Global Pacific pursues Chinese copper connection

A joint venture with a Chinese mining company provides Global Pacific Minerals (VSE) with a 51% interest in an advanced-staged copper-gold-silver project in Anhui province.

Global is among the first foreign firms to receive a metal mining licence in China, and President Rui Feng reports that all regulatory and government approvals are in place to put the Huichen project into production.

The agreement calls for Global to fund construction of a 400-ton-per-day flotation mill, the capital cost of which is estimated at US$1.3 million. (Chinese equipment will be employed.)

The skarn deposit hosts proven and probable reserves of 2.2 million tons grading 1.37% copper, 0.03 oz. gold and 1 oz. silver per ton. Half the reserve is categorized as proven on five levels, to a depth of about 525 ft.; probable reserves extend to a depth of about 1,000 ft., and the steeply plunging deposit remains open to depth.

Current underground development includes two shafts and almost 5,000 ft. of drifting.

The deposit is 5 miles from Tongling, the second-largest copper-producing city in China, and 7.5 miles from the nearest copper smelter. Construction of the mill will begin by early July, and the mine should be up and running by April, 1996.

A large pool of inexpensive labor is expected to keep mining and milling costs down to about US$20 per ton of ore.

Pretax operating profits are estimated at more than US$1 million per year in the first five years. The figure is based on a copper grade of 2% in the first year (dropping to 1.65% in years two through five), a copper price of US$1.55 per lb. and a copper recovery of 90%.

China offers a tax holiday in the first two years of mining, followed by a 16.5% tax in the three subsequent years, and rising to a standard 33% thereafter.

The US$1.55-per-lb. copper price is based on current quoted levels on the various metal exchanges in China.

Global has $1.4 million in working capital and 13.2 million shares outstanding. The exercise of warrants and options would raise a further $2.8 million and increase the number of issued shares to 19.2 million.