling
from April through October.

Southwestern has
acquired a brick compound from Team 209 where all personnel are accommodated.
Offices, eating facilities, etc. are available in the compound which is
monitored by a security service. The compound and area have full electrical
service, the Boka area is within the Chinese mobile phone network and Internet
access is available in the compound.

The city of Dongchuan
should be able to provide most of the services required by the Project. The
Dongchuan copper deposit is close by and the city has provided service for the
copper mining activities for many years.

The Project is at an
early stage of exploration and as the work program progresses, the matters of
access to surface rights, sufficient supplies of power and water as well as
waste and tailings disposal areas and plant sites will need to be
addressed.



8


The Boka Gold area is
located in the Yunnan - Guizhou Plateau within the Chang Jiang (Yangze) drainage
area. The major rivers are deeply incised and they appear, for the most part, to
follow the major structural zones.

The area is bounded to
the east by the Xiaojiang River and to the west by the Jin Sha Jiang River, the
main upper tributary of the Chang Jiang (Yangze). These rivers occupy large,
north-south trending valleys (faults) and are at an elevation of approximately
900 metres with the intervening central north-south-trending plateau in the Boka
Property area being at about 1,900 metres. The east and west sides of the
plateau are quite precipitous and steep east-west valleys add an additional
degree of ruggedness to the area. The top of the plateau is relatively flat with
relief being in the order of a few tens of metres. The top of the plateau and
the upper parts of the slopes on the plateau edges are mainly under cultivation
for grains, fruits and vegetables. All gentler slopes are terraced.

HISTORY

The Boka Gold Zone was
discovered by Team 807 of the Yunnan Ministry of Geology and Mineral Resources
by stream sediment sampling and soil geochemistry in 1999. Team 209 acquired the
Project from Team 807 and in 2000, Team 209 set up a small mining operation.
Team 209 produced about 150 kilograms of gold per year from a vat leaching
operation situated adjacent to what is now the Southwestern compound. It is
estimated that the average head grade of the ore that was processed was 5 to 10
grams per tonne gold. In early 2004 Southwestern bought out the Team 209
operation.

The Company did not
acquire the Project from an informed person or promoter for the Company or an
associated or affiliated person.

GEOLOGICAL SETTING

The project area lies in
the western part of the Yangze Platform which contains Middle to Late
Proterozoic eugeosynclinal sediments that were consolidated during the
Jinningian Orogenic Movements at 850 million years. The platform received
sediments throughout most of the Paleozoic with interruptions being due to
Caledonian and Hercynian Tectonism and by the Indosinian Orogeny in Mid to Late
Triassic time. From Devonian through Permian time, an extensive north-south zone
of rifting (Panxi Rift) with associated flood basalts developed through the
Yunnan - Sichuan Province area.

This sequence of
geologic events produced the geological setting for the Boka gold deposits. The
oldest units are the Middle to Late Proterozoic formations which in general
trend north-south and exhibit gentle open folds. Unconformably overlying the
Proterozoic units are Paleozoic sediments - Cambrian to Permian in age, followed
by later Mesozoic sediments. The Permian Ermeishan flood basalts are extensively
developed east of the area and the Xiaojiang Fault (River). The Xiaojiang Fault
is one of the major structures of the Devonian - Permian rift zone, extends for
100's of kilometres and is still seismically active. The north-south section of
the Jin Sha Jiang River immediately to the west of the Boka site is also
considered to follow a branch of the rift zone.

The Boka Gold Project
area is underlain by a sequence of essentially unmetamorphosed to lower
greenschist facies Middle to Late Proterozoic eugeosynclinal sediments exposed
in a window of "basement" rocks surrounded by Paleozoic sediments and Permian
age Ermeishan basalts mainly to the south and east. The sequence from bottom to
top commences with various sandstones followed by a chloritic slate, calcareous
siltstones, carbonaceous slates, calcareous sandstones and dolomite at the top.
These units are considered to be part of the Kunyang Group.



9


Geological mapping and
compilation by Southwestern suggests that this sequence has been gently folded
about north-south trending axes into broad open folds that may plunge at low
angles to the south.

The sedimentary package
has been affected by west-verging thrust faulting which appears to have been
mainly confined to the less competent shale/slate horizons between the more
competent dolomites and sandstone/siltstone units. These deformation zones
exhibit ductile-brittle type deformation and are, at least in part, the locus
for the gold mineralization. These thrusts may also have produced a tectonic
thickening of the shale/slate sedimentary package.

At present, the main
stratigraphic interval of interest is that which hosts the Boka 1 - Boka 7 -Boka
11 Mineralized Horizon. Additional mineralized horizons/structural domains have
been recognized below this main horizon at both Boka 7 and Boka 11, however,
only recently has work commenced evaluating the lower horizon at Boka 7. The
situation at Boka 8 is unclear and further work is required to determine the
structural/stratigraphic situation in this area.

Small bodies of gabbro
as dykes and sills are intrusive into the thrust faults and cross-cutting
structures.

Regional metamorphism is
considered to be very limited with the Proterozoic units in the general Boka
area showing lower greenschist grade metamorphism at best.

EXPLORATION

The JV Company is
evaluating the project under the overall direction of John Paterson, president
and CEO of Southwestern and a Qualified Person under the Member, Aus IMM
designation. The on-site Project Manager is John Zhang.

The work completed and
currently in progress consists of:



| | - | detailed
      topographic surveying of the Boka 1 area, surveying of the Boka 7 and Boka
      11areas
      and surveying of all drill hole
locations.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------

-
    identification
      and surveying of all the tunnels excavated by artisanal
      miners.




-
    sampling
      of tunnels in all areas.




-
    driving
      of six exploration tunnels. This work was under contract to Team
      209.




-
    Transient
      Electromagnetic (TEM) survey over the Boka 1 Zone. This survey traced theconductive
      horizon in the hangingwall of the Boka 1 Zone down-dip for over 1,500metres.




-
    regional
      geological mapping and soil sampling.




-
    diamond
      drilling. Currently seven drills are operating on the property under
      contractstotaling
      40,000 metres. Approximately 26,578 metres has been drilled in the 70
      holesthat
      have been completed (or abandoned) and five holes are now in
      progress.




-
    a
      Scoping Assessment Report being prepared by Hatch Engineering. A Draft
      Report wasreceived
      in December 2004, however, after a review the Company expanded theparameters
      to include underground mining.







It is considered that
the Boka gold mineralization was produced by a very large mineralizing system.
Gold mineralization has been identified over a considerable area from Boka 8 and
11 in the north through Boka 1 North and South to south of Boka 7, a total
north-south distance of approximately eight kilometres. The main
north-south-trending east-dipping Mineralized Horizon, contained within a
package of Middle Proterozoic age, eugeosynclinal sediments, consists of a
stratigraphic interval of carbonaceous shales/slates with minor siltstone,
mudstone and carbonate interbeds which shows evidence of multiple episodes of
ductile-brittle deformation. The Mineralized Horizon hosts the main areas of
known gold mineralization, Boka 1 North and South and Boka 7. A lower horizon
has been identified at Boka 7 and is currently being evaluated.





10


The majority of the work
has been carried out by the JV Company with tunnelling being done by Team 209
personnel and drilling by Edco Drilling, Huafeng Drilling Company and Yunnan
Bradley Drilling Limited under contract.

It is considered that
the work on the Property is being done in a professional and competent manner
and that the results to date are a fair and reasonable representation of the
actual situation.

MINERALIZATION

The thrust deformation
has generally been localized within the carbonaceous shales/slates of the Middle
Proterozoic eugeosynclinal sediment sequence. At Boka 1 (North and South), Boka
7 plus Boka 11, deformation occurs within an approximately 200 metres thick
sequence of carbonaceous shales/slates overlain by massive dark grey dolomites
and underlain by light grey sandstones. This 200 metres+thick zone is also the locus for
the gold mineralization which appears to be concentrated within more limited
"stratigraphic" intervals. In the following sections, the 200 metres
"stratigraphic" interval to which the deformation and gold mineralization is
generally confined will be referred to as the “Mineralized Horizon”. The
narrower intervals that host significant amounts of quartz-carbonate veining and
gold mineralization will be referred to as “Enriched Zones”. The work to date
indicates that the Mineralized Horizon is comprised of higher grade Enriched
Zones separated stratigraphically by lower grade intervals. These lower grade
intervals, at least in some cases, may be made up of narrow, more competent
sandstones or carbonates that have suffered only minor deformation. These less
deformed/more competent intervals appear to carry gold values that vary from nil
through a few hundred parts per billion to one or two grams per tonne gold.

As of mid-January 2005,
seven drills are operating on the Property evaluating the potential of the
Mineralized Horizon.

At Boka 1 North within
the Mineralized Horizon, the interval of economic interest as indicated by 17
completed holes varies from 11.8 metres to 116.4 metres thick and has been
traced down-dip for 500 metres and along strike (N20oW) for 700 metres. Gold values
for the mineralized intervals range from 1.2 grams per tonne gold to 10.2 grams
per tonne gold.

Thirty-one drill holes
have been completed at Boka 1 South and have intersected mineralization over a
N20oW
strike length of 700 metres, for 750 metres down dip and across widths from 23.0
metres to 94.6 metres. Assay results show the mineralization to vary in grade
from 1.3 grams per tonne gold to 9.3 grams per tonne gold.

In the Boka 7 area, 11
holes have been completed. The holes occur over a strike length of about 1,000
metres (N20oW), a
down-dip extent of about 300 metres and show the width of the Mineralized
Horizon to vary from 41.7 metres to 107.3 metres with grades in the 2.4 grams
per tonne gold to 3.1 grams per tonne gold range.

All widths of
mineralization are core lengths, however, since the holes are being drilled
approximately perpendicular to the zone, the core lengths are approximately true
widths.

The holes completed to
date extend from hole B03-09b in the north to B03-10 in the south, a distance of
3.89 kilometres. Holes at Boka 1 North occur over a 700 metre strike length, at
Boka 1 South over a 700 metre strike length and at Boka 7 over a 1,000 metre
strike length for a total of about 2,400 metres or approximately two-thirds of
the drilled strike length. Holes for which results are pending are being drilled
at Boka 1 North and South.

The soil geochemical
survey indicates anomalous gold, silver, arsenic, copper and nickel values from
the Boka 11 area in the north to the southern property boundary about 775 metres
south of drill hole B03-10.



11


DRILLING

The current drilling
program is being carried out by Edco Drilling, a division of TVI Pacific,
Huafeng Drilling Company and Yunnan Bradley Drilling Limited with a total of
seven drill rigs on the Property. As at February 11, 2005, 70 holes were
completed (six abandoned) for a total of 26,578 metres with five holes in
progress.

The main unit being
drilled is a fissile shale/slate, which in places has been subjected to folding
and ductile/brittle deformation and has been invaded by intrusives and
quartz-carbonate-sulphide veinlets. This combination of features may lead to
difficult drilling conditions that consist of "blocky ground"; the grinding of
core, caving of the hole, and loss of core as examples.

As is normal at the
start of most drilling programs, core recovery problems were encountered,
however, with more experience the core recovery estimated by the JV Company
geologists for the current drill holes is considered to be in the order of 90%.

The core is placed in
plastic trays at the drill site with plastic markers at the appropriate metrage.
It is then transported by truck to the JV Company core storage facility, which
is a concrete building that can be securely closed off. The core is logged by JV
Company geologists into a computer logging system, sample intervals are marked
and recorded and then the core is set aside for sampling. The core is split with
one half being retained and one half is sent for analysis in security sealed
sample bags to the assay laboratory of the Northwest Non-Ferrous Geology
Research Institute (ISO 9002) located in Xian, Shaanxi Province, P.R.C. for
sample preparation, after which a 500 gram, -10 mesh sample split is sent to IPL
Labs or ALS Chemex Laboratories, Vancouver for analysis.

Seventeen holes have
been drilled in the Boka 1 North sector evaluating the Mineralized Horizon over
a strike length (north-northwest) of approximately 700 metres and for 500 metres
down-dip to the east. Holes B02-01, B03-04, B03-07, B04-49, B04-46 and B04-70
were drilled along one section and illustrate the continuity of the Mineralized
Horizon from surface, in tunnels PD-3 and PD-6 down-dip to the east at about 35°
for 500 metres.

