SHARES STRONGLY UP/DOWN this week 12/12/05 (Master RSI)

Snow Mountain's gold resource could grow
By: Rhona O'Connell
Posted: '15-DEC-05 14:46' GMT © Mineweb 1997-2004



LONDON (Mineweb.com) -- Central China Goldfields (“GGG”) has released more exploration results from a recently completed adit-driving and trenching programme at its Songpanguo deposits in the Snow Mountain project on the Sichuan province China.

Snow Mountain is approximately 370 kilometres to the north of the provincial capital, Chiengdu, and is served by a combination of freeway and paved highways. The region is emerging as one of the most significant gold regions in China, with Chinese sources reporting that resources totalling more than 300 tonnes of gold have been delineated over the past 15 years, including the discovery of Baguamio (80 tonnes or 2.6 m1illion ounces), Shuangwanh (over 60 tonnes or two 1.9 million ounces) Dashuoi (46 tonnes or 1.5 million ounces) and Dongbeizhai (over 60 tonnes).

These discoveries occurred very early in a systematic exploration programme conducted by the Sichuan Bureau of Metallurgy and Geological Exploration (“SBMGE”) using basic exploration techniques, leading observers to suggest that there is plenty more where this came from.

Central China Goldfields is listed on AIM (ticker GGG, current market capitalisation approximately £3.31 million (US$5.9 million). The company, which is concentrating on developing mineral deposits on China, has a large ground holding in the Sichuan Province, which it regards as prospective for the discovery of large Carlin-like deposits, and which is host to the Snow Mountain deposit.

The company was incorporated in November 2004 and in December 2004 it acquired the share capital of Nexon Asia Group Limited, which had already formed a joint venture company with the SBMGE. The Snow Mountain project includes seven non-contiguous exploration licences covering approximately 54 square kilometres; these are held by SBMGE and have been transferred to the joint venture company, which his known as Sichuan Snow Mountain Mining Exploration Unite Centre or SSMMEUC.

The company is entitled to earn a 75% interest in SSMMEUC by providing funding for exploration expenditure of US$7.04 million over the two-year period commencing 2nd December 2004 and by making property payments of US$640,000 over a three year period commencing on the same date. Nexon will be able to raise its stake further via additional finding, but SBMGWE must not be diluted to below 12%.

The latest exploration results prompted Managing Director Jeff Malaihollo to comment that the company is “very excited by the discovery of new zones which suggest that the deposit is bigger than the 200,000 oz inferred resources defined to date.”

The assay results, which were conducted by SGS at its laboratory in Tianjin on four underground tunnels and nine trenches confirm the previous adit assay results and new mineralised zones have been discovered, which suggest that there is the potential to increase the tonnage both along strike and at depth. The mineralised zones occur largely in graphitic, sheared and quartz veined siltstones, with pyrite, realgar and orpiment.

Resampling in four adits over a cumulative distance of 1,540 metres gave 64 metre-grammes of gold, averaging 3.0 grammes per tonne on fire assay. Some new intersections were obtained over intervals that had not previously been sampled, including three metres at four grammes per tonne of gold at 9 metres from the portal and 0.65 metres grading 3.81 grammes at 8.5 metres. When these new zones are taken into account the total meterage returning fire assay results amount to 87 metre grammes of gold. There is one adit where exposure is badly oxidised and this has resulted in a downgrade from previous estimates; this will be cleaned and resampled.

Trench results (over 860 metres) are more variable as some trenches have slumped or been excavated during trial mining, but one new trench gave three assay intersection including nine metres at 2.94 grammes per tonne of gold, giving a total of 34 metre grammes of gold. Other new trenches have returned estimated true widths of four metres at 2.6 grammes per tonne and six metres at 4.33 grammes.

The inferred resource of 200,000 ounces is not compliant to the Canadian 43-101 standard. The original estimate of the resource, carried out in 2004, amounted to 2,075,000 tonnes at a grade of 2.21g/t in the inferred category, giving approximately 147,000 ounces of gold. Results to date would tend to suggest that GGG will be able to expand this through check and infill drilling and may have a substantial, easily accessible resource on its hands.