Trading Statement
November 04 2008 - 1:00AM
UK Regulatory
RNS Number : 3369H
China Goldmines PLC
04 November 2008
China Goldmines plc
("China Goldmines" (CGM) or the "Company")
(AIM:CGM)
CHINA GOLDMINES GUANZHUANG GOLD PROJECT QUARTERLY UPDATE
SEPTEMBER 2008 (3Q08)
Highlights
1 Three processing plants are now in operation. They have a total capacity
of 350 tonnes per day (tpd). By March 2009, the three plants will be
upgraded to 570 tpd.
2 Production for the 3Q08 was 7,552 tonnes at 4 g/t (average). CGM is
estimated to produce a total of 5,000 - 6,000 ounces of gold by 31
December 2008. Although average grades for the quarter have been running
below budget, we are continuing to observe evidence of high grades from
drilling and underground sampling results (up to 91 grams Au per tonne).
3 Drilling during the 3Q08 was on target with 5,000 metres.
4 CGM's production target has been set at 20,000 - 25,000 oz of gold to be
produced during the year ending 31 December 2009.
5 A consolidated mining licence (incorporating all eight mining licences)
has been issued to our Chinese JV Company Hunan Westralian Mining Co. Ltd.
6 Our cash position remains strong with USD 17.3m in the bank as of 30
September 2008. The Board will review all capital and operating costs in
light of the current economic and currency climate in order to monitor and
maintain our strong cash position.
7 The Board has decided not to bring forward and fast track the "Central
Decline Project", but rather to remain on course with the original
development plan scheduled to start in mid-2009.
8 Our emphasis on safety has resulted in an excellent safety record for the
3Q08.
COMMENTARY
1. Processing Plants
CGM has successfully commissioned three gold processing plants:-
1.1 The Bao Mu Yuan (BMY) Processing Plant was upgraded during 3Q08 from 50
tpd to 200 tpd. It was commissioned on the 4th August 2008, meeting our
objective stated in the 2Q08 project update.
Designs for the new Bao Mu Yuan tailing dam have been approved by the
Chinese authorities and construction will start in 4Q08.
1.2 The De Sheng Processing Plant (DS) was refurbished to 50 tpd and is now
in operation following the commissioning of the 2.5 km tailings line to
the Bao Mu Yuan tailing dam.
CGM has begun upgrading the processing plant to increase from 50 tpd to
100 tpd and it is expected to be in full operation by 31 December 2008.
1.3 The Xiao Chong Zi (XCZ) Processing Plant. CGM has installed a 100 tpd
mill, which will be upgraded to 350 tpd by the end of 1Q09.
Summary of Processing Plants: "Maximum Operating Capacity"
Mine T/day Key Date
BMY 180 Operational
DS 80 4Q08
XCZ 310 1Q09
570
The three processing plants have a total 650 tpd mill capability; they have all been scheduled to run continuously using three shifts
per day to provide a maximum 570 tpd operating capacity.
2. Production and Drilling Results
Summary of production to date:-
CONCENTRATE
HEAD CONCENTRATE GRADE GRAVITY TAILS Recovery
TONNES GRADE TONNES (grams/tonne) GOLD(g) g/t %
2Q 08 5,172 2.82 110 100 2,216 0.27 90%
3Q 08 7,552 4 290 85 3,715 0.27 93%
Total 12,724 3.5 400 90 5,841 0.27 92%
Based on production results to date for the three quarters ending September 2008, CGM will produce 5,000 to 6,000 ounces for the year
ending 31 December 2008.
We revised our 2008 gold production figures for a number of reasons, including:
* a Board decision to add stringent underground mining safety procedures;
* the slower-than-expected ramp-up due to delays in underground mine
refurbishment;
* the lower than expected grades in the upper remnant zones;
* the harshest winter in living memory;
* frequent power cut-offs and outages; and
* the suspension of visas and explosives during the Olympics.
As a result, we will produce 5,000 to 6,000 ounces of gold for the year ending 31 December 2008. CGM expect that once refurbishment is
completed and the plants have been upgraded to 570 tpd (with higher grades indicated in deeper zones of mines), there will be a higher
output of 20,000 to 25,000 ounces for the year ending 31 December 2009.
The Company remains confident that productivity levels will increase in the coming quarters and the set target levels will be achieved.
During the year, the Company's health and safety policy was a major priority, both in implementing Western procedures and in the ongoing
audit and training. This has resulted in an excellent health and safety record to date.
Drilling Results
The company drilled 5,000m in the 3Q08, using six surface diamond-drill rigs.
Our subcontractor, Ausino Drilling Services, commenced a 9,000m underground drilling programme in September for grade control and we
gained further confidence in our gold resources.
