Minco Silver plans scoping study for Fuwan project

As the first step toward an ambitious goal to become “China’s leading silver producer,” Minco Silver (MSV-T, MISVF-O) intends to carry out a scoping study to determine the viability of its Fuwan silver project situated about 45 km southwest of Guangzhou City, the capital of China’s Guangdong province.

In the meantime, the company is carrying out a drilling program with five rigs at its wholly owned property. More than 31 holes totalling about 7,500 metres have been completed to date in this phase of the drill program, which includes infill holes in the sparsely drilled southwest portion of the known mineralized areas.

Highlights from recent drilling include the following:

* 6 metres grading 575.2 grams silver and 0.41 gram gold per tonne, 0.57% lead and 2.36% zinc;

* 3.3 metres of 251.9 grams silver, 0.14 gram gold, 0.17% lead, and 0.4% zinc;

* 9.3 metres of 270.6 grams silver, 0.1 gram gold, 0.37% lead and 3.36% zinc;

* and 8.1 metres of 152.6 grams silver, 0.24 gram gold, 0.16% lead and 0.16% zinc.

Once this round of drilling is completed, Minco Silver will commission a preliminary economic analysis of the project to determine its viability, and also identify the initial mining area. This will be followed by a 5,000-metre infill drilling program, geotechnical and hydrological studies, metallurgical testing and environmental assessment.

Based on a previously released National Instrument 43-101 technical report, Fuwan hosts an inferred resource of 20.37 million tonnes grading 181 grams silver, 0.33 gram gold, 0.21% lead and 0.67% zinc, or an estimated 118.4 million contained ounces silver, based on a cutoff grade of 75 grams silver per tonne.

The adjacent Dadinggang area — covering the northeast extension of the Fuwan silver deposit — hosts an additional inferred resource estimated at 2.04 million tonnes grading 171 grams silver, 0.59 gram gold, 0.32% lead and 0.65% zinc, or an estimated 11.25 million contained ounces.

The Fuwan silver deposit lies within a silver belt where mineralization has been traced for more than 10 km. Exploration efforts to date have focused on less than one-quarter of the belt, which is considered prospective for additional discoveries.

Minco Silver’s holdings include the Fuwan property and additional exploration permits covering about 205 sq. km. The Fuwan project is easily accessible by a 4-lane highway, and a high-voltage power line crosses the property. The adjacent Xijiang River also provides easy access to the South China Sea.

Once the results of the scoping study are in hand, Minco Silver plans to begin a prefeasibility study in the first half of 2007, and apply for a mining licence in the second half of the year in hopes of bringing the project into production as early as possible.

Minco’s exploration and development efforts in China are supported by its two largest shareholders, Minco Mining & Metals (MMM-T, MMK-X) and Silver Standard Resources (SSO-T, SSRI-Q). Minco Mining holds roughly 55% of Minco Silver, while Silver Standard holds about 20% and can increase this to 30% by participating in future financings.

Minco Mining had proposed to distribute up to 6.5 million Minco Silver shares earlier this year, but these plans were cancelled after a review revealed that it would be a complex and costly process with potential adverse tax and regulatory implications.

Minco Mining has a sizable portfolio of mineral properties in China, and is focused on the search for “Carlin-type” gold deposits in several prospective Chinese provinces. The company is also exploring the Changkeng project adjacent to Minco Silver’s Fuwan project. Changkeng hosts an inferred resource of 3.5 million tonnes grading 154 grams silver, 0.5 gram gold, 0.22% lead and 0.77% zinc.