The mineralized
intersections in the 13 holes in the Boka 1 North Zone for which results are
available show mineralized core intervals varying from 11.8 metres to 116.4
metres. Apart from these two values the remaining core intervals fall in the
interval 33.65 metres to 88.6 metres. The grades of the mineralized intervals
fall in the range from 1.2 grams per tonne gold to 10.2 grams per tonne gold.

In the Boka 1 South
area, 38 holes have been drilled with two holes abandoned. The results are
available from 31 holes (29 complete and two abandoned) and results are pending
for seven holes completed or in progress. The drilling indicates that the
Mineralized Horizon in this area trends N20oW and dips at low to moderately
steep angles to the east. The drilling has been over a strike length of
approximately 700 metres (N20oW) and a down-dip extent of about
750 metres. The majority of the drilling has been concentrated in an area
measuring about 300 metres, N20oW, by 550 metres,
N80oE. In
this smaller area, holes have been drilled on lines trending
N80oE and
spaced at 50 metres with holes at 50 metre intervals along these lines.

For the 31 holes
completed at Boka 1 South and for which results are available, the gold
mineralized zone has been intersected across core lengths from 23.0 metres to
94.6 metres. In some holes, more than one mineralized zone was intersected.
Grades in these 33 holes vary from 1.3 grams per tonne gold to 9.3 grams per
tonne gold across the mineralized zone.

Eleven drill holes have
been completed at Boka 7 with all the results having been received. The 11 holes
occur over a strike length (N20oW) of approximately 1,000 metres
and over a dip extent of about 300 metres.



12


The results received to
date at Boka 7 indicate mineralization over widths from 31.0 metres to 107.3
metres and with grades across the mineralized intervals from 2.4 grams per tonne
gold to 3.2 grams per tonne gold. Hole B03-14 returned two intervals of interest
separated by a 55.7 metre zone of anomalous to sub-economic mineralization. The
upper interval from 166.8 metres to 197.8 metres (31.0 metres) averaged 3.2
grams per tonne gold while the lower interval of 31.9 metres starting at 253.5
metres assayed 2.9 grams per tonne gold. Three zones starting at depths of 117.0
metres, 222.8 metres and 287.1 metres were intersected in hole B04-36.

In summary, 70 holes
have been completed (six abandoned) over a N20oW distance of four kilometres.
Within this distance, three mineralized zones have been identified by drilling,
Boka 1 North, Boka 1 South and Boka 7, with strike lengths (N20oW) of 700 metres, 700 metres and
1,000 metres respectively. At Boka 1 North, holes have been drilled on lines
trending N80oE and
spaced at 100 metres with some lines containing only one hole while other lines
host more than one hole with hole spacing varying from 50 metres to 200 metres.
For the most part, the Boka 1 South drilling has been on a grid with lines
spaced at 50 metres and with hole spacings of 50 metres. At Boka 7, holes are
more widely spaced with 11 holes drilled over an area measuring 1,000 metres
north-south by 300 metres east-west.

It is considered that
the drilling at Boka 1 North is showing good continuity to the mineralization
over the 700 metre strike length and for 500 metres down-dip on the section
drilled. The close spaced drilling at Boka 1 South shows continuity to the
mineralization in the area tested. Holes B03-12 and B03-21 returned only low
gold values, however, further drilling will be required to determine the
structure/stratigraphic complexities in this area, which may be the cause of the
low gold values. At Boka 7, although the holes are widely spaced, they show the
presence of the Mineralized Horizon over an area of 1,000 metres by 300 metres
with additional drilling required to determine the detailed nature of the
mineralization in this area.

SAMPLING AND ANALYSIS

The initial work at the
Boka Gold Project began in mid-October 2002 and since that time the sampling
approaches and procedures have evolved as new information became available.

As a means of quickly
evaluating the Mineralized Horizon and contained gold-bearing zones, the JV
Company began a program of surveying and then sampling of the tunnels that had
been driven by the artisanal miners. During the due diligence work vertical chip
samples were taken, however, when the tunnel sampling program was started in
October 2002, horizontal chip samples were taken along one wall of a tunnel for
a predetermined sample interval that was usually in the 2 metres to 5 metres
range. Prior to sampling, loose dirt was scraped from the wall as best as
possible and then the horizontal sample was taken by chipping rock fragments
from the tunnel wall into a cloth sample bag. The bag was then ticketed, closed,
combined with other samples in a larger bag and sent to the Langfang Institute
of Geochemical and Geophysical Exploration (1S0 9001 Certification), Langfang,
Hebei Province, approximately 60 kilometres from Beijing.

It was recognized that
the horizontal channel sampling procedure was prone to misrepresenting the value
of the mineralization after the preliminary work showed that in general the
gold-bearing mineralization trended north-south and dipped, on average, about
30oto
the east with variations from horizontal to 60o. In these circumstances, a
horizontal sample in a 30odipping mineralized zone cuts
the zone at a low angle and may give a sample value that overstates the "true"
value. In contrast, a 30odipping zone close to the floor
or back of the tunnel, may not be sampled by a waist high horizontal channel
sample, thus giving an understated assay value. To correct this situation, a
panel sampling procedure was proposed whereby the tunnel wall would be sampled
as a panel. The tunnels are on average 2 metres high, thus, for a 3 metres long
(horizontal) panel, for example, the panel would be sampled by four lines of
chips - top left to bottom right and top right to bottom left and top to bottom
and left to right at mid-wall. The chips from these crosses would provide the
sample.



13


As indicated above, the
initial horizontal channel samples may have produced some non-representative
values due to the bias introduced by the geometry of the sample relative to the
geometry of the mineralization trend. However, in a large number of samples, it
would appear that some samples would overstate the "true" value while others
would understate it, with the result that the mean for a number of samples in a
tunnel is probably a reasonable value for the total length of tunnel sampled,
for example.

The sampling of the
drill core presents similar problems to those encountered in sampling the
tunnels. Specifically the drill core is a small sample of a host rock that has
been subjected to at least two or three phases of deformation, has been altered
and mineralized and most recently, may have been subjected to surface weathering
and oxidation. As a result, sections of core are highly fractured and may be
quite friable due to oxidation. This type of ground creates challenges for the
drillers in order to maximize core recovery. It is considered that the most
difficult sections in which to get 100% core recovery are oxidized, mineralized
sections due to the vuggy to friable nature of the residual material. As a
result, it is the writer's opinion that the gold values as reported from the
drill core samples may understate the actual gold content of the sample.

Apart from the above
consideration, it is considered that the current sampling procedures are
appropriate. Due to the presence of coarse erratic gold concentrations in the
mineralization, all drill core samples are now being treated using the Screen
Fire Assay Method.

The tunnel sampling was
undertaken to ascertain the grades of gold mineralization that might be
encountered in the Boka Property. It was not undertaken to sample any specific
unit or structure, however, as the situation has evolved it became evident that
the tunnels contained zones of higher grade mineralization, associated with
deformation zones, quartz-carbonate-sulphide veining and in some cases heavy
sulphide mineralization, separated by less deformed zones containing low grade
to anomalous levels of gold mineralization. Therefore, the tunnel samples must
be considered to represent various types of materials exhibiting a wide range of
values. Also, an individual tunnel should not be considered to expose the true
width of the mineralization. Due to the limited stratigraphic interval exposed
in any one tunnel or set of connected tunnels, it is considered that it is
extremely difficult to state the true width of all the mineralized zones sampled
to date in the tunnels. If the average dip of the mineralized zones is
considered to be 30oeast,
then a "rule of thumb" at this time would be that the "true width" of a set of
mineralization samples in a horizontal tunnel would be half (50%) of the
horizontal length. The true width of the Mineralized Horizon and any contained
gold-bearing zones can best be estimated from the drill holes currently being
put down.

Economic grade gold
values in the Mineralized Horizon vary in thickness from approximately 40 metres
to over 100 metres and within this interval there are many combinations of
carbonaceous black slate, siltstone, shear/fault zones, mineralized zones,
veined zones, etc. Drill core is generally sampled in two metre intervals with
the core being split longitudinally into two halves, one of which is retained in
the core box while the other half is sent for assay. The results for each drill
hole are reported as a combined weighted average for each drill hole.

Southwestern has been
re-sampling drill core under the supervision of the Project Manager. Samples
showing a range of values and from different holes have been selected.

The Boka Gold Project is
using 16 Standard Samples obtained from Gannet Holdings Pty. Ltd. which cover
the range of gold values from below the detection level of 5 parts per billion
gold to 35.600 grams per tonne gold. These Standards are submitted along with
the normal core, rock and soil samples, as a means of determining the accuracy
of the gold values reported by the analytical laboratories. In addition, the
Company, on a random basis, takes second or duplicate samples which are
submitted for analysis for gold. To date, a total of 123 Standard Samples, four
duplicate rock samples, 65 duplicate core samples and 23 duplicate soil samples
have been analyzed for a total of 92 duplicates. (One hundred and seven
additional Standard Samples and 107 additional duplicate samples have been
submitted for analysis, however, the results are still outstanding.)



14


Accuracy is an
indication as to how closely the determined value of a sample is to the "true"
value of the sample. Precision is an estimate of the reproducibility of an
analytical determination.

A total of 123 analyses
were carried out on Standard Samples to determine the accuracy of the chemical
analyses. Each analytical batch contained an equal number of standard and
duplicate samples (for a total of 92). The additional 31 Standard Samples were
from a separate set of analyzed Standard Samples.

With respect to the Boka
Standard Samples, the data for the Standard Sample analytical values and the
Standard Sample "True" Values indicates that the level of accuracy is acceptable
at the 20% precision level. It is appropriate to note that even for Standards,
that are generally considered to be quite homogeneous, the accuracy is at the
20% precision level. When the precision was calculated for the individual pairs
of samples, the average for all the Standards was also 20%.

Sixty-five Duplicate and
65 Standard Samples were analyzed in 16 batches of drill core from the Boka Gold
Project. The results for both the Standard Samples and the Original - Duplicate
Sample Pairs indicated that the precision for the Standards varied from 103.21%
to 4.13% and the precision for the Duplicates varied from 139.45% to 22.80%. The
high values of precision for the most part are associated with Standards and
Duplicates where the gold values are very low and close to the detection limits.
When the two highest values for the precision of Standards are rejected, the
remaining 14 batches give a very acceptable 14.7% value of precision. For the
Original - Duplicate Sample Pairs when the 3 highest values are rejected, the
level of precision is 47.0%. A graphical representation of the complete data set
suggests a precision level of 50%, very close to that as calculated for the 13
batches.

Twenty-three soil sample
Original - Duplicate Pairs indicate a precision of about 50% and the four
Original - Duplicate Pairs of rock samples show a precision level of about 20%.

The work to date
suggests that for low gold concentrations the level of precision cannot be
expected to be much better than 50%. This is considered to be due to the greater
chemical variance as the detection limit is approached. Also the 50% precision
level is considered to be a function of the heterogeneity of natural materials
such as sulphide or quartz-hosted gold.

In summary, it is
considered that the analytical results from the Boka Gold Project core, rock and
soil samples fall within normal and acceptable levels of accuracy and precision
and can be considered to be representative of the naturally occurring
mineralization.

It is considered that
adequate quality control procedures are in place for this stage of the Projects.
As the Project advances further quality control procedures will be required
depending on the program.

SECURITY OF SAMPLES

Drill core samples
consist mainly of two types of material, solid drill core and broken drill core
which consists of broken pieces of core varying from sand size to 20 millimetres
+/-. The core is sampled by splitting the material longitudinally into the
required sample and half of the core is retained on site for review, resampling,
etc. as required. The drill core samples are each placed in a sample bag, which
is then sealed, and these are grouped into larger bags and then shipped directly
in security sealed bags to the assay laboratory of the Northwest Non-Ferrous
Geology Research Institute (ISO 9002) located in Xian, Shaanxi Province, P.R.C.

