Project Update
July 11 2008 - 3:42AM
UK Regulatory
RNS Number : 8679Y
China Goldmines PLC
11 July 2008
11 July 2008
China Goldmines plc
("China Goldmines" or the "Company")
CHINA GOLDMINES GUANZHUANG GOLD PROJECT UPDATE
China Goldmines Plc (AIM:CGM), which recently transitioned from explorer to gold producer, announces the following progress on its
Guanzhuang Gold Project in the Hunan Province, PRC, which consists of eight mines located along the same host structure with 6km of strike
length.
Highlights
* Two more processing plants commissioned with capacity of 200 tonnes per day and upgraded to 550 tonnes per day expected shortly.
* High grades achieved in drilling and underground sampling with results of up to 103 grams per ton.
* Underground mining is active on 9 mine faces with an immediate 1.6 million tonnes available for mining that will be high graded to
achieve budget grades in excess of 6 grams per tonne.
* On the basis of production capacity of 550 tonnes per day CGM should achieve its target of 20,000oz in the calendar year 2008.
* Drilling will achieve 22,000 metres by the end of the year, using 9 drill rigs.
* The company has constructed an international accredited laboratory that will process average 120 samples per day.
* All mines assessed and development strategy determined.
* Refurbishment programme revised and on target for production of 150,000oz p.a. in 2011.
* Approvals granted for consolidation of the 8 licenses into one mining license and increase project area from 3.66 square km to
6.24 square km.
* The cash position as the 30 June 2008 was USD 25.5 million.
Summary
The Company took possession of the 8 mines on 1 November 2007 from the previous owners. Since then the Company has assessed all mines,
the plant and equipment, instigated the refurbishment programme and moved into initial production.
It has determined the overall development programme for the resource, acquired additional land and identified the route for "Highway
-40", an underground transport route 350 metres from surface, linking all eight mines to a central location. It has recruited and trained
over 400 Chinese staff over the last 6 months across all departments. In addition approximately 300 contract staff are now on site who have
been similarly trained in the safety standards.
An update of the Production, Drilling, Mining and Corporate activities are set out below.
The Company had originally anticipated continuing historic levels of production in parallel with its refurbishment programme. However,
having assessed the mines the Company revised its refurbishment programme to accelerate the pace of the underground development with the
consequence that its production output to date has been largely a bi-product of the underground development work. The Company is confident
that it is on track to achieve its production target of 30,000 oz for the financial year to 30 June 2009. The Company looks forward to
updating shareholders on specific aspects over the coming months.
Production
China Goldmines has successfully commissioned three gold processing plants in its Shenjiaya Gold Prospect. The Baomuyuan Processing
Plant was commissioned with low grade ore and confirmed the metallurgical test work with recoveries of 90% plus. Baomuyuan is currently
operating at 50 tonnes of ore a day, and will be upgraded to 200 tonnes a day in the near term.
The second processing plant successfully commissioned is the Xiachongzi Plant which was originally running at 30 tonnes a day and has
now been replaced by a 150 tonne mill and is currently processing 100 tonnes of ore a day. The plant will be upgraded to a further 150
tonnes in a couple of months enabling it to process 300 tonnes of ore a day.
The Desheng mine has been commissioned and is currently processing 50 tonnes of ore per day.
The three processing plants have all been scheduled to run twenty four hours a day utilizing three eight hour shifts and should achieve
the budgeted production target of 20,000 oz this calendar year.
The Company's technical management team in Hunan, China, have designed an economic program of running the three processing plants to
achieve up to 650 tonnes of ore processed each day as being the most economical way moving forward until the 2000 tonne a day plant is
operational (scheduled for the end of 2009). By only having three plants as opposed to original six plants the Company has reduced the
duplication of costs associated with power, labour, consumables and transport whilst achieving the same economic output because of the
substantially upgraded plants. This approach also reduces the operational risk associated with Health, Safety and Environmental factors as
the operations are confined to three mines as opposed to six plants on six mines with a lower level of productivity.
