31 Mar 2009 11:47
CHINA GOLDMINES PLC
("China Goldmines", "CGM", the "Company", or the "Group")
INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS TO
31 DECEMBER 2008
China Goldmines plc (AIM:CGM), the AIM-listed gold miner based in Hunan, China, announces its unaudited interim financial results for the six months to 31 December 2008.
Highlights - 31 December Half Year
| 31 December 2008 cash position USD$10.3m (31 December 2007 USD$25m), and the group remains debt free. The Company has mined ore containing the equivalent of 4,104 ounces of gold during the period under review. Group's consolidated operating loss for the six month period amounted to USD$3.8m (31 December 2007 USD$4.4m) before charging an adverse unrealised foreign currency exchange loss of USD$15.8m (31 December 2007 USD$1.1m). The Group recorded a consolidated net loss of USD$19.3m (31 December 2007 USD$5.2m). These unrealised foreign exchange losses were primarily due to the rising value of the USD and the translation impact on our balance sheet assets. CGM has identified high-grade stopes for production and remains confident that productivity levels will increase over the course of 2009. CGM has completed its 15,000 metre drilling program at the end of December 2008 with drilling results that confirm the continuity of the ore body in both strike length and depth. The Company maintains a world class safety record with no injuries to date and all licences and permits are fully compliant. |
Frank Vanspeybroeck, CEO, Commented:
"Established gold production combined with a financially sound balance sheet of USD$10m in cash places China Goldmines in an excellent position to increase high grade ore production over the year. Also, the higher gold prices will benefit shareholders as the company is unhedged. We are reviewing various strategies to help mitigate exposure to further currency fluctuations but do not envisage US dollar currency movements of the severity of quarter 4 2008 to re-occur. The challenge for 2009 will be to optimise the cultural management practices at the mine site to enable us to increase efficiencies in production and lower costs. To this end we may seek to work with a local partner.
For further information contact:
| 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 (Nominated Adviser) Threadneedle Communications Laurence Read/Beth Harris | +44 (0)131 529 0276 +44 (0) 207653 9855 |
Chairman's Statement
The six months to the 31st December 2008 saw China Goldmines achieve gold concentrate production equivalent to 4,104 oz which brought us within our restated production target range for the calendar year. The Company sold 1,002 ounces of gold of which 287 ounces was processed and deposited in December 2008, and the balance in January 2009, with the revenue consequently to be recognised in the H2 financial year. We ended the period with a cash position of USD$10.3m.
During the period three gold processing plants were commissioned and refurbishment work was completed at our development projects. While delays occurred underground due in part to the implementation of rigorous safety procedures and external events including the Olympics, a number of high grade stopes have been identified during development for immediate production in 2009. Exploration drilling achieved a total of 15,000 metres for surface drilling during the 2008 calendar year. The underground drilling has completed approximately 2,000 metres. While drilling was slower than expected, results confirm the continuity of the ore bodies both along strike and with depth.
In August 2008, CGM obtained a new mining licence. The new licence provides CGM with production rights not just to the original eight gold mines but also for the territory in-between. We are now in the final stages of negotiations with local villagers and government officials to acquire the permanent use of all the land necessary for our current operations. The Company anticipates to execute a sale and purchase agreement by the end of H1 2009.
Despite gold production and development work we found ourselves subject to significant fluctuations in the US dollar during the period and sustained losses due to CGM being unhedged.
Notwithstanding our current cash position and without compromising our stated gold production objectives, CGM is undertaking a full optimisation review. Overhead expenditure is being directly targeted relating to reductions from administration and professional fees to travel expenditure. The Company will also focus underground drilling purely on areas that will directly assist its production targets for the first half of 2009.
CGM is also performing a cost/benefit analysis of constructing its own gold concentrate treatment smelter, in order to reduce the gold refinery costs and associated transportation and security issues. Once we have made a decision on whether to invest in a proprietary smelter it will be announced to the market. However, given the current economic climate, all capex is subject to detailed board scrutiny.
In this, our first full year of extraction we plan further localisation including the formation of local partnerships in order to enhance gold production both in 2009 and for the longer term. During the next 12 months CGM's intention is to establish strong links with local corporates to ensure maximum value is returned to shareholders from gold production, as quickly as possible.