The core is currently
stored in plastic trays in a secure concrete building.

At the Xian facility,
the drill core samples are prepped to -10 mesh at which point a 500 gram sample
split is taken. This material is sent to IPL Laboratories or to ALS Chemex
Laboratories inVancouver and the balance of the sample is stored. All drill core samples
are being assayed using the Screen Fire Assay Method.



15


ALS Chemex is an ISO
9001: 2000 registered laboratory that is actively pursuing accreditation for ISO
17025 under CAN-P-1579 "Guidelines for Accreditation of Mineral Analysis Testing
Laboratories". IPL Laboratories is an ISO 9002 registered laboratory.

The soil geochemical and
exploration samples are assayed at the Langfang Institute of Geochemical and
Geophysical Exploration in Beijing, an ISO 9001 registered lab. The samples are
digested in aqua regia followed by analysis by atomic absorption techniques for
gold, silver, copper, nickel, arsenic, antimony and bismuth.

The JV Company submits
its own standards as a measure of the accuracy of the analysis. Field duplicates
and pulp duplicates are being routinely analyzed for precision at ALS Chemex,
Vancouver, British Columbia.

MINERAL RESOURCE AND
MINERAL RESERVE ESTIMATES No mineral reserve or resource calculations have been
undertaken. MINING OPERATIONS

The Project is at an
early stage of exploration and, while there remain small adits and stopes
developed by artisanal miners, there are no mining or processing facilities on
the Property being operated by the JV Company.

EXPLORATION AND
DEVELOPMENT

It is considered that
the Boka gold mineralization was produced by a very large mineralizing system.
Gold mineralization has been identified over a considerable area from Boka 8 and
11 in the north through Boka 1 North and South to south of Boka 7, a total
north-south distance of approximately eight kilometres. The main
north-south-trending east-dipping Mineralized Horizon, contained within a
package of Middle Proterozoic age, eugeosynclinal sediments, consists of a
stratigraphic interval of carbonaceous shales/slates with minor siltstone,
mudstone and carbonate interbeds which shows evidence of multiple episodes of
ductile-brittle deformation. The Mineralized Horizon hosts the main areas of
known gold mineralization with Boka 1 North, Boka 1 South and Boka 7, currently
being drilled.

The JV Company has
embarked on additional engineering studies and has purchased the Team 209
Interest in the Boka Gold Project. The JV Company is in its Phase 3 exploration
program, the budget for which is $3,806,500 and central to which is the
completion of the 40,000 metres of diamond drilling. Upon completion of the
Phase 3 program the JV Company plans to proceed with additional drilling to
define areas of mineralization indicated by previous work and to enable resource
estimates to be made for the Boka 1 North, Boka 1 South ad Boka 7 Zones. To take
into account these expenditures, an additional budget has been proposed by the
JV Company.

The Liam
Gold-Silver Project

Information on the Liam
Gold-Silver Project, Department of Cusco, Peru set out herein has been obtained
from the National Instrument 43-101F1 compliant technical report entitled
“Technical Report, Southwestern Resources Corp., Liam Gold-Silver Project,
Department of Cusco, Peru” by L.D.S. Winter, P.Geo., dated February 23, 2005.

The Company's principal
property in Peru is the Liam Gold-Silver Project (the “Liam Gold-Silver Project”
and the “Project” are used interchangeably) located 190 kilometres northwest of
the city of Arequipa. In late 2003 the Company signed an option agreement with
Newmont Peru Limited Sucursal del Peru (“Newmont Peru”) regarding the core zone
of the Liam Gold-Silver Project (the“Liam Core Zone” and the “Liam
Core Project”). Newmont Peru Limited (“Newmont Delaware”) and the Company also
entered into a joint venture agreement (the “Regional Joint Venture Agreement”)
to explore various concessions owned by the two companies outside the Liam Core
Zone (the “Liam Regional Zone” and the “Liam Regional Project”).



16


PROJECT DESCRIPTION AND
LOCATION

The Liam Gold-Silver
Project is comprised of three parts, the Liam Core Zone containing four
concessions totalling 3,500 hectares, the Liam Regional Zone containing 110
concessions covering 89,395 hectares and the Area of Interest.

The Liam Gold-Silver
Project is located in southern Peru, within the western slopes and the
continental divide of the Cordillera Occidental (Western Cordillera) of the
Peruvian Andes in the Department of Cusco at 14° 46’S latitude, 72° - 23’W
longitude, approximately 190 kilometres northwest of the city of Arequipa.

The concessions in the
two zones constitute the “Project Area” and are held by either Minera del
Suroeste S.A.C. (“Misosa”) an affiliate of Southwestern or Newmont Peru Limited
Sucursal del Peru (“Newmont Peru”), a branch of Newmont Peru Limited (“Newmont
Delaware”). Both Misosa and Newmont Peru own or control mineral rights outside
the Project Area but within the Area of Interest.

In late 2003, a letter
of intent was executed between Newmont Delaware and Southwestern and was
subsequently formalized in two agreements: (1) an Option Agreement dated
November 14, 2003 between Misosa and Newmont Peru regarding the Liam Core Zone
(the “Option Agreement”); and (2) a Joint Venture Agreement dated November 14,
2003 (the Regional Joint Venture Agreement) between Newmont Delaware and
Southwestern, regarding the Liam Regional Zone (the Regional Joint Venture).
Newmont Delaware and Newmont Peru are collectively referred to as Newmont.

Under the Option
Agreement, Misosa granted Newmont Peru the option to earn an undivided 50%
interest in the Liam Core Zone by spending a total of US$5 million over a
three-year period, with a minimum annual expenditure of US$1 million, which must
include 5,000 metres of drilling. After earning an undivided 50% interest
Newmont Peru has the second option to earn an additional undivided 10% interest
in the Liam Core Zone by producing a positive feasibility study. In addition,
Newmont Peru has a third option to earn a further undivided 10% interest in the
Liam Core Zone, thereby increasing its interest to an undivided 70% interest, by
funding all costs incurred to commencement of commercial production of mineral
products from the Liam Core Zone. If Newmont Peru elects the third option it
will be entitled to receive 90% of distributable profits until it has been
reimbursed for all costs incurred during the third option, while the remaining
10% of profits will be distributable to the parties pro rata.

Under the Regional Joint
Venture Agreement, Southwestern and Newmont Delaware contributed certain mineral
concessions and each has an undivided 50% participating interest in the Regional
Joint Venture. The parties have agreed to spend a total of US$5 million in the
Area of Interest over a five-year period, with Southwestern as exploration
manager. If the Technical Committee formed under the Regional Joint Venture
determines that any project within the Area of Interest, based on a preliminary
scoping study of its tonnage, or grade, initial metallurgy or initial economic
valuation, constitutes a viable exploration project then Newmont Delaware has
the election to earn an additional 20% interest in that project by producing a
feasibility study and funding all costs incurred to the commencement of
commercial production. Newmont Delaware also has similar preferential rights to
distributable profits as those specified for the Liam Core Zone.

Apart from the
contractual terms set out above, there are no additional royalties, overrides,
back-in-rights, payments or other agreements to which the Project is subject.

There are no known
pre-existing environmental liabilities.



17


The Liam Gold-Silver
Project is located within the western slopes and the continental divide of the
Cordillera Occidental (Western Cordillera) at an altitude of 4,500 metres to
5,300 metres within the northwesterly-trending Southern Peru, Tertiary Volcanic
Belt.

At Liam, within a large
zone of argillic – siliceous alteration, the Liam gold-silver-bearing zone is
considered to consist of three parts: Cerro Crespo butte to the south, an 800
metre diameter, maar-like crater immediately to the north and northeast, and the
Queshca area on the north side of the maar-like crater. The area in which
gold-silver values of economic interest have been obtained extends about 2.5
kilometres north-south from Queshca to Cerro Crespo and about 1.5 kilometres
east-west. Four additional target areas within the Regional Zone area have been
identified.

There are no defined
mineral reserves or resources for the Liam Gold-Silver Project and there are no
mine workings, tailing ponds, waste disposal areas or natural features of
significance or improvements in the area.

The Liam Gold-Silver
Project consists of three parts: the Liam Core Zone concessions, the Liam
Regional Zone concessions and the Area of Interest. The concessions provide the
operators with access to the mineral rights and the current drilling program is
being carried out under a Category C Permit. Currently, within the Area of
Interest are mineral rights owned or controlled by either Misosa or Newmont
Peru, which will be maintained in good standing for the benefit of the Joint
Venture as per the Option Agreement.

ACCESSIBILITY, CLIMATE,
LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The Project can be
reached by road from Arequipa via the communities of Puente Callari, Sibayo,
Cailloma and Arcata. All access to the area is by vehicle or helicopter.

Apart from the small
communities which provide accommodation and services to the mining operations at
Orcopampa and Arcata there is limited infrastructure in the area.

The Project Area is
above 4,000 metres and has a high altitude tundra-type climate. The rainy
season, which is from December through March, hinders road access and work
during this period. Snowfalls are not uncommon during the rainy season and on
some of the higher peaks snow may remain for considerable periods of time.

The Project is at an
early stage of exploration, however, as the Project progresses, the sufficiency
of surface rights for mining operations, tailings or waste disposal, heap leach
pods or processing plants will be addressed.

At present, there is no
power available in the area. A small lake adjacent to Cerro Crespo has
sufficient water for the drilling programs. Any future mining operations in the
area would require that accommodations be built for the mine personnel.

The Project is located
on the western slopes of, and on the continental divide of the Cordillera
Occidental (Western Cordillera) of the Peruvian Andes. The area is well above
tree line in the Altoplano which is an undulating high altitude plane of gentle
to moderate slopes with elevations ranging from a high of 5,371 metres on Cerro
Crespo in the west central part of the Liam Core Zone to a low of 4,470 metres
along a creek to the northeast. The prominent Cerro Crespo butte which outcrops
in the centre of the Core Zone has a flat top and very steep sides while at
Queshca, to the north, the slopes are gentle to moderate with steeper sections
between Cerro Crespo and Queshca.

There are no trees at
this elevation and the only vegetation consists of alpine-type plants and
grasses, which mainly grow in the valleys. Some of these areas may be used on a
short-term basis for grazing llamas, alpacas and sheep.



18


HISTORY

The Liam concessions
were initially acquired by the Soteco Joint Venture in January 1995
(Southwestern/Teck Corporation/Cominco Ltd.) with Minera Teck Peru S.A. (“Minera
Teck”) being the operator.

1995 Programs

The Liam property was
originally identified by Southwestern and staked based on a satellite image
anomaly thought to represent hydrothermal alteration. Initial reconnaissance,
1:100,000 scale geological mapping and concurrent rock and stream sediment
sampling were carried out by Minera Teck on the original two Liam claims, Liam
II and III (totaling 1,600 hectares) in May 1995. Also during 1995, Cominco
carried out a brief first-pass program on their superimposed 1,000 hectares La
Francia claim. Their mapping outlined high-sulphidation alteration, consisting
of vuggy silica, alunite and advanced argillic alteration and a 450 metres by
350 metres breccia zone in the Cerro Crespo area.

1996 Program

A second phase Minera
Teck program consisting of 1:10,000 scale geological mapping and sampling was
conducted in November 1996. The program outlined five alteration zones (A-E)
with two zones containing anomalous gold in rock values. Hydrothermal alteration
consisted of silicification and argillization. Both the zones contained
coincident silver and epithermal indicator elements arsenic, antimony, bismuth
and mercury as well as lead.

1997 Program

The June 1997 Minera
Teck third phase program consisted of grid installation followed by 1:5,000
scale geological mapping with concurrent detailed grid rock and soil sampling
and induced polarization (IP) and magnetic surveys. In October 1997, with the
aid of a qualified mountain climber, detailed rock sampling was carried out over
Cerro Crespo. Analyses of the 567 grid rock samples include 2>500 parts per billion gold, 14>200
parts per billion gold, 22>100 parts per billion and 49>50
parts per billion gold. Almost all of the anomalous gold values were restricted
to the two anomalous zones and all had coincident silver and epithermal
indicator elements (arsenic, antimony, mercury and bismuth) as well as lead
anomalies.

