ASIA — Minco, Teck form JV for White Silver Mountain project

Teck (TEK-T) has agreed to option Minco Mining and Metals’ (MMM-V) 80%-owned polymetallic White Silver Mountain property in China’s Gansu province.

In order to earn 70% of Minco’s interest, Teck is required to make a private placement of 975,000 shares at $2 each. Teck is also obliged to exercise 125,000 warrants at $3 each within one year and finance all of Minco’s obligations on the property to production.

The private placement includes an additional 125,000 share-purchase warrants at $2 for one year and a further 125,000 share-purchase warrants at $3.45 for two years.

The proceeds from the initial placement, $750,000, are earmarked for the White Silver Mountain project, in which Minco holds an 80% interest and serves as operator. Baiyin Nonferrous Metals, a large Chinese base-metal producer, holds the balance.

The first phase of exploration, which is scheduled to commence this summer, will include a 3,600-metre underground drilling program and a surface exploration program.

Drilling will follow completion of a 200-metre hangingwall crosscut. Surface exploration will consist of geological mapping and structural interpretation. A program of data compilation and re-interpretation will also be performed. If warranted, Minco may perform some ground geophysical work over prospective areas.

“Most of the deposits that have been found were discovered by drilling gossanous zones,” says Colin McAleenan, vice-president of exploration for Minco Mining. “So there was never any attempt, in recent times, to put together the whole picture using a modern [volcanogenic massive sulphide] model.”

In the event of a successful first-phase exploration program, Teck will become the operator and finance all of Minco’s required expenditures on the property thereafter. This scenario would see Teck wind up with a 56% interest, leaving Minco with a 24% carried interest.

Cominco (CLT-T) can exercise a back-in right at any time prior to the prefeasibility stage by paying Teck and Minco one-and-a-half times the total project costs up to the date of the back-in. If that occurs, ownership will be 20% Cominco, 19% Minco, 41% Teck and 20% Baiyin. Cominco would be required to pay its pro-rata share of feasibility and development costs under this scenario.

Last year, one Baiyin drillhole at White Silver Mountain intersected 43.5 metres of volcanogenic massive sulphide mineralization, including a 17.7- metre interval of 2.1% copper, 5.4% lead, 9.7% zinc, 4.8 grams gold and 120 grams silver per tonne. This interval was hit 375 metres below the active workings of the 750 tonne-per-day Xiaotieshan mine.

The drilling program planned for the summer will further delineate this newfound mineralized zone.

Baiyin also operates the 3,500-tonne-per-day Heyoushan copper mine, as well as lead, zinc and copper smelters.