Afcan eyes Chinese gold (October 17, 2002)

Afcan Mining (AFK-V) has signed a letter of intent to acquire an 85% stake in the Tanjianshan gold project in northwest China’s Qinghai Province, from Australian-based Sino Gold.

Afcan paid Sino US$25,000 on signing; completion of the deal is subject to Afcan’s due diligence, which is slated for completion by the end of November.

The 350-sq.-km Tanjianshan project is home to an indicated resources of 3.35 million tonnes averaging 6 grams gold per tonne, or 645,000 contained ounces of gold.

A feasibility study at Tanjianshan suggests running a 60,000-oz.-per-year operation for 6 years.

The remaining 15% of Tanjianshan is held by The First Brigade for Geology and Mineral Exploration of Qinghai Province and the Dachaidan Gold Mine, which currently pumps out around 1,400 oz. of gold per month.

Sino is looking to dispose of the project as it heads towards construction on a much larger project elsewhere in China. Sino’s original agreement at Tanjianshan calls for commencement of development in 2003.

To help fund the acquisition Afcan has completed a non-brokered private placement of 1.5 million units at 20 apiece. One unit comprises one share plus half a warrant. One warrant allows the holder to buy one Afcan share for 26 before April 15, 2004.