A ground magnetic survey
showed a central part of the grid that suggested a possible deep-rooted magnetic
anomaly coincident with the central resistivity high. An IP survey suggested a
central zone of high resistivity (centred over Cerro Crespo and gold zone “B”).
This central zone of high resistivity was flanked by zones of high
chargeability, often with associated high resistivities.

1998 Diamond
Drilling Program

The 1998 drill program
consisted of twelve HQ- and NQ-sized diamond drill holes totaling 1,781 metres.
1,638 metres was cored HQ and 143 metres was cored NQ.

A total of 747 core
samples were collected during the 1998 drill program and analyzed by Chemex Labs
in Vancouver, Canada for gold by fire assay and atomic absorption finish and
silver, copper, lead, zinc, arsenic, molybdenum, bismuth and antimony by aqua
regia digestion and ICP-AES (inductively coupled plasma-atomic emission
spectrometry) finish. Mercury was analyzed by flameless atomic absorption
spectroscopy. Anomalous gold (> 0.1 grams per tonne gold) values and weighted
average gold and silver drill intersections were plotted on sections. In order
to determine epithermal alteration zoning, PIMA (portable infrared mineral
analyzers) spectral analysis study was completed on holes 1B, 2, 3, 4, 5B, 6, 7
and 8. Core recovery was generally good, however, in some sections poor recovery
was encountered.



19


After Minera Teck
decided not to contribute to the vigencia payments in June 2002, Misosa reviewed
the results of the prior Liam Project work and concluded that it was still a
target of merit and deserving of additional work.

The Liam Property was
not acquired from an informed person or promoter of Southwestern or an associate
or affiliate of an informed person or a promoter.

GEOLOGICAL SETTING

On a regional basis the
Liam Gold-Silver Project is located in the central part of the
northwest-trending Tertiary Volcanic Belt of southern Peru. The volcanic belt
has been developed on top of older, mainly sedimentary, Paleozoic and Mesozoic
units, which in general lie to the southwest and northeast of the volcanic belt.
Northwest-trending, belt-parallel zones of Cretaceous to Tertiary age felsic
intrusives lie to the southwest and northeast of the central part of the
Tertiary Volcanic Belt.

Dominant structural
trends are northeast, northwest and to a lesser extent north-south. Base metal
mineralization generally occurs associated with the intrusives as porphyry and a
skarn-type mineralization. Gold-silver mineralization, usually of the high or
low sulphidation epithermal type, tends to occur within a northwest-trending,
belt-parallel zone, centrally located in the Tertiary Volcanic Belt. Examples
are the Madrigal, Caylloma, Suckuytan, Orcopampa, Poracota, Ares and Arcata
mines and prospects to the south, and Santa Rose and Selene to the northwest of
Liam.

Within the area of the
Liam Regional and Liam Core Zones the oldest volcanic units are those of the
Tacaza Formation which in turn are overlain by the Late Miocene Alpabamba
volcanics consisting of bedded, felsic to andesitic tuffs and lavas and
associated re-worked units. It is the Alpabamba units which host the Cerro
Crespo-Queshca gold-silver mineralization. Following the formation of the
Alpabamba units they were hydrothermally altered and mineralized. The Liam site
is considered to have been a volcanic centre and the site of on-going cratering,
brecciation, alteration and mineralization. Local structural trends appear to
duplicate those that are present on a regional basis.

The unaltered andesitic
Barroso Group volcanics of Pleistocene age were extruded over the argillically
altered Alpabamba volcanics. Quarternary alluvial and glacial deposits occur
throughout the lower areas and valleys.

Work by Misosa has
indicated that the underlying units in the Cerro Crespo / Queshca area are
flow-banded rhyolites, lapilli tuffs and dacitic crystal tuffs of the Miocene
Alpabamba Formation. Rhyodacites were reported in the deeper parts of some of
the Minera Teck drill holes at Cerro Crespo.

These units are
considered to be localized in the central vent area of a large volcanic complex
composed of one or more craters with an 800 metre diameter maar-like crater
flanked by Cerro Crespo to the south and the larger Queshca crater to the north.
These features are considered to occur in the central part of an extensive zone
of high sulphidation argillic-siliceous alteration.

Cerro Crespo butte is a
high-level, complex, hydrothermal vent system located on the southern side of
the maar-like crater and exhibiting several felsic diatreme/brecciation events.
At a depth of 150 metres to 200 metres some of these diatreme/breccia zones
become narrow, fault-controlled feeder zones. The original rock textures have
been almost completely destroyed by the hydrothermal and phreatomagmatic
processes with three types of breccias currently being recognized: a
hydrothermal breccia, a phreatomagmatic breccia and a weakly brecciated, very
strongly silicified unit. In all these units silicification is pervasive,
multi-episodic and associated with alunite.



20


On the lower southeast
slope of Cerro Crespo are dacitic crystal tuffs intercalated with silica sinters
and silicified ash flow tuffs and in places thin-bedded lacustrine sediments,
which may have been deposited in small crater lakes. Lapilli tuffs have been
mapped in contact with hydrothermal breccias in the northern, western and
southwestern parts of Cerro Crespo and flow banded rhyolites occur on the
northern end of Cerro Crespo. All these units are moderately to strongly
silicified and argillized. In places limonite after sulphides is present and
most units are strongly oxidized. These units appear to be sub-horizontal to
north dipping (towards the maar-like crater). At Queshca, pyroclastic breccias
and crystal tuffs dipping at low angles to the south (inwards) occur on the
northern edge of the maar-like crater. Within the maar-like crater thin-bedded,
crater-lake sediments and intrusive breccias have been mapped.

Preliminary structural
interpretations by Misosa indicate the presence of northeast, north-south and
northwest-trending structures. At Cerro Crespo, a set of east-west fault
structures has been identified. These appear to generally have a left-handed
displacement and to have produced five small fault blocks. These faults are
syn-and post-mineral and have controlled the emplacement of feeder structures
and the breccia zones.

In summary, the Liam
area of mineralization is considered to be localized in a large volcanic complex
consisting of several maar-like craters surrounded by sub-horizontal to inward
dipping felsic volcaniclastics, flows and epiclastics which have been
extensively faulted and fractured, pervasively silicified and argillized and
intruded by multiple diatreme and hydrothermal breccias. Gold-silver
mineralization appears to have been introduced in association with the
introduction of the various breccia units.

EXPLORATION

The work from 1995
through 1998 was carried out by Minera Teck as operator of the Soteco Joint
Venture. In 2002 Misosa took over as operator of the Property and carried out
programs of geological mapping and sampling followed by a diamond drilling
program at Cerro Crespo in which 19 holes totalling 3,198 metres were completed.

The initial work by the
Soteco Joint Venture at Liam indicated the presence of a large epithermal,
high-sulphidation type argillic alteration zone with anomalous gold and silver
values at Cerro Crespo and Queshca.

The careful, detailed
chip sampling as well as the drilling by Misosa indicated that Cerro Crespo
hosts mineralized breccias with gold-silver values of economic interest in
several zones over an area approximately 350 metres by 150 metres, trending
northwest, and to a depth in the order of 150 metres.

Approximately 800 metres
to the north is the Queshca area where six outcrop areas or zones have been
mapped and sampled. Within these six zones, channel samples have yielded gold
values from 0.03 grams per tonne gold (30 parts per billion) to 83.50 grams per
tonne gold and 32.3 grams per tonne silver across 0.50 metres. Of the 215
samples collected at Queshca, 95 (44%) gave values equal to or greater than 1
gram per tonne gold. Sixty-eight samples (32%) returned values greater than 2
grams per tonne gold and 29 samples (13%) assayed better than 5 grams per tonne
gold. This preliminary work indicated that the samples from the outcrops (Zones
1 and 2) at higher elevations gave lower gold values of 0.10 grams per tonne to
0.50 grams per tonne while those at lower elevations (Zone 6) returned the
highest gold values. These gold values which occur over an area greater than
1,000 metres east-west by about 1,000 metres north-south lying 800 metres north
of Cerro Crespo indicate an increase in grade with stratigraphic depth which may
be the reflection of the porosity and permeability of the different volcanic
units.

The results from five
drill holes from Cerro Crespo and from 11 holes at Cerro Queshca drilled by
Newmont were reported by Southwestern in a press release dated September 29,
2004. Two holes at Cerro Crespo identified a new mineralized zone on the
northeast flank of the CerroCrespo butte (Li-23 and Li-24)
and one hole from Cerro Queshca, QS-010, intersected 24.55 metres at 6.0 grams
per tonne gold and 67.6 grams per tonne silver. This hole plus additional work
at Cerro Queshca have indicated that the mineralization in this area is
associated with a major, steeply-dipping, east-west-trending structure. Work in
both areas is on-going.



21


The Liam Regional Zone
concessions and Area of Interest cover additional areas of potential economic
significance as indicated by regional studies and the field work carried out in
2004. This work has identified four high priority gold-bearing areas.

Interpretation of the
Liam Core Zone exploration information is that of a large, high-sulphidation
epithermal system within a large volcanic complex with extensive silicification,
multiple stages of brecciation and gold-silver mineralization over an area
measuring approximately 2.5 kilometres north-south by 1.5 kilometres east-west.

The Liam Regional
Project represents a significant land position in a high interest area based on
regional considerations and satellite imagery and in which four gold-bearing
alteration zones have been identified.

It is considered that
both the Liam Core Zone Project and the Liam Regional Zone Project are of
considerable merit due to the results to date and because of the potential for
additional epithermal gold-silver mineralization of economic
significance.

The previous work on the
Liam property was carried out under the direction of Minera Teck as operator.
The geological field work and sampling in 2002 and 2003 has been carried out by
Misosa personnel with the diamond drilling being done by Bradley Bros. Peru
Ltda. Drill core logging and sampling was done by Misosa geologists and
technicians. Within the Liam Core Zone, the 2004 work has been under the
direction of Newmont and the 2004 work in the Regional Joint Venture under
Misosa's direction.

The overall supervision
of the programs completed by Misosa was by Javier Salas Tamayo, Exploration
Manager for Misosa. The initial sampling program from September 4, 2002 to
October 6, 2002 consisted of channel sampling Cerro Crespo at which time 325
samples were taken and analyzed for gold plus 34 elements.

Misosa carried out some
initial check sampling in January 2003 on 10 channel samples from the 2002
program on Cerro Crespo. These 10 were chosen due to their high silver content.
The initial samples were analyzed by ALS Chemex Laboratories with the re-assay
of the reject pulps being by Actlabs Skyline Labs. It is the Company's opinion
that the geological and sampling work carried out by Misosa was done in a very
professional and competent fashion and that the results are a fair
representation of the geological situation. The Misosa team has continued the
work on the Regional Joint Venture.

MINERALIZATION

The Soteco Joint Venture
initially identified the Liam area as a zone of high sulphidation epithermal
gold-silver mineralization and in particular that the Cerro Crespo butte could
represent a vent related diatreme-type body. Drilling at Cerro Crespo by Soteco
was generally below the base of the butte (except for one, upward directed
hole). The Soteco sampling showed that Cerro Crespo was anomalous in gold and
silver, however, drilling marginal to and to some degree below Cerro Crespo
produced only anomalous precious metal values.

Subsequently Misosa
mapped and sampled in detail Cerro Crespo and Queshca and then carried out an
initial diamond drilling program at Cerro Crespo. The following comments are
mainly based on the work from mid-June 2002 to the end of 2003 completed by
Misosa.

Detailed mapping and
sampling from September 4, 2002 to June 9, 2003 resulted in the collection of
410 channel samples mainly on the top of Cerro Crespo and on its northern andeastern flanks. The
mapping identified the various breccia units, while the sampling identified five
areas, from northwest to southeast and referred to as Areas A, B, C, D, and E,
of gold-silver mineralization with grades ranging from anomalous to being of
economic interest.



22


Zone A - located in the
northern part of Cerro Crespo and extends about 45 metres north-south by 40
metres east-west. Three geologic units are present: hydrothermal breccia,
phreatomagmatic breccia and strongly silicified-weakly brecciated
material.

