EXPLORATION 1999 – Minco drills beneath Chinese producer — Junior hopes for rapid development at low capital costs

Partners Minco Mining & Metals (MMM-T) and Teck (TEK-T) are encouraged by results from four diamond drill holes on the White Silver Mountain polymetallic project in Gansu, a province in north-central China.

The holes were put down in an attempt to define a new zone of mineralization directly below the Xiaotieshan base metal mine, currently being operated by Baiyin Nonferrous Metals, a large Chinese producer. Xiaotieshan has a proven reserve of 10.7 million tonnes grading 1.1% copper, 3.3% lead, 5.1% zinc, 2.1 grams gold and 100 grams silver per tonne, and is producing at the rate of 750 tonnes per day.

Minco is earning an 80% interest in the non-producing areas of the 110-sq.-km White Silver Mountain project, and is acting as operator. Baiyin holds the balance. To vest its interest, Minco is required to spend US$4.8 million on exploration over six years.

Teck, in turn, can earn 70% of Minco’s interest in the project and become operator by assuming all costs of subsequent work after the first phase of drilling, leaving Minco with a 24% carried interest to production.

To date, about 2,800 metres of the 3,600-metre, first-phase program of underground drilling have been completed. Results include the following:

• hole XT6-1 intersected 1.35 metres averaging 2.02% copper, 15.93% lead and 29.78% zinc, as well as 6 grams gold and 390.94 grams silver per tonne;
• hole XT6-2 cut 2.15 metres of 0.54% copper, 4.63% lead, 6.53% zinc, 1.63 grams gold and 141.42 grams silver;
• hole XT6-3 cut 10.1 metres of 1.53% copper, 9.32% lead, 16.34% zinc, 3.3 grams gold and 222.6 grams silver; and
• hole 14-B1 intersected 4.36 metres of 0.78% copper, 2.52% lead, 4.74% zinc, 2.35 grams gold and 71.2 grams silver. This was followed by a 9.49-metre intercept that assayed 1.68% copper, 9.8% lead, 13.74% zinc, 4.17 grams gold and 148.88 grams silver per tonne. Another 1.5-metre interval intersected 1.14% copper, 8.47% lead, 10.99% zinc, 1.2 grams gold and 220.11 grams silver.

Hole XT6-3 intersected the Main zone, which represents the upward extension of the massive sulphide lens that was intersected in 13-B2 (17.7 metres averaging 2.1% copper, 5.4% lead, 9.7% zinc, 4.8 grams gold and 120 grams silver) and 14-B1 (9.5 metres grading 1.7% copper, 9.8% lead, 13.7% zinc, 4.2 grams gold and 148.9 grams silver).

Holes XT6-1 and -2 intersected the downdip extension, or footwall zone, of the massive sulphide lens being mined on the sixth level. Severe flattening caused these holes to intersect the mineralized horizon above their planned target elevations. Minco states that the footwall zone represents an additional ore horizon. However, the Main zone is still regarded as the primary target.

Drilling of XT6-4 has been halted short of its target because of mechanical problems. The hole will be completed once additional equipment is brought to China from Canada. Hole XT6-5 has been completed and assays are pending.

Minco plans to drill roughly 8,000 metres in a second-phase program to test the continuity of the deposit along strike, to the east and west.

Since the newly discovered zone is directly under current mining operations, rapid development and production can be achieved at low capital costs, Minco says.

The company’s short-term goals at White Silver Mountain are to define at least 10 million tonnes of additional base and precious metals reserves below the Xiaotieshan mine and to find new VMS targets on the property.

Minco hopes to generate early cash flow by placing reserves into production as quickly as possible, and to build a large reserve base from other prospective zones within the 100-sq.-km licence.

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, and Cominco would be required to pay its pro rata share of feasibility and development costs.