Drilling and underground sampling results:
Sampling results > 6 g/t
Sample-ID App. Length True Length Au Grade Mine
(M) (M) (g/t)
1750 Rock-chip Sampling 24.44 BMY
1734 1 1 19.02 BMY
1736 0.7 0.7 18.48 BMY
1721 Rock-chip Sampling 15.59 BMY
1395 Rock-chip Sampling 12.77 BMY
2958 1.2 0.9 12.47 BMY
1895 1.7 1.3 11.51 BMY
3116 Rock-chip Sampling 9.85 BMY
1397 Rock-chip Sampling 9.41 BMY
1798 1.2 0.9 9.33 BMY
1374 1 0.4 7.49 BMY
1729 1 1 7.07 BMY
1816 1.5 0.6 6.85 BMY
1335 1 0.83 6.72 BMY
3071 1.3 1.15 6.35 BMY
3116 1 0.9 9.85 BMY
3091 0.5 0.4 91.05 BMY
3154 1 1 10.7 BMY
3202 1 1 30.76 BMY
3200 1.2 1.14 6.8 BMY
3208 1.1 0.9 8.7 BMY
3213 0.9 0.7 10.2 BMY
3215 1.6 1.4 6.98 BMY
3232 1 0.93 7.55 BMY
3236 1 0.9 8.92 BMY
3237 1.6 0.7 8.1 BMY
3295 0.8 0.8 18 BMY
3296 1.15 1.15 41.48 BMY
5020 0.8 0.8 19.01 BMY
5025 0.6 0.6 13.06 BMY
5267 0.8 0.8 25.35 BMY
5400 0.6 0.4 21.5 BMY
5446 1 0.55 7.03 BMY
5449 0.85 0.85 14.51 BMY
5453 0.25 0.25 6.59 BMY
5455 1 0.95 14.38 BMY
5458 1.1 1 9.82 BMY
5462 Rock-chip Sampling 8.47 BMY
1863 1 1 8.3 XCZ
1840 Rock-chip Sampling 7.9 XCZ
1853 0.8 7.56 XCZ
1862 1 1 6.28 XCZ
1857 1 1 6.02 XCZ
3163 1.5 1.5 6.23 XCZ
3335 0.2 0.2 37.35 XCZ
3415 1 0.9 31.12 XCZ
3424 0.8 0.75 7.81 XCZ
3425 0.9 0.85 7.88 XCZ
3434 0.4 0.4 8.41 XCZ
5469 Rock-chip Sampling 13.29 XCZ
5005 Rock-chip Sampling 8.02 SJY
5014 0.75 0.7 12.21 SJY
5015 1.8 1.8 11.62 SJY
5282 7.68 SJY
5297 1 0.85 8.6 SJY
5079 1.4 1.3 6.35 SJY
5304 1.35 1.3 10.78 SJY
5305 Rock-chip Sampling 11.97 SJY
5327 1.8 1.7 11.18 SJY
5328 1.7 1.45 17.94 SJY
5350 0.7 0.6 26.26 SJY
5357 0.5 0.5 6.85 SJY
5361 0.47 0.47 17.49 SJY
5366 0.5 0.5 6.88 SJY
5367 1 1 7.12 SJY
5468 0.4 0.4 71.63 SJY
5471 0.5 0.4 16.23 SJY
5476 0.48 0.41 23.17 SJY
1802 1015 1.02 24.09 DS
3072 0.9 0.9 12.5 DS
3080 1.1 0.9 12.1 DS
1803 0.8 0.58 9.02 DS
3082 1 0.85 5.62 DS
3072 0.9 0.9 12.5 DS
3080 1.1 0.9 12.1 DS
5037 Rock-chip Sampling 6.95 DS
5048 1.2 1.1 6.37 DS
5049 0.95 0.95 6.98 DS
5318 1.2 1.1 22.57 DS
5378 1.5 1.5 6.55 DS
5380 0.8 0.8 7.66 DS
5381 0.5 0.5 11.66 DS
U005 1.5 1.5 7.7 DS
U013 0.8 0.8 8.22 DS
3210 Rock-chip Sampling 12.43 ZJS
3282 0.35 0.35 13.73 ZJS
3284 Rock-chip Sampling 7.22 ZJS
3336 Rock-chip Sampling 30.06 ZJS
3338 Rock-chip Sampling 18.38 ZJS
3344 1 1 6.21 ZJS
3397 0.85 0.8 6.94 ZJS
5201 0.8 0.75 11.43 ZJS
5204 0.8 0.7 10.85 ZJS
5207 0.9 0.9 13.5 ZJS
5228 1 1 7.01 ZJS
5031 Rock-chip Sampling 32.99 ZJS
5040 1 0.8 7.09 ZJS
3488 0.7 0.7 8.18 ZJS
3490 1.3 1.3 36.22 ZJS
3491 1 1 7.58 ZJS
5419 0.7 0.7 6.31 ZJS
5432 1.1 1.1 6.12 ZJS
3150 1 0.7 9.01 XL
Drill Results
Drill hole Beijing Grid East Beijing Grid North Beijing Grid RL (m) From (m) To (m) Grade (g/t)
(m) (m)
SJDD0002 37501333.21 3160298.113 224.01 149.65 151.62 2.48
SJDD0002 37501333.21 3160298.113 224.01 182.59 183.09 19.5
SJDD0002 37501333.21 3160298.113 224.01 196.99 197.69 2.93
SJDD0003 37501333.21 3160298.113 224.01 210.75 211.58 10.5
SJDD0004 37501333.21 3160298.113 224.01 250 251 3.86