Zone B - about 25 metres
southeast of Zone A in strongly silicified and weakly brecciated rock, extends
for about 100 metres in an east-west direction and is about 25 metres wide
(north-south). The Zone B West hydrothermal breccia measures about 30 metres by
15 metres and the mean values of the 16 samples collected from this zone are 444
parts per billion gold and 295.6 parts per million silver.

Zone B East is an
elongated east-west breccia body about 60 metres by 20 metres, also hosted in
strongly silicified-weakly brecciated rock. This zone is very similar to Zone A
and Zone B West. The 10 samples collected from this zone assayed 852 parts per
billion gold and 322.1 parts per million silver.

The Hatun Curasma Vein
is located immediately south of Zone A, extends to the west, and also to the
eastern slope of Cerro Crespo. The vein consists of massive and vuggy quartz
associated with goethite and barite. The mean values from five samples from this
vein averaged 3,767 parts per billion gold and 461.1 parts per million silver.

Zone C - south of Zone
B, is composed of strongly silicified rock which has three phreatomagmatic
breccias as well as some small hydrothermal breccias. This is the highest part
of Cerro Crespo at 5,371 metres. Forty-five channel samples averaged 244 parts
per billion gold and 295.6 parts per million silver.

Zone D - east of Zones B
and C; two outcrops of strongly oxidized hydrothermal breccia and strongly
silicified-weakly brecciated rock.

Zone E - about 100
metres southeast of Zone D. Seventeen channel samples of strongly oxidized and
brecciated rock with abundant limonite and sulphides plus late quartz veinlets
and barite were collected.

Mapping and sampling in
the southern part of Cerro Crespo in May – June 2003 indicated the presence
mainly of diatreme breccia. Eighty-five channel samples were collected from this
area, with the following conclusions:



|1) | Cerro
      Crespo is a high level, complex volcanic hydrothermal vent system within
      an extensive high sulphidation alteration zone.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------



|2) | A
      significant gold-silver zone of mineralization is associated with the
      hydrothermal vent system.
|-- | -------------------------------------------------------------------------------------------------------------



|3) | High
      grade silver values with subordinate gold were found in Zones A, B and C
      in the upper part of the butte at elevations between 5,350 metres and
      5,375 metres and also in Zone D at an elevation of 5,200 metres suggesting
      150 metres to 175 metres of vertical continuity in the eastern part of the
      butte. In Zone E at 5,150 metres silver values decrease but copper
      increases.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4) | The
      upper part of Cerro Crespo is strongly oxidized, however, Misosa
      geologists consider that silver migration is generally in the order of
      centimetres.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In mid 2003 Misosa
carried out two channel sampling programs at Queshca with the results being
reported in press releases by Southwestern on September 23, 2003 and October 31,
2003. From the preliminary sampling it appears that the grade of the
mineralization is increasing with depth in the stratigraphic sequence. The
distribution of the gold and silver values in this area may be related to the
porosity and permeability of the volcaniclastic/epiclastic units in this sector
andpossibly the
presence of more impermeable units, higher in the volcanic stratigraphy, which
have produced a ‘cap rock’. Gold values ranged from 10 parts per billion to
13,720 parts per billion and silver ranged from 3.2 parts per million to 86.1
parts per million.



23


A second sampling
campaign was undertaken to check the high gold values reported in the earlier
sampling. This sampling program of 303 samples included the sampling of trenches
20 metres in length with individual channel samples being 2 metres in length.
The assay results from this second set of samples confirmed the values obtained
in the first sampling campaign.

In June 2003 Misosa
commenced a drill program at Cerro Crespo which resulted in 19 holes totaling
3,198 metres being completed.

From the mapping at
Cerro Crespo and the diamond drilling it is considered that the gold-silver
mineralization at Cerro Crespo is confined to the brecciated and highly
silicified zone of the butte, which is in turn surrounded by an
argillic-siliceous alteration zone. The mineralized zone trends northwesterly,
with a strike length in the order of 350 metres, a width of 125 metres – 150
metres and a vertical extent of 150 metres +/-. The zone of better grade
mineralization appears to be “V” shaped in cross-section with the zone being
wider at the top of the butte and diminishing in width at depth as it passes
into the feeder zones. The main areas of mineralization are on the two arms of
the “V” with smaller, discontinuous areas within the upper mouth of the “V”.
This overall picture is distorted by the east-west faults and movement of the
adjacent blocks.

The work by the Soteco
Joint Venture initially, but more importantly, the work since June 2002 by
Misosa has indicated the widespread presence of gold-silver high sulphidation
epithermal mineralization of economic potential. The presently indicated area of
interest extends from Queshca 6 Zone North to Cerro Crespo, a distance of
approximately 2.5 kilometres north-south and from Queshca Zone 4 in the east for
about 1.5 kilometres east-west.

In late April 2004,
Newmont began a drilling program in the Liam Core Project area. This preliminary
work has indicated the presence of a new zone of gold-silver mineralization on
the northeast flank of the Cerro Crespo butte and has indicated that the best
Cerro Queshca gold-silver mineralization is associated with a major, east-west,
steeply-dipping shear zone.

Within the Liam Regional
Program, regional rock and geochemical sampling has resulted in the discovery of
four new gold-bearing zones; the A Zone, the B Zone, the Ibel Zone and the Teton
Zone. The A Zone consists of an area of alteration, vuggy silica and breccias
600 metres by 400 metres and showing a thickness of at least 100 metres.
Recently the A Zone has been renamed Astana and the B Zone has been renamed
Farallon.

The Ibel Zone is a high
sulphidation epithermal system covering an area 1,000 metres by 500 metres. An
initial surface sampling and detailed trenching program of the breccias and
vuggy silica has been completed. This work yielded anomalous gold and silver
values. The Farallon and Teton Zones are more recent discoveries and to date
only limited sampling has been carried out over these Zones.

DRILLING

There have been three
drilling programs carried out on the Liam property, one in 1998 by the Soteco
Joint Venture, a second in 2003 by Misosa and a third by Newmont on the Liam
Core Project. Both the 1998 and 2003 programs were at Cerro Crespo. The Soteco
drilling confirmed that the strong high sulphidation epithermal alteration zone
observed on surface continued to depth, however, no intersections of economic
widths of precious metal mineralization were encountered. As a result of the
work done by Misosa at Cerro Crespo, it is now apparent that the Soteco drill
holes were being drilled below the main zone of mineralization.

Misosa's drilling
program consisted of taking a diamond drill to the top of Cerro Crespo and
drilling 19 holes in six north-south sections. The sections were nominally
spaced at 50 metres.



24


This work indicated the
presence of a significant zone of gold-silver, high sulphidation-type epithermal
mineralization with a strike length of about 350 metres, a width of 125 metres
+/- and a vertical extent of 150 metres.

In late April 2004,
Newmont Peru commenced a Phase 1 drilling program. In a press release dated
September 29, 2004 Southwestern reported the results from five holes drilled at
Cerro Crespo and 11 holes drilled at Cerro Queshca. Holes Li-21 and Li-22
drilled at Cerro Crespo were drilled 300 metres south of the butte but no
significant gold or silver mineralization was intersected. Two holes, Li-23 and
Li-24 identified a new gold-silver zone of mineralization on the northeast flank
of Cerro Crespo butte. The zone requires additional drilling to define its
limits.

Queshca drill holes
QS-001 to QS-007 and QS-011 intersected anomalous sporadically distributed gold
and silver values, however, QS-010 intersected 24.55 metres assaying 6.0 grams
per tonne gold and 67.6 grams per tonne silver. The Cerro Queshca drilling has
been very widely spaced, however, the initial results indicate that the better
grade gold mineralization is controlled by a steeply-dipping, major,
east-west-trending structure as indicated by hole QS-010.

All reported
intersections are core intervals. Until the zones are better defined the true
widths of the mineralization cannot be stated.

SAMPLING AND ANALYSIS

The surface sampling
carried out by Misosa consisted of taking channel samples, which varied in
length from 0.30 metres to 2.0 metres. Due to the strongly silicified nature of
much of the rock at Cerro Crespo, the sample widths were generally in the 5
centimetres to 10 centimetres range and in the harder sections from 3
centimetres to 5 centimetres wide. As conditions permitted, samples were
normally taken perpendicular to lithologic and/or structural trends.

Each sample was
collected in a plastic bag, following which it was ticketed, security sealed and
its location recorded.

All the drill hole core
was split longitudinally with each sample generally being one metre in length.
After the drill core was logged and sample intervals marked and recorded, the
core was photographed then split or sawn longitudinally into two halves. One
half was retained in the core box and stored on site while the second half was
placed in a plastic sample bag with the appropriate ticket and then security
sealed for shipment to the lab in Lima, Peru.

A second sampling
campaign was undertaken to check the high gold values reported in the earlier
sampling. This sampling program of 303 samples included the sampling of trenches
20 metres in length with individual channel samples being 2 metres in length.
The assay results from this second set of samples confirmed the values obtained
in the first sampling campaign.

Misosa personnel have
followed the same sampling protocols in their work in 2004 in the Liam Regional
Joint Venture work.

Misosa carried out some
initial check sampling in January 2003 on 10 channel samples from the 2002
program on Cerro Crespo. These 10 were chosen due to their high silver content.
The initial samples were analyzed by ALS Chemex Laboratories with the re-assay
of the reject pulps being by Actlabs Skyline Labs (“Actlabs Skyline”).

Actlabs Skyline reported
lower silver values for six samples, and higher silver samples for four samples
than the original ALS Chemex results. On average, the Actlabs Skyline silver
values are 2.4% lower for silver and 6.5% lower for gold. It is considered that
there is a good correlation between the two sets of values and that the Actlabs
Skyline results corroborate the ALS Chemex values.



25


Subsequently, 39 channel
sample rejects with low, medium and high grades of gold and silver were selected
from different zones and sent to the Actlabs Skyline laboratory to test for
repeatability of the ALS Chemex gold and silver values. Also, four samples were
assayed using the Neutron Activation Method.

The Actlabs Skyline
results for gold are 3.7% less (15.6 parts per billion) than the ALS Chemex
results and the Actlabs Skyline results for silver are 23.5% higher (33.7 grams
per tonne) than the ALS Chemex results, however, it is considered that this is a
very acceptable correlation and confirms the validity of the original ALS Chemex
analyses.

The grades obtained
using the Neutron Activation Method are 11.5% higher for gold and 15.6% higher
for silver than the assay results originally reported by Actlabs Skyline.

In summary, it is
considered that the check assaying as well as testing by a second technique has
confirmed, within the limits of sampling and testing methods, the validity of
the Cerro Crespo channel sampling.

As discussed above,
there is a good correlation between the initial sampling and the check sampling
values indicating that to date the sample values are a fair representation of
the gold and silver values in the rock.

In general sample
intervals were established to reflect the geological units being sampled with
individual samples varying in length from one metre to two metres. As a result
the two controls on the sampling were the width of the geological unit being
sampled and within this interval the choice of sample length, i.e., one metre to
two metres.

For the work being
carried out by Misosa, the overall supervision of the program has been under the
direction of Javier Salas Tamayo, Exploration Manager for Misosa. The initial
sampling program from September 4, 2002 to October 6, 2002 consisted of channel
sampling Cerro Crespo at which time 325 samples were taken and analyzed for gold
plus 34 elements.

Misosa carried out some
initial check sampling in January 2003 and the results of this check sampling as
well as subsequent check sampling are presented above.

SECURITY OF SAMPLES

After collection, all
sample bags were sealed with an individually numbered sample tie and then a
number of bags were combined into one larger shipment to the ALS Chemex Lab in
Lima, Peru (ISO 9002 registration). The samples were crushed to minus 80 mesh
and pulverized to greater than 85% passing a 200 mesh screen. The sample pulp
was then sent to the ALS Chemex, Vancouver lab for analysis. Samples were
digested in an aqua regia acid digestion and then were analyzed for 34 elements
using an ICP-AES (Inductively Coupled Plasma – Atomic Emission Spectrometry).

