Preliminary Results
17 Décembre 2008 - 8:00AM
UK Regulatory
RNS Number : 2653K
China Goldmines PLC
17 December 2008
CHINA GOLDMINES PLC
PRELIMINARY RESULTS FOR THE YEAR TO 30 JUNE 2008
China Goldmines plc (AIM : CGM) which recently transitioned from explorer to gold producer announces the following preliminary results
for the financial year ended 30 June 2008.
Highlights
Financial
* In October 2007, the Company acquired all eight producing gold mines in the Shen Jia Ya prospect. All eight gold mines were
successfully transferred into the Company's possession and control.
* Net assets as at 30 June 2008 of US$59m, which includes US$32m invested in wholly owned mining properties, with no long term debts or
borrowings.
* Loss for the 2008 year amounted to US$4.2m being US 9.37 cents per share.
* Cash position as at 30 June 2008: US$25m. (Unaudited cash position as at 30 November 2008 US$13.5m (excluding gold inventory)).
Operational
* China Goldmines has three processing plants in operation. They have a total capacity of 350 tonnes per day.
* During 2008 underground mining was active on nine mine faces, with 1.6 million tonnes immediately available for mining that will be
high-graded to achieve budget grades in excess of 6 grams per tonne.
* In June 2008 the Land and Resources Department of the Hunan Province approved the consolidation of eight mining licences into one
mining licence, which was subsequently issued in August 2008 to our Chinese JV Company, Hunan Westralian Mining Co. Ltd.
* We have constructed an internationally accredited laboratory that will process an average of 120 samples per day.
* The Company has made a milestone transition from gold explorer to gold producer. CGM sold 17 kg of gold from treatment of stock piles
(taken on as part of the acquisition of the eight gold mines) during the 2008 financial year. We commenced production in the June quarter,
producing 110 tonnes of concentrate with a gold content of 100 g/t and 2216 grams from gravity recovery.
* The Company will shortly commence the sale of gold amalgam and concentrate.
* Based on production results to date, CGM anticipates production of 5,000 to 6,000 oz's of gold for the calendar year ending December
2008.
* Once the first stage of refurbishment is completed and the plants have been upgraded to a total producing capacity of 570 tpd (with
higher grades indicated in deeper zones of mines), we confidently expect to achieve output of 20,000 to 25,000 oz's in the calendar year
ending December 2009.
* High grades were verified in drilling and underground sampling, with results of up to 103 grams per tonne. Exploratory drilling will
be finalised by December 2008, achieving 20,000 metres.
* The Company expects to provide a Q2 operational update in January 2009.
Frank Vanspeybroeck, CEO of China Goldmines said:
"Under adverse and challenging external conditions, the Company has made solid progress during 2008 which will now lay the foundation as
a gold producer for the coming years."
The Chairman's Statement and financials follow.
-ENDS-
China Goldmines plc
Frank Vanspeybroeck (CEO) +86 731 518 8200
Alex Worrall (Director/Company Secretary) +44 207 788 7621
Marinko Vidovich (CFO) +61 8 6216 5200
Guanzhuang Site Office +86 745 463 9900
Brewin Dolphin Ltd (Nomad)
Alex Dewar +44 131 529 0276
(Nominated Adviser)
Notes to Editors
China Goldmines plc is a UK mining company listed on AIM on 7 February 2006 as a gold resources company focussed on the discovery and
development of gold projects in Hunan Province, China.
CGM's Gold Project is known as the Guanzhuang Gold Project. Based on an Independent Geological Report, the project has an estimated
inferred resource of 1.8m ounces within the top 325m from the surface and over a strike distance of 1.5km. The resources have been
identified from CGM's 100% owned/controlled Shen Jia Ya Prospect, which is within the Guanzhuang Gold Project.
The Shen Jia Ya Prospect consists of eight gold mines that have now been converted into a single mining licence. The Company plans to
consolidate all eight individual mines. That consolidation will result in a mining operation with a long life producing 150,000 oz Au/pa, in
the longer term. At the same time as mining the existing eight mines, China Goldmines will continue to investigate the potential of the
project area that remains under-explored.
