Resource World Magazine

38 www.resourceworld.com A U G U S T / S E P T E M B E R 2 0 1 4 MINING China Gold International Resources Corp. Ltd. [CGG-TSX; 2099-HKEx], hav- ing successfully doubled production from 30,000 to 60,000 tonnes per day (tpd) at its CSH gold mine in the Inner Mongolian Region of China, is now well advanced in increasing production at its Jiama polyme- tallic mine in Tibet. At The Jiama Mine, located 68 km northeast of Lhasa, the two newly installed flotation circuits will enable the mill to pro- cess 50,000 tpd of ore (16.5 million tonnes/ year) by 2015 for the copper-molybdenum ores – 9.9 million tonnes open pit and 6.6 million tonnes from underground. There is an expected mine life of 35 years. Anticipated Jiama annual production is: • Copper – 67,000 tonnes • Molybdenum – 2,400 tonnes • Silver – 2.8 million ounces • Gold – 42,000 ounces • Lead – 10,400 tonnes • Zinc – 4,000 tonnes Revenues from the Jiama Mine, for the first quarter of 2014, were US $5.07 mil- lion compared to US $29.3 million a year earlier due to lower gold prices and lower production. Proven + probable reserves at Jiama stand at 6.0 billion lbs copper with measured + indicated resources of 13.5 billion lbs. In an interview, Dr. Song Xin, General Manager and Chairman, told Resource World that lower production was the result of an electrical shortage from the local government's power plant. Song said that a new power plant, in the early stages of construction, will solve this problem. Talks have been underway to ensure avail- ability and an acceptable electricity price. Revenues from the CSH Mine were also impacted by lower gold prices and a lower gold sales volume. Gold produc- tion decreased by 16% from 32,163 oz in Q1 2013 as compared to 27,118 oz in Q1 2014. This was mainly due to lower grade ore being mined and placed on the heap leach pads in the past periods and an increased height of the leaching heap lead- ing to a longer gold recovery period. China Gold has taken steps to lower its produc- tion costs, said Dr. Song. These included decreased reagent expenditures, lowering transporting costs for supplies and a lower waste stripping cost. Total production costs at the CSH Mine have dropped from US $953/oz in Q1 2013 to US $783/oz in Q1 2014. There are 648 workers employed at the CSH Mine. Combined proven + probable reserves at the CSH and Jiama mines total 6.3 mil- lion oz gold with measured + indicated resources of 9.7 million oz. Despite lower gold prices, China Gold has had four years of profitability which is expected to improve as costs have decreased and production continues to increase. By 2015, annual gold production from the CSH Mine is expected to reach about 260,000 ounces as compared to the current 131,418 oz/year. Dr. Song said that China Gold is pres- ently seeking to acquire gold projects in suitable jurisdictions outside China. He noted that these could be producing gold mines or gold projects that are at the development stage with positive feasibil- ity studies where construction could start soon. Dr. Song added that the company prefers gold projects but would also con- sider gold-copper and silver projects. Speaking of gold in general, Song pointed out that there has been considerable interest in gold purchasing by individuals in China. This has been aided by the services of the Shanghai Gold Exchange. At the Global Gold Summit in Vancouver, co-hosted by the World Gold Council and the China National Gold Group (which owns 39% of China Gold International), Dr. Song remarked that gold jewelry sales in China for Q1 2014 were up 35% compared to Q1 2013. As physical gold buying by Chinese individuals is still much lower than the global average, Song expects physical gold sales in China to see a huge increase in the future. In China, gold ownership is traditionally seen as a way to preserve wealth. Dr. Song is of the view that it is impor- tant for federal governments to acquire gold holdings as it helps to underpin the strength of its fiat currency. n The Jiama polymetallic mine 68 km northeast of Lhasa, Tibet. Photo courtesy China Gold International Resources Corp. Ltd. China Gold International Resources increasing production

• Cover