18 May 2009 14:07
China Goldmines plc
("China Goldmines" (CGM) or the "Company")
(AIM: CGM)
CHINA GOLDMINES GUANZHUANG GOLD PROJECT
Security and Production Update for the 1st April 2009 to 15 May 2009
Highlights
8,590 tonnes mined in the 7 week period;
5,975 tonnes containing 2,193oz milled in the period;
Average grade achieved 12g/t;
Major security breach on 15 / 16 May 2009 resulting in theft of at least 5 tonnes of high grade ore (>1,000g/t);
Mining operations under review - Xiang Lu mine site closed but activity continuing at Bao Mu Yuan and De Sheng plants;
826oz gold sold during the period at an average price of USD896/oz
Security and safety issues
The Company experienced an alarming attack on the 15th and 16th May that targeted our Xiang Lu (eastern mine site) and the Bao Mu Yuan Plant. Fifty or more robbers broke into the mine sites and raided high-grade ore/concentrate and threatened staff. On the 17th May, CGM's Chinese Joint Venture Company, Hunan Westralian Mining Co., Ltd, decided to temporarily close the Xiang Lu mine site for the safety and wellbeing of the Company's Western and Chinese workers and to avoid further theft of high-grade ore.
The Company is now working closely with the County Government and Police in reviewing this attack and taking all possible actions to apprehend the culprits and our immediate safety needs.
Prior to this incident the Company has been impacted by small scale skirmishes that have been dealt with by internal security and local police. In the period under review, these have resulted in the closure of the Xiao Chong Zi Plant, together with the Zheng Jia Shan and Jiu Fa mines. This incident however represents a deterioration of security due to the number of robbers involved, the use of weapons and the physical and verbal threats to staff. It all appeared to be well co-ordinated and organised, with the objective of stealing the high-grade ore.
Currently the Company is assessing the loss which is approximately 5 tonnes of high-grade ore (>1000 g/t) from the Xiang Lu mine site. It is difficult at this time to quantify the fine ore stolen from the Bao Mu Yuan Plant. The Company was fortunate there were no injuries to our workers.
The western mining operations will continue cautiously and the Bao Mu Yuan and De Sheng plants will be in operation during the month of May.
The Company will discuss with all stakeholders and the County Government how to move forward on strategic planning.
Summary of Production
From 1 April to 15 May 8,590T was mined, and 5,975T containing 2,193 oz gold was milled during the period. Average grade achieved during the period was 12g/t.
1st April to 15th May Mining Summary
| BMY | XCZ | SJY | DS | ZJS | XL | Total | Total | |
| Wagons | Ore (t) | |||||||
| April-09 | 2480 | 50 | 558 | 978 | 1363 | 382 | 5669 | 4514 |
| May-09 | 1568 | 588 | 715 | 171 | 2921 | 2311 |
1st April to 15th May Milling Activity Results:-
| Month | Plant | Tonnes | Grade (g/t) | Tails (g/t) | Recovery % | Concentrate | Gravity | ||
| Grade (g/t) | Tonnes | Au (g) | Au (g) | ||||||
| April | BMY | 3150 | 12.22 | 0.64 | 94.74 | 172 | 147 | 25,284 | 11,166 |
| DS | 937 | 4.75 | 0.55 | 88.38 | 95 | 25 | 2,437 | 1,498 | |
| May | BMY | 1,346 | 18.30 | 0.57 | 96.87 | 233 | 84 | 19,734 | 4,137 |
| DS | 542 | 7.89 | 0.59 | 92.57 | 146 | 18 | 2,652 | 1,311 | |
| Total | 5,975 | 12.00 | 0.60 | 94.00 | 182 | 274 | 50,107 | 18,112 | |
Sale of Gold
A total of 826 ounces of gold was sold during this period at an average price of USD896/oz with gross receipt of USD740,794. Gold sales included 118.8 (DMT) tonnes of gold concentrate at 86.3g/t and 15.44 kg of doré bars from gravity concentration.
-ENDS-
For further information contact:
| China Goldmines plc | |
| Threadneedle Communications | +44 (0)20 7653 9855 |
| Laurence Read/ Beth Harris | |
| Frank Vanspeybroeck (CEO) Marinko Vidovich (CFO) | +86 731 489 0755 +61 8 6216 5200 |
| Brewin Dolphin Ltd (Nomad) | |
| Alex Dewar | +44 (0)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 may 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.