Junior Marshall Minerals (MMC-T) will earn a majority interest in the Qian Dong Shan lead-zinc mine in the northern Chinese province of Shanxi.
The company has signed a letter-of-intent with Xian Corp., the company responsible for nonferrous mining in the province, to earn a 45% equity and a 60% voting interest in a yet-to-be-formed company that will own and operate the mine. Xian would retain a 40% equity and voting interest, with an undisclosed banking firm maintaining the remaining equity interest.
To earn its interest, Marshall will invest US$36 million in the construction of a smelter capable of producing 40,000 tonnes of electrolyzed zinc per year.
The mine processes 850 tonnes of ore per day, which Marshall hopes to increase to between 2,500 and 3,000 tonnes.
In anticipation of a definitive deal, Marshall is in discussions with independent consulting firms to begin reviewing and confirming the Chinese feasibility study. According to that study, the mine’s total production costs, with a smelter, would be US22 cents per lb. zinc.
Priority will also be given to confirming the mine’s resource of 25 million tonnes grading 7.5-8% zinc, 1.6-2% lead and 45 grams silver per tonne.
Seventy per cent of the resource was drilled on 50-metre centres, whereas the remainder was defined on drill spacings of 200 metres.
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