GUIZHOU JIN CE MINING CO Report
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Williams Exploration Consulting Pty Ltd Consulting Geologists GUIZHOU JIN CE MINING CO., LTD., P.R. CHINA A REVIEW OF THE MINERALIZATION AT, AND ON THE EXPLORATION PROGRAM AND PROPOSED BUDGET FOR, THE JIN CE GOLD PROJECT, CEHENG COUNTY, GUIZHOU PROVINCE, PEOPLE’S REPUBLIC OF CHINA BRIAN WILLIAMS, B.Sc., FAusIMM DECEMBER, 2009 135 FOX VALLEY ROAD, WAHROONGA, NSW, AUATRALIA 2076 Telephone (61) (2) 9487-3415 Fax (61) (2) 9487-3415 Williams Exploration Consulting Pty Ltd Consulting Geologists TABLE OF CONTENTS PAGE 1.0 SUMMARY 6 2.0 INTRODUCTION AND TERMS OF REFERENCE 10 3.0 DISCLAIMER 12 4.0 PROPERTY DESCRIPTION AND LOCATION 13 4.1 TITLE TO PROPERTY 14 4.2 ENVIRONMENTAL LIABILITIES 18 5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY 20 6.0 HISTORY 24 6.1 EXPLORATION HISTORY 24 6.2 HISTORIC MINERAL RESOURCE ESTIMATES 25 6.3 HISTORICAL PRODUCTION 28 7.0 GEOLOGICAL SETTING 29 7.1 REGIONAL GEOLOGY 29 7.2. LOCAL GEOLOGY 31 8.0 DEPOSIT TYPES 33 9.0 MINERALIZATION 36 10.0 EXPLORATION 45 10.1 PRE-GJCM EXPLORATION 45 10.2 GJCM EXPLORATION 45 10.2.1 CENTRAL TENEMENTS AERIAL PHOTO INTERPRETATION 46 10.2.2 MAPPING 46 10.2.2 REGIONAL SOIL RIDGE AND SPUR SAMPLING PROGRAM 47 10.2.3 CHANNEL SAMPLING AND TRENCHING 49 10.2.4 GRAB SAMPLING 50 10.2.5 POLE-DIPOLE IP SURVEY 58 10.2.6 GRAB SAMPLING 58 10.3 SURFACE EXPLORATION RESULT AND DISCUSSION 61 11.0 DRILLING 65 11.1 GJCM DRILLING-WEIPAI #8 65 11.2 GJCM DRILLING-WEIPAI #4-6 70 i Williams Exploration Consulting Pty Ltd Consulting Geologists 12.0 SAMPLING METHOD AND APPROACH 77 12.1 ROCK SAMPLING 77 12.2 SOIL SAMPLING 77 12.3 DRILL CORE SAMPLING 78 13.0 SAMPLE PREPARATION, ANALYSES AND SECURITY 80 13.1 GAS SAMPLE PREPARATION 80 13.2 GAS ASSAYING 80 13.3 ALSG ASSAYING 81 14.0 DATA VERIFICATION 82 14.1 QA-QC RESULTS - ROCK SAMPLES THROUGH GAS LABORATORY 82 14.2 QA-QC RESULTS - ROCK SAMPLES THROUGH ALSG LABORATORY 86 14.3 QA-QC RESULTS - SOIL SAMPLES THROUGH GAS LABORATORY 87 15.0 ADJACENT PROPERTIES 91 16.0 MINERAL PROCESSING AND METALLURGICAL TESTING 92 17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES 93 18.0 OTHER RELEVANT DATA AND INFORMATION 94 19.0 INTERPRETATION AND CONCLUSIONS 95 19.1 PROPOSED EXPLORATION PROGRAM 96 19.1.1 Jin Ce-Liba Boundary Area Programs 96 19.1.2 Jin Ce Lease Programs 96 19.1.3 Structural Study 97 19.1.4 Topographic Mapping Project 97 19.1.5 Hydrological Drilling 97 19.1.6 Geotechnical-Sterilization 97 19.1.7 Remote Sensing 97 19.1.8 Reference Standard Sample Preparation 97 19.1.9 Drill Rig Mobilization 97 20.0 RECOMMENDATIONS 101 ii Williams Exploration Consulting Pty Ltd Consulting Geologists LIST OF TABLES PAGE Table 4.1 Jin Ce Mining and Exploration Tenements 11 Table 5.1 Ceheng Area Weather Data 23 Table 6.1 Historic Exploration Statistics 25 Table 6.2 Gz Non-Ferrous #1 Grade Estimates for the Jin Ce project 27 Table 6.3 Gz Non-Ferrous #1 “Resource” Estimates for the Jin Ce project 27 Table 9.1 Central Tenement Area Deposit/Occurrence Summary 25 Table 10.2 Exploration Work Completed by GJCM 43 Table 10.3 Summary of Significant Trench/Channel Samples 50 Table 10.4 Summary of Significant Grab Samples 56 Table 11.1 Collar Table for Weipai #8 Drilling 64 Table 11.2 Significant Results from Weipai #8 Drilling 67 Table 11.3 Collar Table for Weipai #4-6 Drilling 69 Table 11.4 Significant Results form Weipai # 4-6 Drilling 72 Table 19.1 Jin Ce Exploration Program Budget 96 3 Williams Exploration Consulting Pty Ltd Consulting Geologists LIST OF FIGURES PAGE Figure 4.1 Map of China Showing the Dian-Qian-Gui area ( Golden Triangle) 15 Figure 4.2 Jin Ce project Exploration Lease Map 16 Figure 4.3 Hua Xin Mining Licence Map 17 Figure 5.1 View Looking East Over Hua Xin taken from near Wei Pai #3. 21 Figure 5.2 View of Wei Pai #7 looking west from Wei Pai #6 21 Figure 5.3 View of Wei Pai #6 (Western Pit) and Wei Pai #4 (background) from Wei Pai #7 20 Figure 7.1 Location of Sedimentary Rock-Hosted Gold Deposits in China (from Perters et al, 2002) 27 Figure 7.2 Geologic Features of the Golden Triangle (Dian-Qian-Gui) Area China 28 Figure 7.3 Geological Map of the Central Tenement Area (1:50,000) 31 Figure 9.1 Geological and Sampling Result of Weipai #8 (1:1000) 36 Figure 9.2 Geological and Sampling Result of Weipai #7 (1:1000) 37 Figure 9.3 Geological and Sampling Result of Weipai #6 (1:1000) 38 Figure 9.4 Geological and Sampling Result of Weipai #5 (1:1000) 39 Figure 9.5 Geological and Sampling Result of Weipai #4 (1:1000) 40 Figure 9.6 Geological