Jinshan Gold boosts China resource

With China toppling South Africa as the world’s largest gold producer last year, foreign companies churning out the yellow metal there could be forgiven for patting themselves on the back well, just a little.

Since Jinshan Gold Mines (JIN-T, JINFF-O) started commercial production at its Chang Shan Hao 217 mine last July, it has churned out 26,945 oz. gold.

At an average unhedged price of US$762 per oz., gold sales between July 31 2007 and Jan. 31 2008 reached US$16.7 million.

Now a new National Instrument 43-101 resource estimate has found that the CSH 217 mine has more resources than originally thought.

The resource estimate indicates a measured and indicated resource, at a 0.35 gram gold per tonne cut-off grade, of 171.3 million tonnes at 0.71 gram gold per tonne, for 3.92 million oz. of contained gold.

Inferred resources are estimated at 1.33 million oz. gold contained within 64.2 million tonnes, grading 0.65 gram gold per tonne at a 0.35 gram per tonne cut-off grade.

Currently the mine is operating at 50% of its design capacity because leaching was slowed during startup and through the first winter of operation, the company said in a press release.

But that should improve as the solution temperature, volume and preg grade should be easier to maintain in future years, it said.

Jinshan is mining 20,000 tonnes of ore each day from the pit’s northeastern zone. But an expansion study is underway that will determine whether the rate can be increased to 30,000 tonnes per day.

The study will also update the proven and probable reserves to include the southwestern zone and the expanded resource at the northeastern zone.

CSH 217, 126 km northwest of Baotou in Inner Mongolia and 650 km northwest of Beijing, is situated in China’s Tianshan gold belt, which extends along the northern margin of the North China craton.

Jinshan plans to continue exploration and drilling this year. Its first priority is to convert inferred resources to the measured and indicated category with additional infill drilling in the northeastern and southwestern zones.

The second priority is to drill several gold anomalies and carry out trenching along the 9 km-surface strike extension of prospective stratigraphy that Jinshan defined by grid rock sampling last year.

The new resource estimate was prepared by Mario Rossi of Geosystems International and was based on all previous data and 11,432 metres of drilling completed last year.

In Toronto at mid-day, shares of Jinshan were trading up 5 to $2.85, with 75,450 shares changing hands.

Jinshan’s shares have a 52-week trading range of $1.45 and $3.22.