Safety is paramount to CGM's operations. We have an excellent safety record for underground mining and processing in China and the Company is proud that no time has been lost through injury during the period. This has been achieved through extensive ongoing training and safety development programs.
Financial and Trading - 31 December 2008 Half Year
The results for the six month period ended 31 December 2008 show a consolidated operating loss of USD$3.8m, compared to a USD$4.4m loss for the 31 December 2007 period, and a consolidated loss of USD$19.3m, compared to a USD$5.3m loss for the 31 December 2007 period. The consolidated loss was primarily attributable to a foreign exchange loss of USD$15.8m being expensed.
The CGM accounts involve a number of different currencies, and the process of converting them all into the one presentation currency (USD) results in a number of different foreign currency balances. More specifically:-
| 1) | Translation of the Australian operations (which include Global Resource Ventures Limited, Westralian Resources Pty Ltd, and the Joint Venture Company, Hunan Westralian Mining Company Ltd from AUD into USD has resulted in a net credit (gain) balance. This amount is recognised in equity as the Foreign Currency Translation Reserve in accordance with the requirements of IAS 121. |
| 2) | Translation of the English operations (CGM) from GBP into USD has resulted in a net debit (loss) balance. This amount is recognised in the profit and loss. |
| The respective credit and debit balances effectively represent the movement of the relevant currencies during the period against the historical conversion rates. The large loss represents the devaluing of the GBP against the USD. |
During October 2008 there were unprecedented US dollar movements versus almost all other currencies. This unprecedented and rapid shift in foreign exchange markets impacted the Company through its UK Sterling (GBP) holding. This loss is reflected through the foreign exchange loss positions mentioned above. The Company during the interim period converted the majority of its liquid assets GBP to USD holdings to reduce the cash impact of these adverse foreign exchange movements.
The Company requested its auditors, Mazars LLP, to audit the cash as at 31 December 2008 and they have confirmed that the Group had a cash balance of USD$10.316m (or US dollars equivalent) based on exchange rates at that date.
Cashflow movements for the interim period were USD$1.4m associated with operating activities (31 December 2007 USD$5.1m). Investment activities associated with purchase of equipment, development of mine site and exploration activity amounted to USD$6.5m. During the interim period, the foreign exchange cash movement was a loss of USD$6.9m, compared to a gain of USD$6k for the comparative period to 31 December 2007.
Licence
In 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). The new licence provides CGM production rights not just on the original eight ML's but also for the territory in-between the surrounding mines.
We are now in the final stages of negotiations with local villagers and government officials to acquire by way of permanent use all the land necessary for our operations. The Company anticipates to execute a sale and purchase agreement by the end of H1 2009.
Production
The Company produced 5,161 oz's during the 2008 calendar year which was within our restated target production range announced in the September Quarter trading statement.
The Company's mining operation is making the transition from remnant mining while refurbishing the mines to targeting new high grade mine development.
Mining production results for the 6 months:-
| Quarter | Total Ore (t) | Average Gold Grade (g/t) | Contained Au Oz's |
| September 2008 December 2008 | 7,552 23,519 | 4 4.14 | 971 3,130 |
| Contained Ounces | 4,104 |
CGM has during the development and remnant mining process identified a number of high grade stopes earmarked for immediate production in 2009.
During the transition of explorer to producer the Company had revised its 2008 full calendar year gold production target for a number of reasons including:-
| A Board decision to add stringent underground mining safety procedures. Ramp-up slowed due to delays in underground mine refurbishment. Within upper remnant zones lower grades encountered. Severe weather conditions for the region, suspension of Visa's and other Olympic specific restrictions such as access to explosives. |
With higher grades targeted CGM is aiming a production target of 20,000 - 25,000 contained ounces from its mining operations for the 2009 calendar year.
During the 6 month period the Company proceeded to sell 1,002 ounces of gold of which 287 ounces was processed and deposited in December 2008, 715 ounces was delayed for processing until January 2009, with the revenue consequently to be recognized in the H2 results. The Company is currently undertaking a cost/benefit analysis of constructing its own gold concentrate treatment smelter, in an attempt to reduce the gold refinery costs and associated transportation and security issues.