and Sampling Result of Weipai #3 (1:1000) 41 Figure 9.7 Geological and Sampling Result of Gaoshan and NX #2 (1:1000) 42 Figure 10.1a Ridge and Spur Soil Geochem Results for Weipai-Nongying (1:50,000) 46 Figure 10.1b Ridge and Spur Soil Geochem Results for Nongying-Naxin-Pingmai EL (1:50,000) 47 Figure 10.2 Stacked 2D IP Survey Profiles of Weipai #8 Area 57 Figure 10.3 Stacked 2D IP Survey Profiles of Weipai #8 Area 58 Figure 11.1 Drill Collars Grid of Weipai # 8 Drilling 65 Figure 11.2 Drill Collar and Grid for Weipai #4-6 Drilling 70 Figure 14.1 Assay Results for Gold Standards-GAS 81 Figure 14.2 Pulp Duplicate Variance GAS – Gold 82 Figure 14.3 Pulp Duplicate Variance GAS – Gold > 0.3 g/t 82 Figure 14.4 Pulp Duplicate Variance GAS- Arsenic 83 Figure 14.5 Pulp Duplicate Variance GAS- Antimony 83 Figure 14.6 Pulp Duplicate Variance GAS- Mercury 84 Figure 14.7 Assay Results for Gold Standards – ALSG 84 Figure 14.8 Pulp Duplicate Variance ALSG – Gold 85 Figure 14.9 Field Duplicate Variance – Gold 86 Figure 14.10 Field Duplicate Variance – Gold > 2 ppb 86 Figure 14.11 Field Duplicate Variance – Arsenic 87 Figure 14.12 Field Duplicate Variance – Antimony 87 Figure 14.13 Field Duplicate Variance – Mercury 88 4 Williams Exploration Consulting Pty Ltd Consulting Geologists APPENDICES Appendix A Jin Ce Exploration Lease Documentation 103 Appendix B Gannet Holdings Standard Reference Material Assay Results 135 5 Williams Exploration Consulting Pty Ltd Consulting Geologists 1.0 SUMMARY The Jin Ce project consists of a mining licence and four contiguous exploration licences (the Central Tenements), within which Guizhou Jin Ce Mining Co., Ltd. (GJCM) is concentrating its exploration for Carlin-like gold deposits and two further exploration licences and an application for restoration of a third. The Central Tenements are located near the town of Ceheng, Ceheng County, Qianxinan District, Guizhou Province, Peoples Republic of China (China) approximately 1900 km south-west of the capital Beijing. Of the three properties which make up the remainder of the project, the area under application is also in Ceheng County, one licence is in the neighbouring Wangmo County and the other lies several hundred km to the east. The project was acquired by GJCM, a Sino-foreign cooperative joint venture company (the JV) from the Guizhou Tong Fa Mining Company Limited (Tong Fa) subject to a scheduled payment of agreed funds. These payments have since been made. Tong Fa is a Chinese limited liability company and is based in the city of Guiyang, capital of Guizhou Province. Perfect Ally Limited (PAL), a company registered in the Cayman Islands, holds a 95% interest in the JV with the remaining 5% held by Tong Fa. The mining licence, Hua Xin, and the surrounding exploration licence, Wei Pai, are held by Ceheng Huaxin Gold Mine Co. Ltd. (CHGM), a Chinese limited liability company also registered in Ceheng. This company is controlled by GJCM through its 80% share holding. In the other properties, Nong Ying, Na Xin and Ping Mai which, with Hua Xin and Wei Pai, comprise the 126.2 km2 Central Tenement block, and the isolated Moa Zhai and Nan Zhai, GJCM has 100% interest and either holds the licence in its own name or is in the process of having ownership transferred to it. Gold was discovered in the vicinity of the Hua Xin in the late 1980’s by the Guizhou Provincial Bureau of Geology and Mineral Resources (GzBGMR) investigating anomalies from its earlier regional stream sediment geochemical survey but little systematic exploration followed before CHGM obtained the mining licence and the Wei Pai exploration licence in 2002. CHGM commissioned surface exploration, mainly trenching and sampling, sufficient only to establish mining of oxide ore from five small mines at Hua Xin (now known as Weipei #3, #4, #5, #6 and #7) and one (Weipai #8) near the eastern boundary of the Wei Pai licence. These operated as shallow open pit mines and associated heap-leach gold extraction operations till 2006 when the oxide ore was exhausted. There are no available production records but, based on the size of leach heaps, gold produced was of the order of 150 kg. Weipai #6 and Weipai #7 were the larger producers. Following closure of the mines, CHGM commissioned the No 1 General Team of the Guizhou Non-Ferrous Metal Geological Exploration Bureau (Gz Non-Ferrous #1) to assess the further ore potential of the two areas. This group produced a report which highlighted gold potential associated with the existing mines and included resource estimates.