Summary of production to date
MINE START-UP TONNES HEAD GRADE CONCENTRATE CONCENTRATE GRAVITY TAILS RECOVERY
%
TONNES GRADE GOLD(g) g/t
BMY 1-Apr-08 4878 2.53 98.16 94.3 1890 0.25 90
DS 26-Jun-08 207 7 7.26 162 152 0.58 91.5
XCZ 1-Jul-08 87 9.17 5 127 84 0.9 90
TOTAL 2-Jul-08 5172 2.82 110.42 100.1 2126 0.27 90
The summary of production to date, when taken together with the gold poured from concentrate available on site means that the Company
has already produced 36kgs of gold.
In order to cope with the increase processing capacity, Hunan Westralian (China Goldmines JV partner) constructed a new tailings dam at
XCZ with a capacity of 73400m3 and is in the process to increase the tailing dam capacity in Baomuyuan and Desheng with another 400,000 m3.
CGM has constructed an international accredited lab that will process on an average 60 samples from our processing plants on a daily
basis and a similar amount from the geology department associated with underground grade control and exploration activity. This lab will be
equipped with the latest technology and is capable of screen fire assay and A.A.S sample reading using a graphite tube that is extremely
accurate. The Company is currently training people to use this equipment and is also putting in place procedures that enable it to become
QAQC compliant.
Drilling
The drilling budget of 15,000 metres is still on target and will be met by mid December, even though the Company experienced delays due
to an uncharacteristically harsh and prolonged winter. The Company will have drilled 5,000 metres by mid-July.
China Goldmines now has five drill rigs on site, the fifth of which has just arrived and is a new track mounted drill rig. In addition,
a sixth small tower drill rig is scheduled to arrive shortly, together with two underground drill rigs and a portable rig for regional
exploration.
With the current targets besides resource extensions and infill programmes, there is a possibility of an open pit resource potential at
least at one location (near Shen Jia Ya Mine) which will be drilled over the coming months.
The Company embarked on a more definitive drilling and sampling programme on the old tailings dams with some early results coming in
from Jin Zhu Wan Mine tailings sands indicating 2 - 3 g/t for over 1000 tonnes. Besides cleaning up the environment with the removal of
these tails, this activity is expected to be profitable at current gold prices given that the material has already been milled before.
Future tailings sands investigation will be put in place once additional portable drilling equipment arrives.
Drill and Underground Sampling Results
Sampling results
Sample_ID Location App. Length (M) True Length (M) Au Grade (g/t) Mine
1863 2/2/ACC 1 1 8.3 Xiao Chong Zi
1840 2/2/ACC Stope 7.9 Xiao Chong Zi
1853 2/4/ACC Test point 2044 0.8 7.56 Xiao Chong Zi
1862 2/2/ACC 1 1 6.28 Xiao Chong Zi
1857 2/2/ACC 1 1 6.02 Xiao Chong Zi
