Minco goes east for ‘Carlin’ gold

Barring unforeseen events and assuming exploration continues apace, the Qinling Gold Triangle is poised to become China’s equivalent of Nevada’s Carlin trend — one of the premier gold-mining camps in the world.

The historic yet still emerging gold district in central China covers a 1,000-km-long sedimentary belt that encompasses parts of Gansu, Shaanx and Sichuan provinces.

With a production history dating back 3,500 years and known deposits containing more than 16 million oz. gold, it’s not surprising that foreign mining companies are flocking to a region known as prime hunting ground for “Carlin-style” gold deposits. But as is often the case, some of the best targets were secured by pioneering juniors that ventured into China years earlier, when the nation was taking its first cautious steps toward economic liberalization.

Among those pioneers was Minco Mining & Metals (MMM-T), a Vancouver-based company headed by Ken Cai, a Chinese-born, Western-educated geologist and mining entrepreneur. In the mid-1990s, Minco acquired several base metal projects, which it explored in co-operation with the company now known as Teck Cominco (TEK-T). But when zinc and copper prices went soft a few years later, Minco shifted gears to gold. This diversification effort was supported by Minco Chairman William Meyer, who helped guide Teck’s entry into Ontario’s Hemlo gold camp in the early 1980s.

Meyer says Ken Cai’s local knowledge and contacts proved invaluable as Minco crisscrossed China to examine several hundred properties. The company picked up two early-stage gold projects in Inner Mongolia, but its big coup came last fall when it secured rights to the Yangshan gold project in the heart of the Qinling Gold Triangle.

“We’re excited about Yangshan because it’s the largest known discovery in the camp in modern times,” Meyer says. “We have two other parcels in the camp with similar geochemical signatures. They’re prime exploration targets that have never been followed up.”

The Yangshan Anba deposit was previously explored by Chinese geologists who outlined resources estimated at 16.1 million tonnes at 5.64 grams gold per tonne, or 2.9 million contained ounces. This estimate was based on 8,000 metres of drilling, plus samples collected from adits and trenching.

Minco recently filed an independent technical report for Yangshan under National Instrument 43-101. This report concludes that the Chinese estimate was professionally prepared and meets Canadian standards for an inferred resource. The report also confirms that deposits at Yangshan (and in the Qinling region) are “good candidates” for Carlin-style, sediment-hosted gold deposits.

Known deposits in the district collectively host resources containing more than 16 million oz. gold. This does not include historic production, first from alluvial deposits, and later from free gold found in the oxidized upper layers of deposits.

Most of the modern-day discoveries were made in the 1970s and ’80s, when Chinese agencies launched nation-wide, geological and geochemical surveys. Hundreds of anomalies were identified in the Southwest Qinling Mountains, which comprise the fold zone between the North-China and Yangtze cratons. Most Carlin-style gold deposits (in Nevada and elsewhere) are also found in fold belts.

Gold deposits in the Qinling region are closely associated with major west-northwest-trending deep structures and their second-order faults. As for stratigraphy, 80% of large Carlin-style deposits in China are hosted in Devonian clastic sediments.

The regional stream-sediment surveys that led to the Yangshan Anba discovery also revealed that the Carlin-type geological setting extends for at least 90 km.

The key factors that led to these discoveries were:

— a favourable sequence of calcareous clastic sediments;

— a well-developed regional fault system and second-order faults;

— significant gold geochemistry with elevated arsenic, antimony and mercury;

— granitic dykes spatially associated with ore-control faults; and

— silicification, pyrite, sericite, and limonite alteration.

Not all geoscientists agree on how Carlin-type deposits should be classified, but most recognize three main Carlin styles: stratabound replacement-style mineralization (Carlin mine); high-grade structurally controlled veins (Bootstrap mine); and complex breccia and replacement zones.

Yangshan Anba is viewed as a structural Carlin-style deposit within the 30-km-long Yangshan regional gold zone. The bulk of the resources are found in two main stratabound zones of gold mineralization that strike approximately east-west, and dip 45-55 to the south into the mountains.

Gold mineralization occurs primarily as inclusions in arsenopyrite, limonite, scorodite and clay minerals. Preliminary metallurgical tests suggest the deposit is refractory but amenable to flotation for concentrate, or oxidation process with cyanide leach.

The refractory mineralization put a damper on China’s initial efforts to develop mines in the Qinling region, though free-milling gold was recovered from the oxidized upper portions of some deposits. This parallels progress in Nevada’s Carlin trend, where surface oxide deposits were developed years before mining companies took on the challenge of extracting the deeper, richer, but refractory, sub-micron-sized gold mineralization. Today, the Carlin trend is a showcase of modern processing technology aimed at treating metallurgically complex ores.

“Refractory mineralization isn’t a problem as long as there’s enough of it,” Myer says.

The Qinling region appears to have sufficient resources to warrant an infusion of exploration and development capital, and Chinese authorities are keen to see the camp developed through partnerships with foreign companies able to provide financial, technological and management resources.

When China first opened its doors to the West, some government leaders and officials were openly ambivalent about allowing foreign involvement in the mining sector. But at the urging of new, more progressive leaders, the country has since adopted a pragmatic and aggressive approach to attracting foreign investment. The mining law was changed to allow for the privatization and deregulation of the industry, and to streamline the approval process.

Helped by its track record in the country, Minco recently signed several agreements with government agencies to acquire properties in the emerging Qinling gold camp.

Through a subsidiary company, Minco has the right to acquire a 40% equity interest in Yangshan Gold Mining (YGM), which in turn can acquire the Yangshan project. Minco’s subsidiary will be the largest shareholder in YGM and can appoint the president.

Meyer says the Anba deposit will be the main focus of Minco’s efforts in the coming year. An infill drilling program of at least 20,000 metres is expected to firm up the existing inferred resource. Crews will also look for strike extensions and test early-stage targets.

Minco intends to explore gold occurrences and geochemical anomalies found on its two other land parcels in the region. One of these covers the western strike extension of the Anba deposit, whereas the other hosts a major geochemical gold anomaly.

These properties are held by a joint venture between Minco and a Chinese partner. Minco can earn a 75% equity interest through the joint venture.

Minco’s land package is accessible by a 2-lane asphalt road. The elevation ranges between 1,500 and 2,000 metres.

Minco recently carried out a 9-hole, 1,173-metre drill program at its Gobi gold project in Inner Mongolia. Four holes were drilled in the Discovery pit area and encountered mineralization ranging in grade from 0.5 to 2.7 grams over widths ranging from 1 to 5 metres.

Several geophysical targets were tested, but none led to any significant discoveries.

Minco is reviewing its options on the main licence, and on an adjoining licence, where gold occurrences are yet to be systematically explored.

Minco also holds rights to the BYC project in the eastern Tian Shan metallogenic belt, at the southern margin of the North China Platform. This belt hosts numerous multi-million-ounce gold deposits (including Kumtor and Murantau).

More than 100 surface gold showings have been identified in an area measuring 12 by 3 km, within arcuate shear-hosted vein systems on the margin of a granitic pluton. These showings have yet to be drill-tested.

Minco can earn a 75% interest in the land package by spending $2.4 million over four years. The BYC project is also subject to a joint venture with New Cantech Ventures (NCV-V), which can earn 60% by bringing the project to the feasibility stage. All interests will then become working interests, subject to dilution for non-participation.

New Cantech will carry out the spring drill program, to be followed by a more substantial drill program by mid-year.