ASIA Minerals picks up more ground in China

With China’s mining industry (along with many other sectors) rapidly becoming more like those of Western nations, Denver-based General Minerals (GNM-T) is seizing the opportunity to pick up prospective mineral properties in advance of a possible exploration boom.

The company, which has gained familiarity with China through its work on the HSG project in Sichuan province, has signed letters of intent to acquire four additional properties across the country.

General Minerals signed a letter of intent to acquire an interest in 55 sq.

km adjacent to one of China’s largest gold mines, the Axi mine in Xin Jiang Autonomous Region. While the operation cranks out only 40,000 oz. gold annually, it is considered a large mine for its reserve base (officially, 9.5 million tonnes grading 5 grams per tonne, using a 3-gram cutoff). The Chinese still believe in drawing out production over a span of 30 years, says General Minerals geologist Ishiung Wu. “They still operate under a socialist mindset, rather than a Western economic viewpoint.” Axi was discovered in 1991 and began production in 1995. The headgrade at the 750-tonne-per-day operation is about 6.7 grams per tonne, Wu says. With a lower cutoff grade of 1 gram per tonne, the reserves would increase to 2.8 million oz. gold. The deposit, which occupies a major north-south-trending shear zone, remains open in both directions and at depth.

Axi lies within the major gold belt that cuts across Central Asia, from the Murantau mine in Uzbekistan (where Newmont Gold holds a 50% interest in the heap leaching of low-grade material), through the Kumtor mine, operated by Cameco in Kyrgyzstan. Axi is 50 km from the Kazakstani border, near the town of Yining.

General Minerals’ property abuts Axi to the south, where the structure is believed to split. The company holds a letter of intent that Wu says serves as a framework for the final joint-venture agreement. General Minerals has submitted the letter of intent to the provincial government for two approvals (one from the planning commission, another for the exploration licence). Only after these approvals are granted can the company begin formal negotiations for the joint venture. The company must also secure final approval from the planning commission and a business licence before it can begin exploring for gold.

“This is the basic structure for joint-venture agreements in China, whether it’s mining or making shoes,” Wu says.

General Minerals’ joint-venture partner for the property will be the Ministry of Metallurgical Industry (MMI) and a local party, with General Minerals holding 75%. The organizational structure of MMI and all of the country’s mining-related entities are in a state of flux, Wu notes. The central government in Beijing is drastically reducing the size of these agencies, including the Ministry of Geology and Mineral Resources (somewhat akin to a government geological survey), which employs half a million people.

General Minerals is confident that this downsizing will be good for the country. The company has signed letters of intent on another three properties in central Sichuan province, one of which is the 170-sq.-km YLP exploration licence, centred on a platinum-gold-nickel deposit. The YLP licence includes two mining licences for a 100-tonne-per-day operation at the deposit, which boasts a large resource within which are 25 million tonnes grading 0.49% nickel, 0.19% copper and 0.84 gram combined gold, platinum and palladium.

The two other projects, as yet unnamed, cover 30 and 15 sq. km. The larger of the two contains Carlin-type gold mineralization over widths of 100 metres and a strike length of 1 km. The smaller is said to have a geologic setting similar to the Murantau deposit.

Meanwhile Minerals is looking for a partner to help it advance the HSG project. Thus far, the company has outlined 1.3 million tonnes of vein mineralization grading 3 grams gold, 42 grams silver and 1% copper.