1802 4/1/ACC 1015 1.02 24.09 De Sheng
3072 4/3/ ACC 0.9 0.9 12.5 De Sheng
3080 4/3/ ACC 1.1 0.9 12.1 De Sheng
1803 4/1/ACC 0.8 0.58 9.02 De Sheng
3082 4/3/ ACC 1 0.85 5.62 De Sheng
3091 0.5 0.4 103.5 Bao Mu Yuan
1750 1/1/EXP1 Rock chip SJY left over 24.44 Bao Mu Yuan
1734 1/2/ACC 1 1 19.02 Bao Mu Yuan
1736 1/2/ACC 0.7 0.7 18.48 Bao Mu Yuan
1721 1/1/ACC 15.59 Bao Mu Yuan
1395 1/1c/ACC 12.77 Bao Mu Yuan
2958 1/2/ expE 1.2 0.9 12.47 Bao Mu Yuan
1895 1/2/ expE 1.7 1.3 11.51 Bao Mu Yuan
3116 9.85 Bao Mu Yuan
1397 1/1c/ACC 9.41 Bao Mu Yuan
1798 1/1c/ACC 1.2 0.9 9.33 Bao Mu Yuan
1374 1/2/ACC 1 0.4 7.49 Bao Mu Yuan
1729 1/2/ACC 1 1 7.07 Bao Mu Yuan
1816 1/1/R1 L 1.5 0.6 6.85 Bao Mu Yuan
1335 1/1a/ACC 1 0.83 6.72 Bao Mu Yuan
1778 1/1c/ACC 0.8 0.8 6.7 Bao Mu Yuan
1731 1/2/ACC 1 0.82 6.43 Bao Mu Yuan
3071 1/1c.d 1.3 1.15 6.35 Bao Mu Yuan
1818 1/1c/ACC 1 1 6.13 Bao Mu Yuan
1815 1/1/R1 L 1.15 0.7 6.1 Bao Mu Yuan
1899 1/1/R1 1.5 1.5 5.55 Bao Mu Yuan
1304 1/1a/ACC 1 0.85 5.47 Bao Mu Yuan
1755 3/3/ACC 1 0.85 6.9 Shen Jia Ya
1791 5/6/ACC 0.8 0.66 7.74 Zheng Jia Shan
1766 5/5/ACC 1.1 1.1 7.7 Zheng Jia Shan
1710 5/1/ACC 0.85 0.6 7.1 Zheng Jia Shan
1825 5/5/ACC 0.95 0.9 5.75 Zheng Jia Shan
2908 5/5/ACC 0.8 0.7 5.52 Zheng Jia Shan
Drill results
Drill hole Beijing Grid East Beijing Grid North Beijing Grid RL (m) From (m) To (m) Length (m) Grade (g/t)
From (m) To Length Grade
(m) (m)
(m) (m) (g/t)
SJDD0005 37501450 3160264 306.14 85.90 87.40 1.50 3.0 Exploration hole to
prove mineralisation up dip from ZK00601, East of Xiang Lu
SJDD0006 37501379 3160299 249.6 Exploration hole for structure between known
mineralisation - uneconomic alteration was intersected.
SJDD0007 37501265 3160265 205 311 312 1.00 2.1
SJDD0008 37500815 3160127 226.83 Hole drilled for structural interpretation between Jin Zhu
Wan and Xiang Lu - uneconomic alteration was intersected.
SJDD0009 37500703 3160037 227.05 305.4 310 4.6 9.39 Includes
305.4 306 0.6 6.73
and
306 307 1 13.25
and
307 308 1 8.58
and
308 308.8 0.8 19.25
and
308.8 310 1.2 1.61
SJDD0009 315 316 1 2.32
SJDD0009 316 317 1 1.27
SJDD0009 321 323 2 1.92 Includes
321 322 1 2.52
and
322 323 1 1.31
SJDD0009 325 326 1 1.13
SJDD0009 390 391 1 1.29
SJDD0009 392 393.3 1.3 3.88
SJDD0009 396 397 1 1.46
SJDD0009 397 398 1 1.11
Of interest in the results from SJDD0009 drill hole, besides intersecting significant mineralisation under the Jin Zhu Wan Mine, this
was screen fired assayed with additional assaying of the 'plus size' sieve fraction. The oversize fraction (Au-SCR21 / Au(+) Fraction) when
assayed provide results indicating, in part, what could be a small nugget effect.
Drill hole From To Length Au-AA25 Au-AA25D Au-SCR21 Au-SCR21 Au-SCR21 Au-SCR21 Au-SCR21
Au-SCR21
Au Au Au Total (+)(-) Au (+) Fraction Au (-) Fraction Au (+) mg WT. + Frac Entire
WT. - Frac Entire
Combined
(m) (m) (m) ppm ppm Ppm ppm ppm mg g
g
SJDD0009 304.5 305.4 0.9 0.17 0.23 0.2
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