The information in this report was derived from data compiled by Hunan Westralian Mining Co. Ltd, China and reported by John Warner B.
App. Sc. (App. Geol), MAIG, MGAA. John Warner is the Group Geology Manager to the Company. He has the required experience of the style of
mineralisation and types of deposit under consideration and of the activity he is undertaking so that he is qualified as a Competent Person
as defined by the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.' John
Warner consents to the inclusion in the report of matters based on his information in the form and context in which it appears and has
reviewed the contents of this announcement.
Chairman's Statement
In this, my first annual statement as Chairman, I am pleased to report that China Goldmines plc (CGM) has made substantial progress
during the year with the exploration, evaluation and purchase of eight gold mines using funds from the successful capital raising in October
2007. This has enabled us to reach the key milestone with CGM moving from exploration to become a gold producer in China, now the largest
gold producing nation in the world
In June 2008, we poured our first gold and we anticipate production of 5,000 to 6,000 ounces of gold by 31 December 2008.
During the course of this turbulent year in the international markets, the Board has prudently re-focused the company on three priority
areas: safety, production and cash conservation.
Our safety record remains outstanding with no fatalities since start up and a lost time injury rate of just 0.0003%. We remain vigilant
to ensure that all colleagues return home safely to their families every night.
In 2009, when the plants have been upgraded to exceed 500 tpd, output will increase considerably and we plan to exceed 20,000 ounces
during the calendar year.
We are maintaining a tight control on costs and only capital expenditure relating to improved safety and increased production is being
approved. As a result, our cash position remains strong. On 30 June 2008, we had US$25m in the Bank with no bank debt and we continue to
monitor our cash position closely.
Looking forward, in 2009 we will continue work to link the eight mines underground to help accelerate ore production. This will also
provide multiple exploration drilling platforms and facilitate modern load and haulage practices. Most importantly, it will assist us to
increase production towards 150,000 ounces per annum in the longer term. We will continue to focus on safety, with the implementation of a
rigorous training programme to further improve health and safety procedures. We will also conduct vigorous underground exploration to better
understand low-grade surface soil anomalies and higher-grade depth extensions.
Our transformation from gold explorer to gold producer was only achieved by the teamwork, enthusiasm and skills of all staff both above
and below ground. For their dedicated efforts and contributions throughout the year, I would like to thank all colleagues, consultants,
contractors and fellow Board members. In particular, I would like to thank Clive Donner who due to time constraints stepped down as Chairman
in July this year, but has agreed to remain on the Board as a Non-Executive Director. Finally, I would also like to thank Shareholders for
their continued support and confidence.
Lance Browne CBE
Chairman
OPERATIONS OVERVIEW
1. Project Overview
CGM's Gold Project is known as the Guanzhuang Gold Project. Based on an Independent Geological Report, the project has an estimated
inferred resource of 1.8m ounces within the top 325m from the surface and over a strike distance of 1.5km. The resources have been
identified from CGM's 100% owned/controlled Shen Jia Ya Prospect, which is within the Guanzhuang Gold Project.
The Shen Jia Ya Prospect consists of eight gold mines that have now been converted into a single mining licence. The Company plans to
consolidate all eight individual mines. That consolidation will result in a mining operation with a long life. At the same time as mining
the existing eight mines, China Goldmines will continue to investigate the potential of the project area that remains under-explored.
2. Tenure
The Guanzhuang project comprises an exploration licence held by our Joint Venture Partner, Brigade 407, for an area of 20.74 km2.
Final approval from the Land and Resources Department to transfer the exploration licence to CGM was completed and handed over to Hunan
Westralian Mining Co., JV Company ("HWM") in March 2008. The transfer fee of 700,000RMB (approximately $102,000 USD) was calculated by an
independent valuation institute in Beijing and paid by HWM in June 2008.