In light of the economic climate, the level of production achieved during the six months and the foreign exchange issues the Company acted prudently and reviewed all costs on a regular monthly basis. Overhead expenditure was targeted to be reduced:-
| Admin related and professional fees reduced by 61% from comparative figures to USD$1m. Consulting fees reduced by 50% to USD$400k. Travel reduced by 54% to USD$149k. |
Processing Plants
CGM has successfully commissioned three gold processing plants:-
The Bao Mu Yuan (BMY) Processing Plant: was upgraded from 50 tpd to 200 tpd. It was commissioned on the 4th August 2008.
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, planned upgrading had begun in the period to 100 tpd.
The Xiao Chong Zi (XCZ) Processing Plant: CGM has installed a 100 tpd mill, which will be upgraded to 350 tpd in early 2009.
Exploration
Exploration drilling has achieved a total of 15,000 metres for surface drilling during the 2008 calendar year. The underground drilling has completed approximately 2,000 metres. There were issues and delays due to the poor availability of compressed air. Underground sampling together with underground drilling continues to confirm the continuity of the ore bodies both along strike and with depth. The Company will now focus purely on underground drilling that will assist its production targets for H1 2009.
Mine Development
Encouraging high grade results have been targeted for production in 2009:-
Shen Jia Ya (SJY) Mine
Development of -40 Highway from SJY to De Sheng Mine has progressed well and breakthrough is expected in early 2009.
Active stopes at level 3 with 13,500t @ 14.5 g/t and level 4 with 10,800t @ 9.8 g/t.
Planning for SJY level 5 ore extraction was carried out and development of SJY decline 5 started.
Bao Mu Yuan (BMY) Mine
Mining is ongoing with two stopes at level 2 for 10,500t @ 4.7 g/t.
Xia Chong Zi (XCZ) Mine
Two stopes are active at level 1 for 18,900t @ 6.3 g/t.
De Sheng (DS) Mine
Development of DS decline 3 to -40 level started and has progressed well. In early 2009 decline 3 will reach the ore drive that connects with SJY mine. A steel pipe line for compressed air line was installed and construction of a new explosives magazine was completed. There are two active stopes on level 1 for 9,100t @ 4.3 g/t and 5,400t @ 27 g/t respectively and one stope for 7,300t @ 12 g/t on level 2.
Two stopes for 10,950 t @ 12 g/t are identified on level 3.
Zhen Jia Shan (ZJS) Mine
Refurbishment of office infrastructure was completed to house the mining, survey and geologist departments.
Production is ongoing at level 1 with a stope for 22,000 t @ 6.6 g/t and a stope on level 1A for 8,000t @ 6.6 g/t. Stopes identified for development at level 2 total 25,000t @ 6.6 g/t.
Jiu Fa (JF) Mine
Refurbishment of decline 3 was completed and rehab of decline 4 is progressing. Breakthrough to -40 Highway is expected in early 2009 to start the -40 Highway development towards the Jin Zhu Wan Mine.
Jin Zhu Wan (JZW) Mine
The Jin Zhu Wan ventilation was established. Survey pick-ups of decline 2 to decline 5 have been scheduled for early 2009.
Xiang Lu (XL) Mine
Refurbishment of decline 3 was completed and stoping commenced in late December.
Stopes are identified at level 1 for 12,000t @ 8 g/t, level 2 for 7,000t @ 11 g/t and at level 3 for 59,000 t @ 22g/t.
Health and Safety
Human resources and safety is paramount to the operations at CGM. We have an excellent safety record for underground mining/processing in China and the Company is proud that no time has been lost through injury during the period. This has been achieved through extensive ongoing training and safety development programs.
