Southwestern Resources Corp.

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Takeover Bids and Issuer Bids -- Exemption from the issuer bid requirements of MI 62-104 and the Securities Act (Ontario) -- Exemption from the valuation requirement applicable to issuer bids in MI 61-101 -- issuer requires an exemption from issuer bid requirements to acquire its own shares in connection with a negotiated settlement -- issuer acquired securities resulting from the settlement of claims or potential claims -- acquisition is not an independent transaction in which the issuer is repurchasing its own securities from one securityholder in preference to other shareholders -- settlement was negotiated at arm's length between the issuer and the transferring securityholder's legal representatives -- value of the consideration being paid to the transferring securityholder does not exceed the market value of the securities being acquired by the issuer.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 93 to 99.1, 104(2)(c).

Multilateral Instrument 11-102 Passport System.

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.

Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.

May 13, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

SOUTHWESTERN RESOURCES CORP.

(the Filer)

DECISION

Background

1 The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from the issuer bid requirements (the Exemption Sought) with respect to an acquisition by the Filer of common shares of the Filer pursuant to a settlement agreement (the Settlement) with Global Gold Corporation (Global) in respect of a legal action commenced by the Filer (the Action).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the British Columbia Securities Commission is the principal regulator for this application; and

(b) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

2 Terms defined in National Instrument 14-101 Definitions, Multilateral Instrument 11-102 Passport System and Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids (MI 62-104) have the same meaning if used in this decision, unless otherwise defined.

Representations

3 This decision is based on the following facts represented by the Filer:

1. the Filer is incorporated under the laws of British Columbia and has a head office located in Vancouver, British Columbia;

2. the Filer is a reporting issuer in the jurisdictions of British Columbia, Alberta, Manitoba and Ontario;

3. as at April 7, 2009, the Filer's issued and outstanding capital consists of 44,552,660 common shares;

4. the common shares of the Filer are listed on the Toronto Stock Exchange (the TSX) under the stock symbol "SWG";

5. the Filer is an exploration stage 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 Filer's material mineral property interests are in Peru;

6. Global is a company incorporated under the laws of Ontario; Global's registered office is in Ontario and its last address shown on the books of the Filer is in Vancouver, British Columbia;

7. Global directly or indirectly owns 7,117,600 common shares of the Filer, representing approximately 16% of the Filer's issued and outstanding common shares; Global is not a reporting issuer in any jurisdiction;

8. John Paterson (Paterson), the Filer's former President and Chief Executive Officer, previously held an approximate 8% interest in the shares of Global and exercised voting control and dispositive power over the common shares of the Filer held by Global;

9. the Filer had commenced the Action against Paterson, Global and others; pursuant to the Settlement, Global has agreed to transfer to the Filer 452,908 common shares of the Filer (the Settlement Shares) in exchange for a full and final release by the Filer of its claims against Global under the Action (the Release); the value of the consideration paid for the Settlement Shares under Settlement will not be greater than the market price of the Filer's common shares on the TSX as determined in accordance with section 1.11 of MI 62-104;

10. the board of directors of the Filer has determined that the entering into and completion of the Settlement, including the acquisition of the Settlement Shares by the Filer, is in the best interests of the Filer and its shareholders and that the acquisition of the Settlement Shares by the Filer will not adversely affect the financial position of the Filer or the shareholders to whom the bid is not extended;

11. in approving the Settlement, the board of directors of the Filer, considered the merits of the claims and the likelihood of success, the cost of pursuing the claims, including both management time and monetary costs of engaging external advisors, and the ability to collect on any judgment;

12. the acquisition of the Settlement Shares by the Filer is an integral part of the Settlement; it is not being proposed for the purpose or with the intention of providing preferential treatment to one shareholder; and the Settlement Shares will be cancelled immediately after such shares are acquired by the Filer, which will improve the equity position of the other Filer shareholders;

13. the Settlement was negotiated at arm's length through legal counsel and finalized after extensive negotiations between the parties;

14. Global is a defendant in the Action commenced by the Filer;

15. Global has had no representation on the board of directors of the Filer and no involvement in the management of the Filer since Paterson's resignation as President and Chief Executive Officer of the Filer in June 2007;

16. Global does not have access to and is not privy to any undisclosed non-public information relating to the Filer;

17. there are no contractual arrangements between the Filer and Global, other than the Settlement Agreement;

18. Global's only interest in the Filer is the Filer's shares that it holds;

19. the Filer is not in default of any securities legislation in the jurisdictions in which it is reporting;

20. the Filer disclosed the Settlement in the Filer's interim financial statements and management discussion and analysis for the period ended September 31, 2008; the Filer has also disclosed the Settlement in the Filer's annual financial statements, management discussion and analysis and annual information form for the year ended December 31, 2008, and the Filer's management information circular dated April 7, 2009;

21. the acquisition of the Settlement Shares by the Filer is an issuer bid as defined in the Legislation and cannot be made in reliance upon exemptions from the issuer bid requirements contained in the Legislation; and

22. the Filer has entered into an arrangement agreement with Hochschild Mining plc (Hochschild) for the acquisition by Hochschild of all of the issued and outstanding common shares of the Filer by way of a plan of arrangement (the "Arrangement"); the Filer held a special meeting of its shareholders on May 8, 2009 to consider the Arrangement; the Arrangement was approved by the Filer's shareholders, the Filer will subsequently apply to the Supreme Court of British Columbia on or about May 11, 2009 for a final order approving the Arrangement; if all conditions respecting the Arrangement are fulfilled, Global will not be able to transfer its shares to the Filer after the effective date of the Arrangement.

Decision

4 Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted.