VVC options Chinese gold mine (October 08, 2004)

VVC Exploration (VVC-V), through its subsidiary Orient Will Investments, has signed a preliminary option agreement to acquire a half interest in the small Chen Er gold mine in China.

To acquire the interest and become co-operator, Orient Will must spend US$4 million on exploration within 4 years.

Situated in the Kunlun-Xinling mountains of gold-rich Shaanxi province, Chen Er is an underground gold mine now operating at a rate of about 500 tonnes per day.

Chen Er was put in production in 1986, and has cranked out an average of 30,000 oz. gold per year since 1991. Last year, it produced 32,000 oz. at an average grade of 5 grams gold per tonne, 20 grams silver, 8% lead and 1% copper — figures typical for the surrounding gold camp.

VVC describes the mine as being serviced by a mill complex that includes multi-line production, tank leaching, with a combination of a 500- and 200-tonne-per-day ball mill. The 200-tonne-per-day circuit has been rented to an arm’s length company until July 2006.

VVC says it believes the mining operation is “profitable and performing with a satisfactory recovery rate,” though some upgrading may be warranted.

Furthermore, the company notes that, in spite of many years of production, “exploration is almost non- existent,” and no drilling has ever been carried out on the property. Today, the property does not host a documented resource.

Subject to VVC’s due diligence and regulatory approval of the option agreement, Orient Will is proposing to carry out US$2-million worth of exploration over the next two years, including underground diamond drilling and drifting on mineralized veins from a newly completed 500-metre vertical shaft.

The aim is to test and define known zones and extensions of zones currently being mined, with an eye towards developing a significant resource.

VVC is already actively refurbishing and exploring the dormant Beaver Brook antimony mine in Newfoundland (T.N.M., April 23-29/04), and is carrying out grassroots gold exploration in Newfoundland’s Botwood basin amd China’s Yunnan province.