CGM.L Regulatory News (CGM)

24 Jul 2007 07:00

China Goldmines PLC24 July 2007 24 July 2007 China Goldmines plc (AIM:CGM) China Goldmines announces Resource Estimate on the Guanzhuang Gold Project Initial Resource Estimate identifies a JORC Inferred Resource of 1.83 Moz China Goldmines plc (AIM: CGM) announces the results of the IndependentGeological Report (IGR) from Al Maynard & Associates (AM&A) on its GuanzhuangProject, located in the western portions of Hunan Province, China. Highlights of the Independent Geological Report • A JORC Code compliant Inferred Resource estimate of 5.1 million tonnes at 11 g/t gold containing 57,000 kg of gold equivalent to 1.83 million ounces • AM&A's assessment indicates that the Guanzhuang Gold Project economic resource could be increased substantially by a factor of 4 - 6 after the implementation of systematic exploration • Confirms CGM's objective to establish staged underground mining and processing operations increasing gold production from an estimated 25,000 oz per annum to approximately 150,000 oz is achievable • Ammtec's Metallurgical Report confirms the excellent recovery characteristics of the ore which have been observed at the eight existing processing plants • Simple metallurgy provides for low capital investment, processing costs and environmental risk • The mining area is serviced by sound infrastructure including a major highway, grid power and water. A substantial workplace of skilled underground miners is locally available, along with associated support industries Commenting on the report CEO Frank Vanspeybroeck said: "The conclusions from this report have exceeded our original expectations. Our milestone is to create a multi million ounce gold resource and we now have confirmation that this isachievable in the near term. Having reached agreement for the 100% acquisitionof the eight mines we intend to refurbish and consolidate the existing miningoperations with the aim of increasing the current production from 25,000 oz goldper year to an initial target of 150,000 oz gold per year, within 3 years. The Shenjiaya Prospect On the 3rd of July 2007, the Company (CGM) announced that it had finalised andexecuted all eight transfer agreements with all current miners individually.Settlement is due on 1 November 2007. CGM will then take 100% control over theeight mine operations, called the Shenjiaya Prospect. The eight gold mines form part of CGM's Guanzhuang Project, located in theGuanzhuang mineral field, an important recognised mineralised gold and basemetal region in western Hunan Province, China. The Guanzhuang mineral field islocated along a major regional suture zone. CGM has secured agreement to exploreand mine almost the entire extent of a major flexure along this structure,including several major sub-parallel features. AM&A considers that thestructural architecture represented by this flexure zone is highly prospectivefor the location of additional gold mineralisation. Resources Between 2000 - 2006, CGM and its partner, Brigade 407, mapped, sampledunderground mine exposures and drilled mineralised structures associated withthe Shenjiaya Prospect. (Details of drilling intervals were previously announcedon the 18 December 2006). Two dominant East - West shear veins, continuous forover 9.5km, and a number of smaller sub-parallel shear veins are associated withthe majority of mineralisation within a structured zone up to 200m wide. A newparallel structure some 1,000m to the south of the 8 mines has been locatedduring recent exploration. Based on the above work, Brigade 407 and CGM Geologists have outlined 29 shootswithin which average gold grades are reported to exceed 13g/t Au, developed overwidths ranging from 0.76m to 10m, with individual grades up to 157g/t Au. Based on the above results the JORC Code compliant Inferred Resource estimate ofall the veins comprising the Shenjiaya mineralisation is outlined below. Description Average Width Million Average Contained Gold (metres) Tonnes Grade (tonnes) (g/t Au) Total In-situ 2.5 5.5 11 59 Resource Mined To Date* 0.4 6 2 Remaining Resource 5.1 11 57 * Estimated based on available existing records and maximum theoreticalthroughput for mines with unsubstantiated records. Exploration Current mining and production activities at the Shenjiaya Prospect demonstratesthe capacity to mine relatively high grades of mineralisation utilising limitedtechnology at low production rates. Exploration has established that themineralised structures display strong continuity over the 9.5km along strike andhave also been intersected at depth in several localities. AM&A believes thatthe persistence of the mineralised structures provides CGM with an opportunityto define a substantial gold resource once the structural controls on thelocation of mineralised shoots can be established. Accordingly, based simply on extending under-explored mineralised strike zonesAM&A believe that there is potential to increase the current resources by afactor of six based on strike and a factor of five for depth. To be conservativeand to allow for unknown 'sub-economic' zones that may exist within themineralised structure a resource multiplication factor range from 4 to 6 isconsidered reasonable. This excludes possible contribution from non east-weststriking veins found in current mining areas that have additional resourcepotential. One important aspect of the shear zone that warrants further investigation isthe potential for oxide mineralisation potentially amenable to open pit mining.Two of the existing eight mines had small open pit operations prior tounderground development. The Company will therefore continue its vigorous exploration campaign to betterdefine low grade surface soil anomalies and higher grade depth extensions byfurther infill drilling and exploratory development. Looking Ahead China Goldmines strategy is: To consolidate the eight mines into one large scale commercial mine withimmediate cash flow as from 1 November 2007 from the existing operations To design, cost and construct a new 2,000 tonne per day processing facilitywithin the next two years To increase the resource within the unexplored exploration and mining areas inthe near future, through extensive exploration activities For further information on China Goldmines plc you are invited to visit theCompany's website at www.chinagoldmines.com or contact:- Mr Frank Vanspeybroeck (CEO) Mobile: +61 41 116 6276Alex Worrall +44 207 788 7621Marinko Vidovich (CFO) Mobile: +61 41 997 4744Changsha Office +86 731 515 8211Allen J. Maynard, (Al Maynard & Associates) +61 89 388 1000Alan Stewart, Brewin Dolphin Investment Banking (Nominated Adviser) +44 141 221 7733Clare Irvine/Justine Howarth, Parkgreen Communications +44 20 7851 7480 About China Goldmines plc China Goldmines plc listed on AIM on the 7 February 2006 as a gold resourcescompany focussed on the discovery and development of gold projects in the HunanProvince of China. The Company is preparing a feasibility study on its Guanzhuang Gold Project,where a resource of +1.83 million ounces within the top 325m from surface andover a strike distance of 1.5km has been identified from its 100% owned/controlled Shenjiaya Prospect. The Company's target is to further increase thisresource by a factor of 4 to 6 times with a continuing exploration program. The Shenjiaya Prospect consists of eight gold mines which the Company plans toconsolidate with the aim of having a long life mining production of 150,000 ozAu/pa 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 areathat remains under explored. About Al Maynard & Associates AM&A is an independent geological and exploration consultancy established 28years ago, which has been providing services and advice to the internationalmineral industry and financial institutions since 1980. AM&A has beenresponsible for the preparation of a considerable number of geological reportsand valuations for prospectuses and other purposes relating to mineral projectareas Australia-wide and overseas. Mr Allen J Maynard is a Member of theAustralian Institute of Geoscientists ('AIG') and a Corporate Member of theAustralasian Institute of Mining & Metallurgy ('AusIMM'). He and Mr B. Varndellhave the relevant experience and competence to be considered 'Expert' under thedefinitions provided by ASIC Practice Notes 42 and 43. Mr Brian J. Varndell, aFellow of the AusIMM, has over 35 years experience in the mining and explorationindustry, and is a co-author of this report. AM&A have reviewed the information contained in this announcement and consent toits release. This information is provided by RNS The company news service from the London Stock Exchange