51% increase in gold reserves!!Jinshan Gold boosts CSH 217 reserves to 3.43 Moz Au P+P
2010-03-04 10:38 ET - News Release
Mr. Frank Lagiglia reports
JINSHAN ANNOUNCES RESERVES INCREASED BY 51% AND MEASURED AND INDICATED RESOURCES INCREASED TO 4.99 MILLION OUNCES AT ITS CSH 217 GOLD MINE, CHINA
Jinshan Gold Mines Inc. has released the results of a new National Instrument 43-101-compliant reserve and resource estimate at its CSH 217 gold mine in Inner Mongolia, China. Compared with the reserves reported in March, 2008, the total proven and probable minable gold reserves at the CSH 217 mine as of the end of December, 2009, have increased to 3.43 million ounces (including 433,000 mined-out ounces) from 2.26 million ounces in the March, 2008, ITR. This represents a 51-per-cent increase over the previous March, 2008, ITR. In addition, the project's pretax net present value (NPV) increased from $87-million (U.S.) in the March, 2008, ITR to $517-million (U.S.).
"The 2008 drilling campaign that we enacted after the March, 2008, ITR and the 2009 on-site column leach test program has greatly increased our confidence in the CSH 217 project. The total reserves increased over 51 per cent compared with the March, 2008, ITR," said Xin Song, Jinshan's new chief executive officer. "The growth of the number of ounces of gold controlled by the company at CSH will allow the company to grow organically. With the strong support from our major shareholder, China National Gold Group, the company is well positioned to expand on a healthy growth profile."
Mineral reserves
An updated mine plan for the CSH gold project has been developed by Nilsson Mine Services (NMS) of Vancouver, B.C., Canada. This plan has been prepared for heap leaching with a crushing-plant throughput rate of 30,000 tonnes per day, with full capacity expected by the end of the first quarter of 2010.
Mineral reserves have been reported for the final pit designs at a positive net value cut-off that corresponds to a gold grade cut-off of approximately 0.3 gram per tonne (g/t) gold as scheduled in the mine plan. The proven and probable reserves at CSH mine as of Dec. 31, 2009, stand at approximately 138 million tonnes of ore with an average grade of 0.67 g/t gold, representing approximately 3.0 million ounces of contained gold. In the previous March, 2008, ITR, the company reported 99 million tonnes of reserves at an average grade of 0.71 g/t gold, consisting of 35 million tonnes of proven reserves averaging 0.74 g/t gold and 64 million tonnes of probable reserves averaging 0.69 g/t gold at a cut-off grade of 0.28 g/t gold. The new reserves are summarized in the table entitled, "CSH 217 reserves by category, Northeast and Southwest pits combined, December, 2009."
CSH 217 RESERVES BY CATEGORY, NORTHEAST AND SOUTHWEST PITS COMBINED, DECEMBER, 2009 Cut-off Grade Contained Contained Au Ore Au Au AuClassification (g/t) (Mt) (g/t) (kOz) (kg) Proven 0.30 83.6 0.70 1,868 58,100Probable 0.30 55.2 0.64 1,133 35,240 ---- ----- ---- ----- ------Total 0.30 138.8 0.67 3,001 93,340
Resource estimate
The new CSH 217 resource estimate was prepared by Mario Rossi, MSc, MinEng, of Geosystems International Inc. The 2008 drilling campaign added significant tonnages above cut-off and also improved the grade, partly due to the confirmation of grades and upgrade in resource classification, down dip and laterally. The CSH deposit in the Southwest (SW) area is now well delineated, and still significant potential exists for down-dip extensions to the mineralization. Mineralization at depth in the Northeast (NE) zone has been confirmed, with increases in both tonnages and confidence.
At the end of December, 2009, the project's measured and indicated gold resources, using cut-off grade of 0.3 g/t gold, stood at 243 million tonnes averaging 0.64 g/t gold. This translates into 4.99 million ounces of gold (inclusive of reserves) in the deposit after 2.5 years of mining. In the previous March, 2008, ITR, 183 million tonnes of measured and indicated resources averaging 0.69 g/t gold were reported with the same cut-off grade of 0.30 g/t gold. Details of the new resources are summarized in the table entitled, "CSH 217 resources by category, Northeast and Southwest zones, inclusive of reserves."