ALS Chemex, Vancouver is
an ISO 9001:2000 registered laboratory and is preparing for ISO 17025
certification.

The check assays for the
initial Cerro Crespo channel sampling by Misosa in 2002 and 2003 were done by
Actlabs Skyline Labs Inc., Tucson, Arizona, U.S.A. This laboratory is part of
the Actlabs Group of Companies, which is accredited to the ISO/IEC 17025
specification.

MINERAL RESOURCE AND
MINERAL RESERVE ESTIMATES

No mineral resource or
mineral reserve estimates have been made for any of the indicated gold-silver
mineralization.



26


MINING OPERATIONS

The Project is at an
early stage of exploration and there are no mining or metallurgical
operations.

EXPLORATION AND
DEVELOPMENT

Newmont will earn a 50%
undivided interest in the Liam Core Zone Project by spending a cumulative total
of US$5,000,000 within a three-year period with a minimum annual expenditure of
US$1,000,000 which must include 5,000 metres of diamond drilling.

Newmont as operator of
the Liam Core Zone Project has completed an induced polarization survey over the
Project area and has completed their Phase 1 diamond drilling program.

The Regional Zone
Project is being explored by a joint venture, with Misosa as operator, and in
which Newmont and Southwestern each have a 50% interest and will be required to
fund their respective interests. For the Regional Zone Project, a program of
geological mapping and prospecting, trenching, sampling, regional and detailed
geochemistry and geophysics is in progress.

Joint venture meetings
are planned for both the Liam Core Project and the Liam Regional Project. At
those meetings, decisions will be made as to the programs and budgets for both
Projects for 2005.

Risk Factors

History of Net
Losses; Uncertainty of Additional Financing

To date, the Company has
had no revenue from the exploration activities on its properties. The Company
has not yet found that development activity is warranted on any of its
properties. Even if the Company does undertake development activity on any of
its properties, there is no certainty that the Company will produce revenue,
operate profitably or provide a return on investment in the future.

The Company has incurred
losses in most years of its operations. The exploration of the Company’s
properties therefore depends on the Company’s ability to obtain additional
required financing. There is no assurance that the Company will be successful in
obtaining the required financing, which could cause the Company to postpone its
exploration plans or result in the loss or substantial dilution of its interest
(as existing or as proposed to be acquired) in its properties as disclosed
herein.

Possible Loss of
Interests in Exploration Properties; Possible Failure to Obtain Mining Licenses

The agreements pursuant
to which the Company acquired its interests in properties provide that the
Company must make a series of cash payments over certain time periods, expend
certain minimum amounts on the exploration of the properties or contribute its
share of ongoing expenditures. If the Company fails to make such payments or
expenditures in a timely fashion, the Company may lose its interest in those
properties. Further, even if the Company does complete exploration activities,
it may not be able to obtain the necessary licenses to conduct mining operations
on the properties, and thus would realize no benefit from its exploration
activities on the properties.

Mineral
Exploration and Development Activities Inherently Risky

The business of mineral
exploration and extraction involves a high degree of risk. Few properties that
are explored are ultimately developed into production. At present, none of the
Company’s properties has a known body of commercial ore. Unusual or unexpected
formations, formationpressures, fires, power outages, labour disruptions, flooding,
explosions, cave-ins, landslides and the inability to obtain suitable or
adequate machinery, equipment or labour are other risks involved in extraction
operations and the conduct of exploration programs. Although the Company carries
liability insurance with respect to its mineral exploration operations, the
Company may become subject to liability for damage to life and property,
environmental damage, cave-ins or hazards against which it cannot insure or
against which it may elect not to insure. There are also physical risks to the
exploration personnel working in the rugged terrain of Peru and China, often in
poor climate conditions.



27


Previous mining
operations may have caused environmental damage at certain of the Company’s
properties. It may be difficult or impossible to assess the extent to which such
damage was caused by the Company or by the activities of previous operators, in
which case, any indemnities and exemptions from liability may be ineffective.

If any of the Company’s
properties is found to have commercial quantities of ore, the Company would be
subject to additional risks respecting any development and production
activities.

Company at
Exploration Stage Only; No Experience in Placing Properties Into Production

The Company has no
experience in placing mineral deposit properties into production, and its
ability to do so will be dependent upon using the services of appropriately
experienced personnel or entering into agreements with other major resource
companies that can provide such expertise. At present, none of the Company’s
personnel have any experience in actually operating mines. There can be no
assurance that the Company will have available to it the necessary expertise
when and if the Company places mineral deposit properties into production.

Repatriation of
Earnings

Peru has no limitation
on profit or capital remittances to foreign shareholders provided that all
applicable Peruvian taxes have been paid. However, there can be no assurance
that additional restrictions on the repatriation of earnings in Peru will not be
imposed in the future.

Chinese regulations
provide that, subject to payment of applicable taxes, foreign investors may
remit out of China, in foreign exchange, profits or dividends derived from a
source within China. Remittance by foreign investors of any other amounts
(including, for instance, proceeds of sale arising from a disposal by a foreign
investor of any of his investment in China) out of China is subject to the
approval of the State Administration of Exchange Control or its local branch
office. No assurance can be given that such approval would be granted if the
Company disposes of all or part of its interest in the Boka Gold Project.
Further, there can be no assurance that additional restrictions on the
repatriation of earnings in China will not be imposed in the future.

Foreign Currency
Fluctuations

The Company carries out
exploration activities in Peru and China that render it subject to foreign
currency fluctuations. While the Company minimizes the risks associated with
foreign currency fluctuations by holding essentially all of its cash and
short-term investments in U.S. and Canadian dollars rather than the local
currencies, to the extent that its operations in those countries are carried out
using the local currency, any appreciation of such local currency relative to
the U.S. and Canadian dollar could have an adverse impact on the financial
position of the Company. Since the Company’s financial results are reported in
Canadian dollars, its financial position and results are impacted by exchange
rate fluctuations between the Canadian and U.S. dollarsand, in particular, the current
increase in the Canadian dollar relative to the U.S. dollar may have a negative
impact however, such impact is not considered to be material.



28


Political
Investment Risk; Political Instability in Developing Countries

The Company’s mineral
interests are in countries that may be affected by varying degrees of political
instability and the policies of other nations in respect of these countries.
These risks and uncertainties include military repression, political and labour
unrest, extreme fluctuations in currency exchange rates, high rates of
inflation, terrorism, hostage taking and expropriation.

The Company’s mining,
exploration and development activities may be affected by changes in government,
political instability and the nature of various government regulations relating
to the mining industry. Any changes in regulations or shifts in political
conditions are beyond the control of the Company and may adversely affect its
business and/or its holdings. Operations may be affected in varying degrees by
government regulations with respect to restrictions on production, price
controls, export controls, income taxes, expropriation of property,
environmental legislation and safety factors. The Company’s operations in Peru
and China entail significant governmental, economic, social, medical and other
risk factors common to all developing countries. See “Economic Uncertainty in
Developing Countries”. The status of Peru and China as developing countries may
make it more difficult for the Company to obtain any required financing because
of the investment risks associated with these countries.

Economic
Uncertainty in Developing Countries

The Company’s operations
in Peru and China may be adversely affected by economic uncertainty
characteristic of developing countries. For example, Peru has experienced high
rates of inflation for many years. There can be no assurance that any
governmental action to control inflationary or deflationary situations will be
effective in ensuring economic stability, or that future governmental actions
will not trigger inflationary or deflationary cycles. Additionally, changes in
inflation or deflation rates and governmental actions taken in response to such
changes can also affect currency values in such countries. Any such changes
could have a material adverse effect on the Company’s results of operations and
financial condition.

Operations in China are
subject to risks relating to China’s relatively recent transition to a market
economy administered by a socialist government. While China has recently
permitted private economic activities, the government of China has exercised and
continues to exercise substantial control over virtually every sector of China’s
economy through regulation and state ownership. The Company’s prospects, results
of operations and financial condition may be adversely affected by political,
economic and social uncertainties in China, changes in China’s leadership,
diplomatic developments and changes or lack of certainty in the laws and
regulations of China.

Operations in Peru are
also subject to risk. Peru’s fiscal regime is generally favourable to the mining
industry and has been relatively stable over the past ten years or so, but there
is a risk that this could change in a relatively short period of time. In
addition, labour in Peru is customarily unionized and there are risks that
labour unrest or wage agreements may impact operations. The Company believes
that the current conditions in Peru are relatively stable and conducive to
conducting business, however, its current and future mineral exploration
activities could be impacted by political or economic developments.

Current Mineral
Exploration Conditions

The current
infrastructure in China may not be adequate to support the Company’s planned
activities. For example, water supply, electricity supply and transportation
accessibility are presently satisfactory at the Boka Gold Project, however,
their continued reliability, or the ability of the appropriate authorities to
maintain these utilities, is undetermined. In addition, there could be technical
risks associated with exploration at the Boka Gold Project, including, but not
limited to, failure of the leach ponds and the system of tunnels excavated by
previous mining operations. These risks could result in increased operating
costs.



29


Similarly, in Peru,
while the current infrastructure is adequate to support the Company’s present
activities at its properties, the infrastructure at the Liam Property in
particular will require augmentation if advanced exploration or development is
undertaken.

Title
Risks

The acquisition of title
to resource properties or interests therein is a very detailed and
time-consuming process. Title to and the area of resource concessions may be
disputed. The Company has conducted an internal investigation of title to its
significant resource properties. Based on a review of records maintained by the
relevant government agencies in each country in which the Company has
properties, and, based upon legal opinions prepared for the Company in the case
of the Boka Gold Project and the Liam Gold-Silver Project, its resource
properties or interests therein are registered or are in the process of being
registered in the name of the Company, its appropriate joint venture partner,
the property vendor, and in the case of the Boka Gold Project in the name of the
JV Company, or a combination thereof. There is no guarantee of title to any of
the Company’s properties. The properties may be subject to prior unregistered
agreements or transfers and title may be affected by undetected defects. Title
may be based upon interpretation of a country’s laws, which laws may be
ambiguous, inconsistently applied and subject to reinterpretation or change. The
Company has not surveyed the boundaries of any of its mineral properties and
consequently the boundaries of the properties may be disputed.

Specific Risks
Associated with Title to and Future Development of the Boka Gold Project

While the JV Company is
authorized to explore for gold on the Boka Gold Project, it is required to
obtain further approvals from regulatory authorities in China in order to
explore for minerals other than gold or to conduct mining operations. The laws
of China governing the establishment of joint venture companies are ambiguous,
inconsistently applied and subject to reinterpretation or change. While the
Company believes that the JV Company has been properly established and the
Company has taken the steps necessary to obtain its interest in the Boka Gold
Project, there can be no guarantee that such steps will be sufficient to
preserve the Company’s interests in the project.

Risks Associated
with Joint Venture Agreements

The Company operates in
China through a joint venture with a government controlled entity. Although this
connection benefits the Company in some respects, there is a substantial
inequality with respect to the influence of the respective joint venture parties
with the various levels of government. The government holds a substantial degree
of subjective control over the application and enforcement of laws and the
conduct of business. This inequality would become particularly detrimental if a
business dispute arose between joint venture parties. The Company sought to
mitigate this risk by including an international arbitration clause in the JV
Contract and will endeavour to maintain positive relations with both its joint
venture partner and local governments, but there can be no guarantee that these
measures will be sufficient to protect the Company’s interests in China.

In addition to the risks
inherent in doing business with government controlled entities, the Company’s
interests in its various properties in China and Peru are also subject to the
risks normally associated with the conduct of joint and cooperative ventures.
The existence or occurrence of one or more of the following circumstances and
events could have a material adverse impact on the Company’s profitability or
the viability of its interests held through joint or cooperative ventures, which
could have a material adverse impact on the Company’s business prospects,
results of operations and financial condition: (i) disagreements with joint or
cooperative venture partners on how to conduct exploration; (ii) inability of
joint venture partners to meet their obligations to the joint venture or third
parties; and (iii) disputes or litigation between joint venture partners
regarding budgets, development activities, reporting requirements and other
joint venture matters.