On 10 June 2008 the Land and Resources Department of the Hunan Province approved the consolidation of the eight mining licences into one
new mining licence at the same time increasing the area under license from 3.66 km2 (being eight individual mines all combined) to 6.24 km2
with a depth of -230 metres (approximately 550 metres vertical depth from surface). What this means is that CGM has an approximate eight
year mine life until it mines to a depth of -230 meters. The mining licence will be renewed next year for three year terms without incurring
further fees until HWM reaches the depth of -230 metres from its underground production.
Any depth extensions beyond the -230 metres will be granted subject to a renewal fee based on the Company's resource report on the
extended area. The company anticipates mining to -2000 metres.
3. Exploration
The Cooperation Area contains two dominant east - west shear veins, continuous for over 9.5km, and a number of smaller sub-parallel
shear veins which are associated with the majority of mineralisation within a structure/shear zone up to 200m wide. A new mineralised
parallel structure some 1,000m to the south of the Gold Mines has been located during recent exploration.
Current mining and production activities at the Shenjiaya Prospect demonstrate the capacity to mine relatively high grades of
mineralisation utilising limited technology at low production rates. Exploration has established that the mineralised structures display
strong continuity over the 9.5km strike length and have also been intersected at depth in several localities. The persistence of the
mineralised structures provides the CGM Group with an opportunity to define a substantial gold resource once the structural controls on the
location of mineralised shoots can be established.
One important aspect of the shear zone that warrants further investigation is the potential for oxide mineralisation potentially
amenable to open pit mining. Two of the Gold Mines had small open pit operations prior to underground development.
An extensive exploration programme to better define low grade surface soil anomalies and higher grade depth extensions by further infill
drilling and exploratory development is being currently implemented.
Continuous mapping and trenching programmes will be supplemented with additional surface sampling to allow for the effective use of
drill programmes along strike and up/down dip mineralisation extensions. Soil sampling in the form of MMI programmes will be trialled to
check its effectiveness before committing to a larger scale programme across the tenements.
A number of drilling programmes are being designed to provide ongoing data for exploration, grade control, geotechnical and structural
investigations.
Current underground drilling will use existing development locations, supplemented with multi-purpose development drives, to focus on
grade control and infill definition.
Surface exploration will focus on resource extensions and testing parallel structures already identified to the south of the main
mineralisation trend.
The surface drilling budget of 15,000 metres for the calendar year 2008 is on target even though the Company experienced delays due to
an uncharacteristically harsh and prolonged winter at the start of the year.
Significant Drill and Underground Sampling Results (over 5 g/t)
Sampling results
Sample_ID Location App. Length (M) True Length (M) Au Grade (g/t) Mine