Financial Results
Unaudited Consolidated Income Statement
For The Half-Year Ended 31 December 2008
| Six Months Ended 31 December 2008 US$'000 Unaudited | Six Months Ended 31 December 2007 US$'000 Unaudited | Year Ended 30 June 2008 US$'000 Audited | |
| CONTINUING OPERATIONS | |||
| Revenue | 235 | - | 524 |
| Salaries and employee benefits | (858) | (572) | (1,720) |
| Office expenses and professional fees | (1,026) | (2,659) | (2,815) |
| Consulting expenses | (405) | (817) | (1,161) |
| Travel and accommodation expenses | (149) | (326) | (384) |
| Mining expenses | (1,352) | - | (1,344) |
| Other expenses | (238) | (39) | (268) |
| OPERATING LOSS | (3,793) | (4,413) | (7,168) |
| Unrealised foreign currency exchange movement | (15,869) | (1,176) | 1,909 |
| Financial income | 345 | 330 | 998 |
| LOSS BEFORE TAX | (19,317) | (5,259) | (4,261) |
| Tax | - | - | - |
| LOSS FOR THE PERIOD | (19,317) | (5,259) | (4,261) |
| Attributable to: | |||
| Equity holders of the parent | (19,309) | (5,047) | (3,800) |
| Minority interest | (8) | (212) | (461) |
| (19,317) | (5,259) | (4,261) | |
| Basic and diluted loss per share (cents) | (39.8) | (16.1) | (9.4) |
| Unaudited Consolidated Statement Of Changes In Equity For The Half Year Ended 31 December 2008 |
| Attributable to Members of China Goldmines | |||||||||
| Share Capital USD$'000 | Share Premium Reserve USD$'000 | Foreign Exchange Reserve USD$'000 | Other Reserves USD$'000 | Retained Earnings USD$'000 | Total USD$'000 | Minority Interest USD$'000 | Total Equity USD$'000 | ||
| Balance at 1 July 2007 | 390 | 6,726 | (3) | 61 | (2,871) | 4,303 | 448 | 4,751 | |
| Exchange differences on translation of foreign operation | - | - | 44 | - | - | 44 | - | 44 | |
| Net income/(expense) recognised directly in equity | - | - | 44 | - | - | 44 | - | 44 | |
| Loss for the half-year | - | - | - | - | (5,047) | (5,047) | (212) | (5,259) | |
| Total recognised income and expense for the half-year | - | - | 44 | - | (5,047) | (5,003) | (212) | (5,215) | |
| Contributions of equity, net of transaction costs | 530 | 59,554 | - | - | - | 60,084 | - | 60,084 | |
| Balance at 31 December 2007 Unaudited | 920 | 66,280 | 41 | 61 | (7,918) | 59,384 | 236 | 59,620 | |
| Exchange differences on translation of foreign operation | - | - | (1,473) | - | - | (1,473) | - | (1,473) | |
| Net income/(expense) recognised directly in equity | - | - | (1,473) | - | - | (1,473) | - | (1,473) | |
| Profit/(loss) for the half-year | - | - | - | - | 1,246 | 1,246 | (248) | 998 | |
| Total recognised income and expense for the half-year | - | - | (1,473) | - | 1,246 | (227) | (248) | (475) | |
| Contributions of equity, net of transaction costs | - | (110) | - | - | - | (110) | - | (110) | |
| Balance at 30 June 2008 Audited | 920 | 66,170 | (1,432) | 61 | (6,672) | 59,048 | (12) | 59,035 | |
| Exchange differences on translation of foreign operation | - | - | 10,548 | - | - | 10,548 | - | 10,548 | |
| Net income/(expense) recognised directly in equity | - | - | 10,548 | - | - | 10,548 | - | 10,548 | |
| Loss for the half-year | - | - | - | - | (19,309) | (19,309) | (8) | (19,317) | |
| Total recognised income and expense for the half-year | - | - | 10,548 | - | (19,309) | (8,761) | (8) | (8,769) | |
| Balance at 31 December 2008 Unaudited | 920 | 66,170 | 9,116 | 61 | (25,980) | 50,287 | (20) | 50,267 | |
| Unaudited Consolidated Balance SheetAs At 31 December 2008 | |||
| 31 December 2008 US$'000 Unaudited | 31 December 2007 US$'000 Unaudited | 30 June 2008 US$'000 Audited | |
| NON-CURRENT ASSETS | |||
| Intangible assets | 613 | 453 | 705 |
| Mining properties | 36,231 | 26,103 | 32,372 |
