Asia Minerals, Royal Oak take on Chinese venture

A gold project in northeastern China is providing a new focus for Asia Minerals (ASE), a junior which has evaluated several projects in that country.

The latest is a joint venture that allows the company to acquire a half interest in the Yingezhuang mine in Shandong province by making staged investments. The company’s partner, Zhaoyuan City Gold, is the largest gold producer in China.

Also involved is Royal Oak Mines (TSE), which owns a 36% interest in Asia Minerals. The two companies formed an alliance to evaluate projects in China and recently completed a prefeasibility study of Yingezhuang. The mine, which started up in 1992, has a current capacity of 400 tonnes per day. Three production levels have been developed from a 225-metre shaft. In 1993, the mine turned out 12,000 oz. gold from 140,000 tonnes of ore, at a cost of US$173 per oz.

Gold mineralization occurs in a shear zone within an altered granite and has been traced over a strike length of 3 km and a dip extent of 600 metres. The mineralogy is described as “simple,” and recovery from flotation and cyanide leaching was 91% last year. Recently, metallurgical test work was carried out at Royal Oak’s Pamour gold mine in Ontario.

The prefeasibility evaluated a proposal to expand daily capacity to 2,000 tonnes and outlined a geological resource of 19.4 million tonnes grading 2.82 grams gold per tonne in two semi-continuous bodies. This estimate is based on a 2-gram cutoff.

Based on drilling and underground development, a central core to the deposit has been outlined, consisting of 6.2 million tonnes grading 3.17 grams. The deposit is still open at depth, and more work is required to evaluate its economic potential and define mining reserves.

To begin earning an interest, Asia Minerals must finance a US$3.5-million feasibility study, which will include underground drilling, as well as engineering and design work.

To earn a full 50% interest, Asia Minerals and Royal Oak must invest a total of US$30 million. The agreement, once it is completed, will be submitted for approval to Chinese regulators.