Resource World Magazine

MINI NG China Gold International's bold expansion plans by Jennifer S. Getsinger, PhD, PGeo Not content with steadily increasing annual gold and copper production at its two operating mines, China Gold International Resources Corp. Ltd. [CGG-TSX; 2099HKEX] expects to double its annual gold output and multiply its annual copper production sevenfold in the next two years. Currently producing 133,000 troy ounces of gold after five years of steadily increased commercial production, the Chang Shan Hao (CSH) Gold Mine in Inner Mongolia is on track to produce 260,000 oz Au annually by 2015 (with processing capacity of 30,000 tpd going up to 60,000 tpd, shortening the mine life from 17 to 11 years). Processing capacity at its polymetallic copper – gold – silver Jiama Mine near Lhasa, Tibet, is slated to increase from 6,000 tpd to 40,000 tpd by 2015 (2012 production = 25,350,000 pounds Cu); and is expected to last 31 years. In an interview with Jerry Xie (Executive VP and Corporate Secretary), Derrick Zhang (CFO), and Elena Kazimirova (IR Manager and Financial Analyst) at China Gold's Vancouver office, they explained how China Gold, as a Canadian (and Hong Kong) listed company, was able to operate gold mines in China with the support of its main shareholder, China National Gold Group (CNG) while CNG's domestic mining company operates dozens of internal mines. This combination makes CNG the largest gold producer in China, producing 20% of China's gold, and controlling 30% of its gold reserves. Like many Canadian resource companies, this one started in the 1990s with a complicated history of name changes (Global-Pacific, Pacific Minerals, Jinshan Gold), projects, and financing. Eventually, with the stability and expertise offered by its largest shareholder, Ivanhoe Mines Ltd., it was able to concentrate on the gold belt of Inner Mongolia, near the border of Mongolia, not far from Baotou. Beginning as the "Brigade 217 Project," the CSH gold 40 www.resourceworld.com project was acquired in 2002. The CSH gold project is geologically in the Tien Shan Gold Belt, a region of Proterozoic carbonaceous slates affected by Paleozoic orogenic events and granitic plutons. The orogenic belts of Asia are full of rich, sediment-hosted, gold deposits. The CSH Project has been developed into a conventional open-pit, heap-leach operation mining bulktonnage, low-grade gold, occurring in both oxide and sulphide zones. Latest resource figures from China Gold for the CSH gold mine show combined measured and indicated resources at 262.6 million tonnes grading 0.60 g/t Au with 5.066 million oz Au; in addition, inferred resources are 132.8 million tonnes grading 0.49 g/t Au with 2.092 million oz Au. Using a cut-off grade of 0.28 g/t Au, combined proven and probable reserves are shown as 213.5 million tonnes grading 0.59 g/t Au with 4.083 million oz Au. The first gold doré bars were produced at CSH in 2005, and by 2006, the company known as Jinshan Gold Mines Inc. was able to upgrade its listing to the TSX. Gold production began in 2007, with commercial production starting a year later. In 2008, China National Gold purchased the shares owned by Ivanhoe, about 42% of Jinshan, for more than $200 million; and the board composition changed. Although this buyout saved the company from setbacks during the global economic crisis of 2008–2009, significant changes came with the influence of China National Gold, one of the largest gold mining concerns in China, guided by the central government. In China, large mining companies tend to be more vertically integrated than in North America, providing not only exploration and development, but also mining expertise as well as marketing of mineral products. With the advent of CNG as major shareholder, the company was able to streamline the process that enabled the CSH Project to be quickly developed into a successful gold mine. Central companies such as CNG are held to strict standards for business practices and environmental concerns. Consequently, there was encouragement to continually increase productivity and concentrate only on commercially viable projects. Several less successful projects were sold off, while more productive projects were actively sought out. The company moved to a new office in Vancouver and changed its name to China Gold International Resources Corp. Ltd. Plant at China Gold International's CSH gold project in the Tien Shan Gold Belt, China. Photo courtesy of China Gold International. APRIL 2013

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