SJDD0004 37501333.21 3160298.113 224.01 293.6 295 3.09
SJDD0004 37501333.21 3160298.113 224.01 298.35 299 2.9
SJDD0004 37501333.21 3160298.113 224.01 306.75 307.15 7.97
SJDD0004 37501333.21 3160298.113 224.01 309.5 310 2.42
SJDD0004 37501333.21 3160298.113 224.01 310 311 2.95
SJDD0004 37501333.21 3160298.113 224.01 324.8 326 11.4
SJDD0012 37501554.91 3160289.262 357.881 115 116 7.33
SJDD0015 37500722.12 3160042.842 222.463 290 291.1 1.73
SJDD0016 37500816.04 3160127.248 226.927 227.6 228.3 7.57
SJDD0022 37501519.38 3160340.12 353.581 267.46 268.16 2.83
SJDD0022 37501519.38 3160340.12 353.581 492 493 2.95
SJDD0022 37501519.38 3160340.12 353.581 493 494 2.59
SJDD0026 37498084.88 3159178.284 257.42 290 291.1 1.73
SJDD0037 37501178.96 3160304.125 265.745 430.05 431 7.11
SJDD0037 37501178.96 3160304.125 265.745 431 432 5.75
SJDD0037 37501178.96 3160304.125 265.745 432 433 5.64
SJUG00001 37497853 3159018 -110.744 71.5 72.3 2.88
SJUG00001 37497853 3159018 -110.744 72.3 73.5 2.88
3. Mine Updates
The Company is confident of reaching the target set of 20,000 to 25,000 ounces for the year ending 31 December 2009 year.
A summary of the progress 3Q08 of all mines is as follows:-
* Shen Jia Ya Mine (SJY)
The connection with Bao Mu Yuan (BMY) mine was achieved in 3Q08. This will
enable the haulage of gold ore and waste between the two mines and the
establishment of a ventilation circuit.
Active stopes: No. 070 (500t @ 6 g/t)
No. 050 (2,000t @ 4 g/t).
Indentified stopes for development total 19,000t @ 4.5 g/t.
* Bao Mu Yuan Mine (BMY)
The connection with Shen Jia Ya (SJY) mine was achieved in 3Q08.
Active stopes: No. 100 (2,200t @ 3 g/t)
No. 075 (1,500t @ 4.5 g/t)
No. 905 (1,000t @ 3.5 g/t)
No. 850 (5,000t @ 4.5 g/t)
Identified stopes for development total 5,000t @ 4.5 g/t
* De Sheng Mine (DS)
CGM finished a new 150m decline from the surface winch at the processing
plant to level 1 of the De Sheng Mine.
Active stopes : No. 600 (800t @ 3.5 g/t)
No. 700 (800t @ 7.9 g/t)
No. 605 (1,000t @ 4 g/t)
No. 650 (2,000t @ 6 g/t)
No. 660 (5,800t @ 3 g/t)
Identified stopes for development total 13,000t @ 7 g/t and 52,000t @ 4.5
g/t.
* Zheng Jia Shan Mine (ZJS)
Connection with Jiu Fa mine was achieved in 3Q08. Refurbishment of the
ventilation and communication systems is in progress.
Active stopes: No. 925 (500t @ 5 g/t)
No. 950 (500t @ 5 g/t)
Identified stopes for development total 29,000t @ 4 g/t.
* Jiu Fa Mine (JF)
Connection to Zheng Jia Shan mine was achieved. Refurbishment is ongoing
with the replacement of several winches to increase haulage capacity and
to establish ventilation to the lower portion of the mine.
During 3Q08, no active or identified stopes.
* Jin Zhu Wan Mine (JZW)
Work continues to connect Jiu Fa (JF) mine. We estimate that the task will
be completed by the end of August 2009, including the refurbishment
associated with haulage, ventilation and ground services.