D001863 2/2/ACC 1 1 8.3 Xiao Chong Zi
D001840 2/2/ACC Stope grab sample 7.9 Xiao Chong Zi
D001853 2/4/ACC Survey point 2044 0.8 7.56 Xiao Chong Zi
D001862 2/2/ACC 1 1 6.28 Xiao Chong Zi
D001857 2/2/ACC 1 1 6.02 Xiao Chong Zi
D001802 4/1/ACC Survey point 1015 1.02 24.09 De Sheng
D003072 4/3/ ACC 0.9 0.9 12.5 De Sheng
D003080 4/3/ ACC 1.1 0.9 12.1 De Sheng
D001803 4/1/ACC 0.8 0.58 9.02 De Sheng
D003082 4/3/ ACC 1 0.85 5.62 De Sheng
D003091 1/1C/ACC 0.5 0.4 103.5 Bao Mu Yuan
D001750 1/1/EXP1 Rock chip SJY left over 24.44 Bao Mu Yuan
D001734 1/2/ACC 1 1 19.02 Bao Mu Yuan
D001736 1/2/ACC 0.7 0.7 18.48 Bao Mu Yuan
D001721 1/1/ACC Stope grab sample 15.59 Bao Mu Yuan
D001395 1/1c/ACC Stope grab sample 12.77 Bao Mu Yuan
D002958 1/2/ expE 1.2 0.9 12.47 Bao Mu Yuan
D001895 1/2/ expE 1.7 1.3 11.51 Bao Mu Yuan
D003116 1/1C/ACC Stope grab sample 9.85 Bao Mu Yuan
D001397 1/1c/ACC Stope grab sample 9.41 Bao Mu Yuan
D001798 1/1c/ACC 1.2 0.9 9.33 Bao Mu Yuan
D001374 1/2/ACC 1 0.4 7.49 Bao Mu Yuan
D001729 1/2/ACC 1 1 7.07 Bao Mu Yuan
D001816 1/1/R1 L 1.5 0.6 6.85 Bao Mu Yuan
D001335 1/1a/ACC 1 0.83 6.72 Bao Mu Yuan
D001778 1/1c/ACC 0.8 0.8 6.7 Bao Mu Yuan
D001731 1/2/ACC 1 0.82 6.43 Bao Mu Yuan
D003071 1/1c.d 1.3 1.15 6.35 Bao Mu Yuan
D001818 1/1c/ACC 1 1 6.13 Bao Mu Yuan
D001815 1/1/R1 L 1.15 0.7 6.1 Bao Mu Yuan
D001899 1/1/R1 1.5 1.5 5.55 Bao Mu Yuan
D001304 1/1a/ACC 1 0.85 5.47 Bao Mu Yuan
D001755 3/3/ACC 1 0.85 6.9 Shen Jia Ya
D001791 5/6/ACC 0.8 0.66 7.74 Zheng Jia Shan
D001766 5/5/ACC 1.1 1.1 7.7 Zheng Jia Shan
D001710 5/1/ACC 0.85 0.6 7.1 Zheng Jia Shan
D001825 5/5/ACC 0.95 0.9 5.75 Zheng Jia Shan
D002908 5/5/ACC 0.8 0.7 5.52 Zheng Jia Shan
Drill results
Drill hole Beijing Beijing Beijing From To Length Grade From To
Length Grade
Grid East Grid North Grid RL (m) (m) (m) (g/t) (m) (m) (m)
(g/t)
(m) (m) (m)
SJDD0005 37501450 3160264 306.14 85.90 87.40 1.50 3.0 Exploration hole to prove mineralisation up dip from
ZK00601, East of Xiang Lu
SJDD0006 37501379 3160299 249.6 Exploration hole for structure between known mineralisation - uneconomic alteration
was intersected.
SJDD0007 37501265 3160265 205 311 312 1.00 2.1
SJDD0008 37500815 3160127 226.83 Hole drilled for structural interpretation between Jin Zhu Wan and Xiang Lu - uneconomic
alteration was intersected.
SJDD0009 37500703 3160037 227.05 305.4 310 4.6 9.39 Includes 305.4 306 0.6
6.73
and 306 307 1
13.25
and 307 308 1
8.58
and 308 308.8 0.8
19.25
and 308.8 310 1.2
1.61
SJDD0009 315 316 1 2.32
SJDD0009 316 317 1 1.27
SJDD0009 321 323 2 1.92 Includes 321 322 1
2.52
and 322 323 1
1.31
SJDD0009 325 326 1 1.13
SJDD0009 390 391 1 1.29
SJDD0009 392 393.3 1.3 3.88
SJDD0009 396 397 1 1.46
SJDD0009 397 398 1 1.11
Of interest are the results from SJDD0009 drill hole. Besides intersecting significant mineralisation under the Jin Zhu Wan Mine, this
was screen fired assayed with additional assaying of the 'plus size' sieve fraction. The oversize fraction (Au-SCR21 / Au(+) Fraction) when
assayed provide results indicating, in part, what could be a small nugget effect.
Drill hole From To Length Au- Au- Au- Au- Au- Au- Au- Au-
AA25 AA25D SCR21 SCR21 SCR21 SCR21 SCR21 SCR21
Au Au Au Total Au (+) Au (-) Au (+) mg WT. + WT. - Frac
(+)(-) Fraction Fraction Frac Entire
Combined Entire
(m) (m) (m) ppm ppm Ppm ppm ppm mg g g
SJDD0009 304.5 305.4 0.9 0.17 0.23 0.2
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