CSH 217 RESOURCES BY CATEGORY, NORTHEAST AND SOUTHWEST ZONES, INCLUSIVE OF RESERVES (below pit surface to Dec. 31, 2009) Measured Indicated M+I Inferred Cut-off Au Au Au Au Au Au(g/t) Mt (g/t) Mt (g/t) Mt (g/t) (Moz) Mt (g/t) (Moz)0.3 105.8 0.68 137.6 0.61 243.4 0.64 4.993 0.53 0.43 0.0070.35 96.1 0.71 120.8 0.65 216.9 0.68 4.716 0.35 0.49 0.0050.4 86.5 0.75 104.1 0.69 190.6 0.72 4.400 0.24 0.54 0.0040.45 77.2 0.79 89.1 0.74 166.3 0.76 4.068 0.18 0.57 0.0030.5 68.0 0.83 76.2 0.78 144.2 0.80 3.732 0.12 0.62 0.0020.55 59.6 0.88 64.9 0.83 124.4 0.85 3.399 0.08 0.68 0.0020.6 51.9 0.92 54.9 0.87 106.8 0.90 3.073 0.05 0.73 0.0010.65 44.6 0.97 46.6 0.92 91.2 0.94 2.760 0.03 0.83 0.0010.7 38.1 1.02 39.6 0.96 77.7 0.99 2.467 0.02 0.88 0.0010.75 32.3 1.07 33.4 1.00 65.7 1.04 2.188 0.02 0.93 0.000
Notes:
- The contained gold represents estimated contained metal in the ground. It has not been adjusted for mining or metallurgical recoveries.
- Resource classifications conform to CIM standards on mineral resources and reserves referred to in National Instrument 43-101. Mineral resources that are not reserves do not have demonstrated economic viability. Measured and indicated resources are that part of a mineral resource for which quantity and grade can be estimated with a level of confidence sufficient to allow the application of technical and economic parameters to support mine planning and evaluation of the economic viability of the project. An inferred resource is that part of a mineral resource for which quantity and grade can be estimated on the basis of geological evidence and limited sampling as well as reasonably assumed, but not verified, geological and grade continuity.
Production update
Gold production at the CSH 217 mine has totalled 161,625 gold ounces from start-up on July 31, 2007, to the end of December, 2009. The 30,000-tonne-per-day crushing facility at the mine, which commenced start-up operations in August, 2009, is currently performing at about 80 per cent of its design capacity. It is expected to reach full 30,000-tonne-per-day capacity by the end of the first quarter of 2010.
Project economics
The new mine plan extends the CSH 217 mine life from 2018 to 2023, with four more years of leaching afterward. Prior to installation of the crushing facility, the CSH mine experienced low and slow gold recoveries for various reasons, among which, the ore in the lower portions of the categorized weathered zones was actually mixed oxide and sulphide ore with low leaching recovery when not crushed. In addition, run-of-mine (ROM) ore size has been difficult to control. By the end of 2009, the company put approximately 20 million tonnes of ROM ore under leach. The observed recovery from this uncrushed ROM material based on gold poured has been 37.3 per cent. It is estimated that the ultimate recovery rate for the uncrushed ROM ore already on pad will be over 53 per cent. With the new crushers currently ramping up to the design capacity of 30,000 tonnes per day, it is expected that the gold recovery will be greatly improved. According to the column test done by Metcon Research in 2009, the recovery rate for the crushed ore is a function of the ore grade. The higher the ore grade, the higher the recovery rate, which ranges from a low of 62.1 per cent in the SW pit to a high of 80.9 per cent in the NE pit. According to the new mine production plan, approximately 2.35 million ounces of gold will be produced in the next 15 years, starting with annual production of approximately 132,000 ounces in 2010. This will gradually increase to over 150,000 ounces in 2014, then to over 200,000 ounces in 2021.
In the previous technical report released in March, 2008, a gold price of $600 (U.S.) was used to estimate the project economics and the pretax NPV was only $87-million (U.S.) at a 10-per-cent discount. In the estimate, the base gold prices for the next five years used include $1,032 per ounce, $1,033 per ounce, $955 per ounce, $970 per ounce and $849 per ounce corresponding to the years of 2010, 2011, 2012, 2013 and 2014, respectively. A price of $849 is used as the long-term gold price estimate after 2014. Using the new gold prices, the project's pretax NPV as of the end of December, 2009, at a 9-per-cent discount rate, stands at $517-million (U.S.) at the exchange rate of $1 (U.S.) to 6.83 renminbi. Gold prices and recovery rate are still the two most sensitive factors for the project economics.
Exploration
Exploration and drilling will continue at the CSH 217 gold mine during the 2010 field season within the company's 25-square-kilometre licensed area immediately adjoining the mining permit. The first priority for exploration will be to drill several gold anomalies and carry out trenching along the surface strike extension of prospective stratigraphy that was defined by grid rock sampling during the previous field seasons. Deeper drill holes are also planned for the CSH property to explore for higher grades down dip.
Throughput expansion update internal technical report and independent technical report
The updated mine plan, resource and reserve estimate on the CSH 217 project are based on a report compiled by KD Engineering. Behre Dolbear Asia Inc. (BDASIA) has been conducting an independent technical review of the CSH 217 project, including the recent resource/reserve estimates and metallurgical testing, and a technical report titled, "Independent Technical Report on the Chang Shan Hao Gold Mine in Inner Mongolia Autonomous Region, the People's Republic of China," will be filed within 45 days of this release.
We seek Safe Harbor.