30


Third Party
Reliance

The Company’s rights to
acquire an interest in certain resource properties may have been granted by
third parties who themselves hold only a lease or an option to acquire such
properties. If such persons fail to fulfill their obligations, the Company could
lose its interest in the property and may have no meaningful recourse, as it
does not have any direct contractual arrangements with the underlying property
holders. Where the Company’s interests in resource properties are managed or
operated by third parties, the Company’s interests may be adversely affected in
the event such third parties mismanage the operations being carried out on such
properties.

Risks Relating
to Statutory and Regulatory Compliance

The current and future
operations of the Company, from exploration through development activities and
commercial production, if any, are and will be governed by laws and regulations
governing mineral concession acquisition, prospecting, development, mining,
production, exports, taxes, labour standards, occupational health, waste
disposal, toxic substances, land use, environmental protection, mine safety and
other matters. Companies engaged in exploration activities and in the
development and operation of mines and related facilities generally experience
increased costs and delays in production and other schedules as a result of the
need to comply with applicable laws, regulations and permits. The Company has
received all necessary permits for the exploration work it is presently
conducting, however such permits are, as a practical matter, subject to the
discretion of government authorities and there can be no assurance that the
Company will be successful in maintaining such permits. Further, there can be no
assurance that all permits which the Company may require for future exploration,
construction of mining facilities and conduct of mining operations, if any, will
be obtainable on reasonable terms or on a timely basis, or that such laws and
regulations would not have an adverse effect on any project which the Company
may undertake.

Failure to comply with
applicable laws, regulations and permits may result in enforcement actions
thereunder, including the forfeiture of claims, orders issued by regulatory or
judicial authorities requiring operations to cease or be curtailed, and may
include corrective measures requiring capital expenditures, installation of
additional equipment or costly remedial actions. The Company may be required to
compensate those suffering loss or damage by reason of its mineral exploration
activities and may have civil or criminal fines or penalties imposed for
violations of such laws, regulations and permits. The Company is not currently
covered by any form of environmental liability insurance. See “Insurance Risk”,
below.

The implementation by
the U.S. Securities and Exchange Commission of requirements for procedures
regarding internal controls, pursuant to Section 404 of the Sarbanes-Oxley Act,
imposes substantial obligations on the Company and there can be significant
consequences of non-compliance.

Existing and possible
future laws, regulations and permits governing operations and activities of
exploration companies, or more stringent implementation thereof, could have a
material adverse impact on the Company and cause increases in capital
expenditures or require abandonment or delays in exploration.

Insurance Risk

No assurance can be
given that insurance to cover the risks to which the Company’s activities are
subject will be available at all or at commercially reasonable premiums. The
Company currently maintains insurance within ranges of coverage which it
believes to be consistent with industry practice for companies of a similar
stage of development. The Company carries liability insurance with respect to
its mineral exploration operations, but is not currently covered by any form of
political risk insurance or any form of environmental liability insurance, since
insurance against political risks and environmental risks (including liability
for pollution) or other hazards resulting from exploration and development
activities is prohibitively expensive. The payment ofany such liabilities would reduce
the funds available to the Company. If the Company is unable to fully fund the
cost of remedying an environmental problem, it might be required to suspend
operations or enter into costly compliance measures.



31


Competition

Significant and
increasing competition exists for mineral deposits in each of the jurisdictions
in which the Company conducts operations. As a result of this competition, much
of which is with large established mining companies with substantially greater
financial and technical resources than the Company, the Company may be unable to
acquire additional attractive mining claims or financing on terms it considers
acceptable. The Company also competes with other mining companies in the
recruitment and retention of qualified employees.

Fluctuation of
Mineral Prices

Factors beyond the
control of the Company may affect the marketability of any ore or minerals
discovered at and extracted from the Company’s properties. Resource prices have
fluctuated widely, particularly in recent years, and are affected by numerous
factors beyond the Company’s control including international economic and
political trends, inflation, currency exchange fluctuations, interest rates,
global or regional consumption patterns, speculative activities and increased
production due to new and improved extraction and production methods. The effect
of these factors cannot accurately be predicted.

Dependence on
Key Management and Employees

The Company’s
development depends on the efforts of key members of management and employees.
The Company does have consulting agreements with its key employees, which
provide, among other things, that either party may terminate on 30 days notice.
The Company does not have key man insurance with respect to any of its key
employees.

Enforcement of
Judgments

Since essentially all of
the Company’s assets are located outside of Canada, there may be difficulties in
enforcing any judgments obtained in Canadian courts.

Conflicts

Certain of the directors
of the Company also serve as directors of other companies involved in mineral
resource exploration and development and, to the extent that such other
companies may participate in ventures in which the Company may participate,
there exists the possibility for such directors to be in a position of conflict.
The directors of the Company are required to act honestly, in good faith and in
the best interests of the Company and in accordance with the laws of British
Columbia.

Price
Fluctuations: Share Price Volatility

In recent years, the
securities markets in the United States and Canada have experienced a high level
of price and volume volatility, and the market price of securities of many
companies, particularly those considered development stage companies, including
the Company, have experienced wide fluctuations in price which have not
necessarily been related to the operating performance, underlying asset values
or prospects of such companies. There can be no assurance that continual
fluctuations in price will not occur.

Dividends
Unlikely

The Company has not paid
any dividends since the date of its incorporation, and it is not anticipated
that dividends will be declared in the short or medium term.



32


DIVIDENDS

The Company has not,
since its incorporation, paid any dividends on any of its shares and presently
has no intention of paying dividends. The future dividend policy will be
determined by the Board of Directors on the basis of earnings, financial
requirements and other relevant factors.

DESCRIPTION OF
CAPITAL STRUCTURE

General
Description of Capital Structure

The authorized share
capital of Southwestern consists of an unlimited number of common shares without
par value. As of the date of this AIF, there are 43,006,174 common shares issued
and outstanding.

The holders of common
shares are entitled to one vote per common share at all meetings of
shareholders, to receive dividends as and when declared by the directors, and to
receive a pro rata share of the remaining property and assets of the Company in
the event of liquidation, dissolution or winding up of the Company. The common
shares have no pre-emptive, redemption, purchase or conversion rights. There are
no sinking fund provisions in relation to the common shares and they are not
liable to further calls or to assessment by the Company. TheBusiness Corporations
Act(British
Columbia) provides that the rights and provisions attached to any class of
shares may not be modified, amended or varied unless consented to by special
resolution passed by a majority of not less than two-thirds of the votes cast in
person or by proxy by holders of shares of that class.

MARKET FOR
SECURITIES

Trading Price
and Volume

The following table sets
out the high and low market prices and the volume traded of the common shares on
The Toronto Stock Exchange for the most recently completed financial year:

HIGH $
    
    LOW $
    
    VOLUMEJanuary 2004
    21.50*
    
    14.32*
    
    308,742*February 2004
    19.87*
    
    13.80*
    
    234,140*March
      2004
    19.50*
    
    15.40*
    
    244,138*April
      2004
    19.22*
    
    14.70*
    
    175,914*May
      2004
    17.45*
    
    13.25*
    
    128,000*June
      2004
    16.62*
    
    14.30*
    
    118,226*July
      2004
    15.26
    
    9.70
    
    148,528August 2004
    11.64
    
    9.75
    
    104,380September 2004
    14.70
    
    10.18
    
    120,395October 2004
    15.29
    
    13.56
    
    126,710November 2004
    15.70
    
    12.51
    
    152,659December 2004
    15.19
    
    12.15
    
    99,590


*On June 15, 2004 the
Company’s common shares were split on a two-for-one basis. The high and low
market prices and the volume traded as shown in the above table reflect this
split.



33


DIRECTORS AND
OFFICERS

The following table sets
forth all current directors and executive officers as of the date of this AIF,
with each position and office held by them in the Company and the period of
service as such. Each director’s term of office expires at the next annual
general meeting of shareholders, to be held on May 6, 2005.

Name, Occupation
and Security Holding

Name & Residence
    Position with the Company
    **Principal Occupation,
      Business or Employment**
    **Director
      Since**John G. Paterson(1)Vancouver, B.C.
    President, Chief Executive Officer & Director
    President
      & Chief Executive Officer of theCompany;
      Director of Lake Shore Gold Corp.(public
      mineral exploration company),President,
      Chief Executive Officer & Directorof
      Superior Diamonds Inc. (public mineralexploration
      company); President of GlengarryResource
      Management Inc. (privateconsulting
      company).
    1991Daniel G. InnesWest Vancouver, B.C.
    Vice-President, Exploration & Director
    Vice-President,
      Exploration of the Company;President
      & Director of Aurora Platinum Corp.;Director
      and Chair of Lake Shore Gold Corp.(public
      mineral exploration companies);President,
      D.G. Innes & Associates Ltd.(private
      consulting company).
    1993W. David Black(2)(3)(4)Vancouver, B.C.
    Director
    Associate
      Counsel, DuMoulin Black,Barristers
      and Solicitors, Vancouver B.C.
    2000James B. Hume(1)(2)(3)(4)Calgary, Alberta
    Director
    President
      and CEO of the Kahanoff Group ofcompanies
      based in Alberta.
    2002William D. McCartney(1)(2)(3)(4)Vancouver, B.C.
    Director
    President
      and CEO of Pemcorp ManagementInc.
      (private financial consulting company)
    2004Parkash K. AthwalLadner, B.C.
    Vice President, Finance and Chief Financial Officer
    Vice
      President, Finance and CFO of theCompany
      and Aurora Platinum Corp.; ChiefFinancial
      Officer of Superior Diamonds Inc.and
      Lake Shore Gold Corp.
    N/AThomas W. BeattieWest Vancouver, B.C.
    Vice President, Corporate Development and Corporate
    Secretary
    Vice
      President, Corporate Development andCorporate
      Secretary of the Company andAurora
      Platinum Corp.; Director of SuperiorDiamonds
      Inc. and Vice President, CorporateDevelopment
      of Lake Shore Gold Corp.;President,
      Westvista Management Inc.(private
      consulting company).
    N/A




(1)
    Member
      of the Environment and Safety Committee.(2)
    Member
      of the Compensation Committee.(3)
    Member
      of the Corporate Governance and Nominating Committee.(4)
    Member
      of the Audit Committee.


Conflicts of
Interest

See “Interest of
Management and Others in Material Transactions” and “Risk
Factors-Conflicts”.



34


AUDIT COMMITTEE

Charter

General

The primary function of
the Audit Committee is to assist the Board in fulfilling its oversight
responsibilities by reviewing the financial information to be provided to the
shareholders and others, the systems of internal controls and management
information systems established by management and the Company’s internal and
external audit process and monitoring compliance with the Company's legal and
regulatory requirements with respect to its financial statements.

The Audit Committee is
accountable to the Board. In the course of fulfilling its specific
responsibilities hereunder, the Audit Committee is expected to attempt to
maintain an open communication between the Company’s external auditors and the
Board.

The responsibilities of
a member of the Audit Committee are in addition to such member’s duties as a
member of the Board.

The Audit Committee does
not plan or perform audits or warrant the accuracy or completeness of the
Company's financial statements or financial disclosure or compliance with
generally accepted accounting procedures as these are the responsibility of
management.

PROCEDURAL MATTERS

The Audit Committee
shall be governed by the Terms of Reference for Committees adopted by the Board,
save as modified by the following procedural requirements and powers. The Audit
Committee:



| | a) | shall meet at
      least four times per year, either by telephone conference or in person;
| | -- | -------------------------------------------------------------------------------------------



| | b) | may invite the
      Company's external auditors, the Chief Financial Officer, and such other
      persons as deemed appropriate by the Audit Committee to attend meetings of
      the Audit Committee;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | shall report
      material decisions and actions of the Audit Committee to the Board,
      together with such recommendations as the Committee may deem appropriate,
      at the next Board meeting;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d) | has the power to
      conduct or authorize investigations into any matter within the scope of
      its responsibilities. It has the right to engage independent counsel and
      other advisors as it determines necessary to carry out its duties and the
      right to set the compensation for any advisors employed by the Audit
      Committee;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e) | has the right to
      communicate directly with the CFO and other members of management who have
      responsibility for the internal and external audit process; and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | f) | Has the right to
      pre-approve non-audit services, in accordance with the Committee’s
      pre-approval policies and procedures, to be performed by the external
      auditors. The Audit Committee may delegate certain pre-approval functions
      for non-audit services to one or more independent members of its Committee
      if it first adopts specific policies and procedures respecting same and
      provided such decisions are presented to the full Audit Committee for
      approval at its next meeting.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



35


RESPONSIBILITIES

The Audit Committee has
primary responsibility for the selection, appointment, dismissal, compensation
and oversight of the external auditors, subject to the overall approval of the
Board. For this purpose, the Audit Committee may consult with management.