| Property, plant and equipment | 3,569 | 498 | 1,372 |
| Investments | - | 148 | - |
| Trade and other receivables | 315 | - | 822 |
| 40,728 | 27,202 | 35,271 | |
| CURRENT ASSETS | |||
| Inventories | 1,215 | 790 | 503 |
| Trade and other receivables | 711 | 183 | 118 |
| Cash and cash equivalents | 10,316 | 32,098 | 25,148 |
| 12,242 | 33,071 | 25,769 | |
| TOTAL ASSETS | 52,970 | 60,273 | 61,040 |
| CURRENT LIABILITIES | |||
| Trade and other payables | (2,703) | (653) | (2,005) |
| TOTAL LIABILITIES | (2,703) | (653) | (2,005) |
| NET ASSETS | 50,267 | 59,620 | 59,035 |
| EQUITY | |||
| Share capital | 920 | 920 | 920 |
| Share premium account | 66,170 | 66,280 | 66,170 |
| Foreign exchange reserve | 9,116 | 41 | (1,432) |
| Other reserves | 61 | 61 | 61 |
| Retained earnings | (25,980) | (7,918) | (6,672) |
| EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY | 50,287 | 59,384 | 59,047 |
| Minority interest | (20) | 236 | (12) |
| TOTAL EQUITY | 50,267 | 59,620 | 59,035 |
| Unaudited Consolidated Cash Flow Statement For The Half-Year Ended 31 December 2008 |
| Six Months Ended 31 December 2008 US$'000 Unaudited | Six Months Ended 31 December 2007 US$'000 Unaudited | Year Ended 30 June 2008 US$'000 Audited | |
| Operating loss from continuing operations | (3,793) | (4,413) | (7,168) |
| Adjustments for: | |||
| Depreciation of property, plant and equipment | 231 | 32 | 123 |
| Amortisation of intangibles | 7 | 7 | 145 |
| Exploration and development expenditure | 1,352 | - | - |
| Net exchange differences | 760 | 34 | (20) |
| Operating cash flows before movements in working capital | (1,443) | (4,340) | (6,920) |
| (Increase) in receivables | (352) | (1) | (450) |
| (Increase) in inventories | (854) | (790) | (503) |
| Increase/(decrease) in trade and other payables | 1,262 | (3) | 1,290 |
| Net cash outflow from operating activities | (1,387) | (5,133) | (6,583) |
| INVESTING ACTIVITIES | |||
| Payments for environmental deposits | - | - | (303) |
| Purchases of property, plant and equipment | (2,487) | (288) | (1,248) |
| Payments for licences, exploration and development expenditure | (4,362) | (24,333) | (29,193) |
| Interest received | 344 | 330 | 998 |
| Net cash used in investing activities | (6,505) | (24,291) | (29,746) |
| FINANCING ACTIVITIES | |||
| Proceeds on issue of ordinary share capital | - | 62,775 | 62,775 |
| Payments for share issue expenses | - | (3,863) | (3,973) |
| Net cash from financing activities | - | 58,912 | 58,802 |
| Net (decrease)/increase in cash and cash equivalents | (7,892) | 29,488 | 22,473 |
| Cash and cash equivalents at the beginning of the period | 25,147 | 2,594 | 2,594 |
| Movements in foreign exchange rate | (6,940) | 16 | 81 |
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 10,315 | 32,098 | 25,148 |
Notes to the Consolidated Financial Statements
NOTE 1: GENERAL INFORMATION
The financial information set out in this report does not constitute full accounts for the purposes of Section 240 of the Companies Act 1985. The interim accounts for the six months ended 31 December 2008 and 31 December 2007 are unaudited. The comparative figures for the financial year ended 30 June 2008 are not the Company's statutory accounts for the financial year but are abridged from those accounts which have been reported on by the Company's auditors, whose report on the consolidated financial statements prepared under International Financial Reporting and Accounting Standards, was unqualified. The interim accounts have been prepared on the basis of the accounting policies set out in the annual financial statements of the Group for the year ended 30 June 2008.
