Changkeng Reaches 1M Oz. Gold For Minco

VANCOUVER — With 59 freshly drilled holes in 2008, one of Minco Gold’s (MMM-T, MGH. A-X) key assets, the Changkeng gold project in southeastern China, has gotten a major resource boost.

In all, 127 holes formed the basis of an updated resource estimate that sees contained gold in the indicated category grow by 65% to 623,000 oz. Contained gold in the inferred category rose by 16% to 386,000 oz.

But the updated resource estimate came with a small dip in gold grade. A year-old resource estimate pegged the indicated resource at 2.1 million tonnes grading 5.61 grams gold per tonne and 10.7 grams silver per tonne. The latest estimate puts indicated resources at 4 million tonnes grading 4.89 grams gold and 11.2 grams silver.

The 2008 inferred resource estimate weighed in at 2.2 million tonnes grading 4.82 grams gold and 9.3 grams silver while the 2009 update puts it at 4 million tonnes grading 3.01 grams gold and 9.5 grams silver.

Gold mineralization occurs as lenses of brecciated and silicified Triassic clastic rock in three outcropping zones — CK1, CK2 and CK3 — that extend to a depth of about 250 metres.

A near-surface oxide zone has mostly been removed by artisanal miners following discovery of the mineralization in the early 1990s by government surveyors.

In terms of width, CK1 ranges between 1.9 and 39 metres and averages 11.7 metres; CK2 ranges between 1.6 metres and 38 metres and averages 8.5 metres; and CK3 ranges between 1.9 and 17.3 metres and averages 8.2 metres.

Minco says the deposit, although open downdip in some areas and along strike to the southwest, has essentially been outlined within permitted boundaries.

The next step, the company says, is to advance either a scoping study or a prefeasibility study, a decision that will be made soon.

With about $6.4 million in cash and equivalents as of Sept. 30, 2008, Minco says it is well financed through 2009.

The Changkeng property, 45 km southwest of Guandzhou, is next door to the sizable Fuwan silver project owned by Minco Silver (MSV-T). Minco Gold owns about 40% of that company’s outstanding shares.

Ken Cai, president and CEO of Minco Gold, is also chairman and CEO of Minco Silver.

Minco Silver is advancing the Fuwan silver project to the feasibility stage and has so far outlined plans for a 2,500-tonne-per-day operation in a completed scoping study.

The scoping study pegged Fuwan’s resource at 16 million indicated tonnes grading 182 grams silver and 11.3 million inferred tonnes for a total of 157 million contained oz. silver.

It forecasted a 12-year mine life, capital costs of US$57 million, an internal rate of return of 38% and a payback period of 1.7 years.

The company used a silver price of US$12.11 per oz. in its forecast.

Minco Silver owns 100% of the project, which is subject to a 10% profit sharing agreement.

As for ownership of Changkeng, Minco Gold has earned a 51% interest in the project for US$7.1 million. A state corporation owns the rest.

On news of the updated resource estimate, Minco Gold’s share price had gained 3¢ and was trading at 60¢ at presstime. The company has 43 million shares outstanding.