Minco Mining & Minerals (MMM-V) will earn an undisclosed interest in the Gala gold mine in central China.
The mine, which has been in production since 1993, is about 15 km from the city of Ganzi in Sichuan province.
Reserves in the probable and possible categories are estimated at 4.5 million tonnes grading 4.46 grams gold per tonne. The calculation is based on 16 diamond drill holes and 2,000 metres of underground exploration to a depth of 100 metres.
The ore zone has an average width of 7.5 metres and has been tested along a strike length of 1,340 metres. It is open both along strike and downdip.
The heap-leachable oxide ore extends beyond the 100-metre depth, and Minco intends to drill-test the strike and dip extensions of the zone.
The company says the 500-sq.-km property has potential to contain significantly greater reserves than currently estimated.
Minco holds rights of first refusal on all projects owned or generated by the Sichuan provincial government. It also has an exclusive option to enter into a co-operative agreement with the government regarding the acquisition of a majority interest in the mine.
That option is subject to Minco’s completion of due diligence, now under way.
So far, the company has accumulated 11 gold and two base metals projects in China and has entered into “strategic alliances” with Teck (TEK-T) and Cominco (CLT-T), both of which are large shareholders in Minco.
More than $2.5 million has been allocated by the company for exploration and development in 1997.
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