Identified stopes 40,000t @ 4 g/t and 45,000t @ 5 g/t.
* Xiang Lu Mine (XL)
The Company finished the haulage tunnel from XL through an adjacent hill
to a road with more favourable access for large road trucks. This will
facilitate the transport of ore to our processing plants.
Refurbishment XL is ongoing and ore mining is anticipated in 4Q08.
Identified stopes for development are estimated at a total of 25,000t @ 3
g/t and 40,000t @ 6 g/t.
* Xiao Chong Zi (XCZ)
Refurbishment was completed at the end of 3Q08 when the Company achieved
the breakthrough to Shen Jia Ya mine (SJY). This will improve haulage
productivity in the coming quarter.
Note: Identified stopes are based on geological interpretation from underground sampling and drilling and are classified as inferred
resources.
4. Single Consolidated Mining Licence in CGM's Name
On 18 August 2008, CGM received Mining Licence No. 4300000820405. The licence incorporates all eight operating gold mines into one
licence that is now registered in the name of our China JV Company "Hunan Westralian Mining Co. Ltd". This mining licence covers one
registered mining area of 6.24 km2 with a depth of -230 metres (approximately 550m vertical depth from surface). In November 2007, the
purchase of the mining licence was concluded and CGM now has 100% control of all eight individual producing gold mines in the Shen Jia Ya
Prospect, together with all mining permits and licences. The new licence gives us production rights not just on the original eight ML's but
also for the territory surrounding the mines.
5. CGM Cash Position
CGM actively monitors and reviews all aspects of planned capital expenditure and operating costs associated with our Chinese operations
in view of external macro conditions.
CGM's cash position on 30 September 2008 was USD17.3m. We have an additional USD1.7m in cash equivalent assets such as gold stock and
security bonds, taking our cash reserves to USD19m at the end of 3Q08.
As a result of prudent cash management of expenditure, CGM remains on track with its budgeted cash position.
In light of the unstable financial climate associated with capital markets, currency movements (GBP to USD) and the gold price, the
Board will continue to adopt a prudent approach to expenditure for the foreseeable future.
6. Central Decline Project
As announced on 31 July 2008, the Company has entered into a contract with Hunan Tunnel Engineering General Corporation to construct a
central decline and a 4km underground haulage system.
Update on the project:-
* Land and Acquisition
The Company has successfully acquired its central site location in Zheng
Jia Shan for RMB 1,156,231 (USD170,000) from the local villagers for the
land right usage.
* Contractor
In view of the current economic climate and the projected ramp-up of gold
production for the 2009 year, the Board has decided to revert to the
original date of mid-2009 for the commencement of the central decline
project.
7. Human Resources and Safety
* The Company has 476 full-time staff and 600 contractors working on the
Guanzhuang Gold Project.
* CGM has an excellent safety record and the Company is proud that no time
has been lost through injury in 3Q08. This has been achieved through
extensive training and safety development programs.
China Goldmines plc
Frank Vanspeybroeck (CEO) +86 731 518 8200
Alex Worrall (Director/Company Secretary) +44 207 788 7621
Marinko Vidovich (CFO) +61 8 6216 5200
Guanzhuang Site Office +86 745 463 9900
Brewin Dolphin Ltd (Nomad)
Alex Dewar / Sandy Fraser +44 131 529 0276
(Nominated Adviser)
Notes to Editors
China Goldmines plc is a UK mining company listed on AIM on 7 February 2006 as a gold resources company focussed on the discovery and
development of gold projects in Hunan Province, China.
CGM's Gold Project is known as the Guanzhuang Gold Project. Based on an Independent Geological Report, the project has an estimated
inferred resource of 1.8m ounces within the top 325m from the surface and over a strike distance of 1.5km. The resources have been
identified from CGM's 100% owned/controlled Shen Jia Ya Prospect, which is within the Guanzhuang Gold Project.
The Shen Jia Ya Prospect consists of eight gold mines that have now been converted into a single mining licence. The Company plans to
consolidate all eight individual mines. That consolidation will result in a mining operation with a long life producing 150,000 oz Au/pa,
beginning in the near future. At the same time as mining the existing eight mines, China Goldmines will continue to investigate the
potential of the project area that remains under-explored.
The information in this report was derived from data compiled by Hunan Westralian Mining Co., Ltd, China and reported by John Warner B.
App. Sc. (App. Geol), MAIG, MGAA. John Warner is the Group Geology Manager to the Company. He has the required experience of the style of
mineralisation and types of deposit under consideration and of the activity he is undertaking so that he is qualified as a Competent Person
as defined by the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.' John
Warner consents to the inclusion in the report of matters based on his information in the form and context in which it appears and has
reviewed the contents of this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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