External
Auditors

The responsibilities of
the Audit Committee are to:



| | a) | recommend to the
      Board:
| | -- | -----------------------------



| | i. | whether the
      current external auditor should be reappointed for the ensuing year and
      the amount of compensation payable; and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------



| | ii. | if the current
      external auditor is not to be reappointed, select and recommend a suitable
      alternative.
| | --- | ------------------------------------------------------------------------------------------------------------------



| | b) | oversee the work
      of the external auditors engaged for the purpose of preparing or issuing
      an auditors' report or performing other audit, review or attest services
      for the Company;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | resolve
      disagreements, if any, between management and the external auditors
      regarding financial reporting. It accomplishes this by querying management
      and the external auditors. The Audit Committee provides the Board with
      such recommendations and reports with respect to the financial statements
      of the Company as it deems advisable;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d) | take reasonable
      steps to confirm the independence of the external auditors, including but
      not limited to pre-approving any non-audit related services provided by
      the external auditors to the Company or the Company's subsidiaries, if
      any, with a view to ensuring independence of the auditors, and in
      accordance with any applicable regulatory requirements, including the
      requirements of The Toronto Stock Exchange with respect to approval of
      non-audit related services performed by the external auditors;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e) | obtain from the
      external auditors confirmation that the external auditors are a
      'participating audit' firm for the purpose of National Instrument 52-108Auditor Oversightand are in compliance with
      governing regulations;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | f) | review and
      evaluate the performance of the external auditors including the external
      auditors' internal quality-control procedures; and
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------



| | g) | review and
      approve the Company’s hiring policy regarding partners, employees and
      former partners and employees of the Company’s external auditors.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

Audit and
Review Process and Results

The Audit Committee has
a duty to receive, review and make any inquiry regarding the completeness,
accuracy and presentation of the Company’s financial statements to ensure that
the financial statements fairly present the financial position and risks of the
organization and that they are prepared in accordance with generally accepted
accounting principles. To accomplish this, the Audit Committee is required to:



| | a) | review annually
      the Company's internal system of audit and financial controls, internal
      audit procedures and results of such audits;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | prior to the
      annual audit by external auditors, consider the scope and general extent
      of the external auditors' review, including their engagement letter;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



36




| | c) | ensure the
      external auditors have full, unrestricted access to required information
      and have the cooperation of management;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------



| | d) | review with the
      external auditors and, if necessary, legal counsel, any litigation, claim
      or contingency, including tax assessments, that could have a material
      effect upon the financial position of the Company and the manner in which
      these matters are being disclosed in the financial statements. Review the
      appropriateness and disclosure of any off-balance sheet matters. Review
      disclosure of related-party transactions;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e) | receive and
      review with the external auditors, the external auditors' audit report and
      the audited financial statements. Make recommendations to the Board
      respecting approval of the audited financial statements;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | f) | meet with the
      external auditors separately from management to review the integrity of
      the Company’s financial reporting, including the clarity of financial
      disclosure and the degree of conservatism or aggressiveness of the
      accounting policies and estimates, performance of internal audit
      management, any significant disagreements or difficulties in obtaining
      information, adequacy of internal controls over financial reporting and
      the degree of compliance of the Company with prior recommendations of the
      external auditors. The Audit Committee shall direct management to
      implement such changes as the Audit Committee considers appropriate,
      subject to any required approvals of the Board arising out of the review;
      and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | g) | meet at least
      annually with the external auditors, independent of management, and report
      to the Board on such meetings.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------

Interim
Financial Statements

The Audit Committee
shall:



| | a) | review on an
      annual basis the Company's practice with respect to review of interim
      financial statements by the external auditors;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------



| | b) | conduct all such
      reviews and discussions with the external auditors and management as it
      deems appropriate; and
| | -- | ---------------------------------------------------------------------------------------------------------------------------



| | c) | review the
      interim financial statements with the external auditors and make
      recommendations to the Board respecting approval of the interim financial
      statements.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Involvement
with Management

The Audit Committee has
primary responsibility for overseeing the actions of management in all aspects
of financial management and reporting. The Audit Committee:



| | a) | shall review the
      Company’s public disclosure of financial information extracted from the
      Company's financial statements, if such financial statements have not
      previously been reviewed by the Committee, prior to such information being
      made public by the Company and for such purpose, the CFO assumes
      responsibility for providing the information to the Audit Committee for
      their review;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | review material
      financial risks with management, the plan that management has implemented
      to monitor and deal with such risks and the success of management in
      following the plan;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | consult annually
      and otherwise as required with the Company's CEO and CFO respecting the
      adequacy of the internal controls and review any breaches or deficiencies;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



37




| | d) | obtain such
      certifications by the CEO and CFO attesting to internal controls,
      disclosure and procedures as deemed advisable;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------



| | e) | review
      management's response to significant written reports and recommendations
      issued by the external auditors and the extent to which such
      recommendations have been implemented by management;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | f) | review as
      required with management the annual financial statements, the quarterly
      financial statements, Management Discussion & Analysis, Annual
      Information Forms, future-oriented financial information or pro-forma
      information and other financial disclosure in continuous disclosure
      documents;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | g) | review with
      management the Company's compliance with applicable laws and regulations
      respecting financial matters;
| | -- | ------------------------------------------------------------------------------------------------------------------------------



| | h) | review with
      management proposed regulatory changes and their impact on the Company;
      and
| | -- | ---------------------------------------------------------------------------------------------------



| | i) | review with
      management and approve public disclosure of the Audit Committee Charter in
      the Company's Annual Information Form, Information Circular and on the
      Company's website.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

COMPLAINTS

The Audit Committee
shall establish procedures for:



| | a) | the receipt,
      retention and treatment of complaints received by the Company regarding
      accounting, internal accounting controls, or auditing matters; and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | the
      confidential, anonymous submission by employees of the Company of concerns
      regarding questionable accounting or auditing matters.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------

Complaints regarding
accounting, internal accounting controls, or auditing matters may be submitted
as outlined in the Company’s Whistle Blower Policy - Accounting Matters.
Complaints may be made anonymously and, if not made anonymously, the identity of
the person submitting the complaint will be kept confidential.

Upon receipt of a
complaint, the Chair will conduct or designate a member of the Audit Committee
to conduct an initial investigation. If the results of that initial
investigation indicate there may be any merit to the complaint, the matter will
be brought before the Audit Committee for a determination of further
investigation and action.

Records of complaints
made and the resulting action or determination with respect to the complaint
shall be documented and kept in the records of the Audit Committee for a period
of three years.

The Audit Committee
shall review the Whistle Blower Policy annually.

REPORTING

The Audit Committee
shall report to the Board of Directors at its regularly scheduled meetings and
shall report to the Corporate Governance and Nominating Committee for the
Committee Annual Report.

EFFECTIVE DATE

This Charter was
implemented by the Board on November 9, 2004.



38


Composition of
Audit Committee

The Audit Committee is
composed of three independent and financially literate directors of the Company,
James B. Hume, William D. McCartney and W. David Black.

Relevant
Education and Experience of Audit Committee

James B. Hume (Chair of
the Audit Committee) is a Chartered Accountant and has worked as chief executive
officer of various companies involved in financial investment and management for
the past 20 years. He has the expertise to understand and evaluate financial
statements that are prepared using both US and Canadian GAAP, the principles
applied to natural resource companies’ financial statements and the internal
controls required to accurately report the Company’s financial position. He
currently serves as the audit committee chair of a major department store chain.

W. David Black (Chair of
the Board of Directors), was called to the British Columbia bar in 1967, and
practiced as a lawyer specializing in corporate and securities law until
December 2003; he now serves as associated counsel. Mr. Black has served on the
boards of numerous public and private companies in the natural resource sector.
He has the business expertise to understand and evaluate financial statements
that are prepared using both US and Canadian GAAP, the principles applied to
natural resource companies’ financial statements and the internal controls
required to accurately report the Company’s financial position.

William D. McCartney is
a Chartered Accountant and was a founding partner of an accounting firm from
1984 to 1990. He is president of a management company involved with providing
corporate finance and administrative management services to private and public
companies. He currently serves as chair of the audit committee of a publicly
traded pulp and paper company. He has the expertise to understand and evaluate
financial statements that are prepared using both US and Canadian GAAP, the
principles applied to natural resource companies’ financial statements and the
internal controls required to accurately report the Company’s financial
position.

Pre-Approval
Policies and Procedures

The policies and
procedures for the engagement of non-audit services is outlined above in this
item under “Charter – Responsibilities – External Auditors (d)”.

Service Fees
Paid to External Auditors

2004
    
    2003a) Audit
      Fees
    
    $
    92,500
    
    $
    87,300b) Audit
      Related Fees
    
    $
    6,400
    
    $
    4,500c) Tax
      Fees
    
    $
    7,325
    
    $
    48,000d) All
      other Fees
    
    $
    --
    
    $
    --


The audit related fees
paid in 2004 pertain to assistance with compliance with Section 302 of the
Sarbanes-Oxley Act and review of the Company’s audit committee charter.

All off the fees paid to
external auditors in 2004 were pre-approved by the audit committee.



39


LEGAL
PROCEEDINGS

Legal
Proceedings

The Company is not aware
of any legal proceedings, actual or contemplated, to which the Company is a
party or of which any of its property is the subject.

INTEREST OF
MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Interest of
Management and Others in Material Transactions

The interest of
management of the Company and others in material transactions and transactions
involving remuneration for services is disclosed under the heading “Related
Party Transactions” in the Company’s Management’s Discussion and Analysis,
December 31, 2004. See “Additional Information”.

TRANSFER AGENTS
AND REGISTRARS

Transfer Agents
and Registrars

The registrar and
transfer agent for the common shares in Canada is Computershare Trust Company of
Canada at its principal offices in Vancouver and Toronto.

MATERIAL
CONTRACTS

Material
Contracts

The Company does not
have any material contracts, other than those entered into in the ordinary
course of business, that are material to the Company and that were entered into
within the most recently completed financial year or contracts still in effect
from prior years.

INTERESTS OF
EXPERTS

Names of Experts

Lionel Donald Stewart
Winter, P. Geo., an independent consulting geologist and a “qualified person”
for the purposes of National Instrument 43-101, is the author responsible for
the preparation of the technical reports titled “Technical Report for
Southwestern Resources Corp. on the Boka Gold Project, Yunnan Province, China”
dated February 11, 2005 and “Technical Report for Southwestern Resources Corp.
on the Liam Gold-Silver Project, Department of Cusco, Peru” dated February 23,
2005.

Deloitte & Touche
LLP are the auditors for the Company. Deloitte & Touche LLP provided the
auditors’ report on the Company’s financial statements for the year ended
December 31, 2004.

Interests of
Experts

To the knowledge of the
Company, the experts referred to under “Names of Experts” above do not hold, nor
have they received, nor will receive any securities or other property in the
Company.



40


ADDITIONAL
INFORMATION

Additional
Information

Additional information
on the Company, including directors’ and officers’ remuneration and
indebtedness, principal holders of the Company’s securities and securities
authorized for issuance under equity compensation plans, is contained in the
Company’s information circular for its most recent annual meeting of
shareholders that involved the election of directors which may be found on the
Company’s website at www.swgold.com or through a database search at SEDAR at
www.sedar.com.

Incorporated by
reference into this AIF is the Company’s Management’s Discussion and Analysis,
December 31, 2004 which is filed on SEDAR.



41