NOTE 2: SEGMENT INFORMATION
All of the reported revenue and operational results for the period derive from the Group's continuing gold mine exploration and mining operations.
NOTE 3: TAXATION
No liability to tax is expected to have arisen during this period.
NOTE 4: LOSS PER SHARE
The calculation of the loss per share is based on the following data:
| Six Months Ended 31 December 2008 US$'000 Unaudited | Six Months Ended 31 December 2007 US$'000 Unaudited | Year Ended 30 June 2008 US$'000 Audited | |
| Loss | |||
| Loss used in calculating basic and diluted loss per share for the period attributable to the equity holders of the parent | (19,309) | (5,047) | (3,800) |
| Number of shares | |||
| Weighted averge number of ordinary shares for the purpose of basic and diluted loss per share | 48,475 | 32,755 | 40,572 |
The above figures are not affected by any dilutive share options as no share options have been issued in the period.
NOTE 5: DIVIDENDS
No dividends were declared in the period.
NOTE 6: MINING PROPERTIES
| Land Comp. Costs $'000 | Explor. Expend. $'000 | Mine Develop. Expend. $'000 | Mining Licences $'000 | Total $'000 | |||||
| Land Comp. Costs $'000 | Explor. Expend. $'000 | Mine Develop. Expend. $'000 | Mining Licences $'000 | Total $'000 | |||||
| Cost | |||||||||
| At 1 July 2007 | - | 1,781 | - | - | 1,781 | ||||
| Additions | - | - | - | 24,472 | 24,472 | ||||
| Exchange differences | - | (150) | - | - | (150) | ||||
| At 31 December 2007 Unaudited | - | 1,631 | - | 24,472 | 26,103 | ||||
| Additions | 120 | 824 | 3,646 | - | 4,590 | ||||
| Exchange differences | 7 | 150 | - | 1,530 | 1,687 | ||||
| At 30 June 2008 Audited | 127 | 2,605 | 3,646 | 26,002 | 32,379 | ||||
| Additions | 127 | 1,461 | 2,180 | - | 3,768 | ||||
| Exchange differences | - | - | - | 142 | 142 | ||||
| At 31 December 2008 Unaudited | 254 | 4,066 | 5,826 | 26,144 | 36,291 | ||||
| Accumulated amortisation | |||||||||
| At 1 July 2007 Audited | - | - | - | - | - | ||||
| At 31 December 2007 Unaudited | - | - | - | - | - | ||||
| At 30 June 2008 Audited | - | - | - | - | - | ||||
| Charge for the year | (60) | - | - | - | (60) | ||||
| At 31 December 2008 Unaudited | (60) | - | - | - | (60) | ||||
| Carrying Amount | |||||||||
| At 31 December 2008 Unaudited | 194 | 4,066 | 5,826 | 26,144 | 36,231 | ||||
| At 30 June 2008 Audited | 120 | 2,605 | 3,646 | 26,002 | 32,373 | ||||
| At 31 December 2007 Unaudited | - | 1,631 | - | 24,472 | 26,103 | ||||
The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and commercial exploitation or sale of the respective mining areas. Amortisation of the costs carried forward for the development phase and the mining licences is not being charged pending the commencement of production. The business licences are being amortised over 30 years, and software over 5 years, and land compensation costs over 2 years.
The Company shall start to amortise its mining related intangible assets when the relevant area of interest is capable for commercial production (i.e. when the relevant mining assets are available for use). The development costs incurred on the area of interest prior to commercial production are capitalised/expensed in accordance with the Company's accounting policies applicable.
Management has determined that the area of interest (Shenjiaya Project) owned by the Company is yet to be capable for commercial production at the balance sheet and no amortisation is charged on the relevant mining related intangible assets.
NOTE 7: CONTINGENCIES
There has been no change in contingent liabilities or contingent assets since the last annual reporting date.
NOTE 8: SUBSEQUENT EVENTS
No matter or circumstance has arisen since 31 December 2008, which has significantly affected, or may significantly affect the operations of the group, the result of those operations, or the state of affairs of the group in subsequent financial years.
-ENDS-
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.