VVC raises funds, buys Chinese gold mine (December 29, 2004)

Junior VVC Exploration (VVC-V) has completed a half-million-dollar financing and bought half of a small underground gold mine in China’s Shaanxi province.

The non-brokered private placement comprised 632,000 units priced at 85 apiece, for $537,200 in total, with each unit made up of a share and warrant exercisable at $1.11 within a year.

This boosts the number of outstanding VVC shares to 25,887,685.

The closing comes two days after the company signed a deal to buy a 50% interest in the Chen Er gold mine, situated in the Kunlun-Xinling mountains of southern Shaanxi’s Luonan Cty. The site is accessible by paved and asphalt roads from the capital Xi’an.

To acquire its half stake in a new joint-venture with its Chinese partners, VVC must spend US$6.25 million over 3 years, either in cash or in the transfer of technology and equipment.

VVC will manage the JV committee and appoint the JV’s chairman and general manager.

Put into produciton in 1986, the Chen Er underground gold mine is now operating at a rate of about 500 tonnes per day.

In 2003, VVC says it produced 32,000 oz. gold from ore grading an average 5 grams gold per tonne, 20 grams silver, 8% lead and 1% copper.

VVC describes the mine as being serviced by a mill complex that includes multi-line production, tank leaching, with a combination of two 500- and 200- tonne-per-day ball mills.

The 200-tonne-per-day circuit has been rented to an arm’s length company until July 2006.

VVC says the mining operation is “profitable and performing with a satisfactory recovery rate,” though it will likely upgrade the grinding and recovery circuits.

Also, the company is eyeing the region around the mine, where workings are shallow and scant attention has been directed towards exploration.

At present, the mine has no documented resource, and no drilling has ever been carried out at the property.

In the years ahead, VVC plans to drift on mineralized veins from a newly completed 500-metre, vertical shaft to test and develop known zones and extensions.

The company notes that it is reviewing more joint ventures in China, details of which will follow.

In Canada, VVC has been trying to revive the Beaver Brook antimony mine in Newfoundland’s Botwood basin (T.N.M., April 23-29/04).