Afcan pulls more Chinese gold

Ongoing drilling by Afcan Mining (AFK-V) continues to cut impressive gold mineralization at the TJS project in China’s Qinghai province.

In January, Afcan acquired the right to earn an 85% stake in TJS by paying US$5.6 million to Australian-based Sino Gold. Most is to be covered by revenue from future gold production, though US$825,000 (US$125,000 has been covered) must be paid by year-end.

TJS hosts an inferred resource of 3.3 million tonnes averaging 6 grams gold per tonne. According to the Beijing General Research Insitute of Mining and Metallurgy, the resource can support six years of mining — small-scale mining has been under way since 1997 — at a production rate of about 70,000 oz. annually.

To validate that claim, Afcan has hired Australian-based consulting firm RSG Global to review and update the Chinese study. The study will include results from infill drilling, which has been under way since April.

To date, over 4,000 metres have been sunk, and three rigs continue to turn in the Jinlonggou area. The Qinlongtan section of the resource, about 15 km to the northwest, has been tested by 12 holes, results for which are pending.

As part of the deal, Afcan must begin constructing a mine by year-end. Capital costs are expected to chime in at roughly US$18 million.

Gold values in the recent holes, numbered 22-27 and 29, varied from 1.86 to 65 grams over mineralized core lengths of 0.55-12.43 metres. Only intersections of greater than 1 metre and carrying more than 1 gram are being reported, and none of the intersections are internally diluted by more than 2 metres of barren core.

The best results came from hole 26, which cut six separate intervals: 2.92 metres (from 2.6 to 5.52 metres) at 4.22 grams; 1.2 metres (8.82-10.02) at 8.68 grams, including 15.45 grams over the first half a metre; 3.52 metres (39.5-43.02) at 2.4 grams; 10 metres (73.97-83.97) at 21.1 grams, including 30.63 grams over the final 6 metres; 1.55 metres (93.62-95.17) at 4.39 grams; and 12.43 metres (109.27-121.7) at 17.23 grams. The next best was hole 29, which averaged 2.14 grams over 9.15 metres (42.35-51.5) and 5.66 grams over 3.2 metres (63.75-66.95).

Results for hole 28 are pending.

Drilling to date shows mineralization becoming stratabound toward the east, with the western limb dipping steeply in that direction. Results from holes 25 26 also suggest local mineral deposition occurred in a synformal structure.

Afcan recently raised $9.4 million by privately placing 40 million units at 25 apiece. The units, consisting of a share and half a warrant, are subject to a four-month hold period. This includes any shares arising from the warrants, which expire in two years and are priced at 37.5 apiece.