Continental Minerals: one step closer to developing Xietongmen

Vancouver The Chinese government has approved Continental Minerals‘ (KMK-V) land reclamation report the final of seven completed for its Xietongmen project in Tibet, about 50 kilometres away from the city of Rikaze.

Continental Minerals says the approval moves the company one step closer to getting the “legal authorization” and “social license” needed to move the large copper-gold project forward.

With approval in hand, Continental Minerals has turned its attention to completing its mining license application a procedure that requires the finished reports. The company says it will apply for the permit in the third quarter of 2008.

The company also says the reports provide data for a social and environmental impact assessment (SEIA) “that is being completed in accordance with international standards and will play an important role in the financing of the Project.”

Continental Minerals says it is currently reviewing the final draft of the SEIA report and that it will likely be available around the same time it applies for its mining license.

Just over a year ago Coninental Minerals released a positive feasibility study compiled by Aker Kvaerner for the Xietongmen project.

With 182 million proven and probable tonnes grading 0.45% copper, 0.62 gram gold per tonne and 4.03 gram gold per tonne silver, Continental Minerals outlined a plan for a 30,000 tonne per day operation pumping out 116 million lbs. copper, 190,000 oz. gold and 1.8 million oz. silver a year.

Continental Minerals envisions running a mine with about a 14 year life and a payback period of just over 5 years. With an internal rate of return of 17.5% the company reports a net present value, discounted at 7.5%, of US$232 million.The price tag? US$476 million.

But the hefty capital cost doesn’t appear to be a show stopper. In January this year Continental Minerals signed an agreement with nickel and copper giant Jinchuan that included offtake for its concentrate and a US$18 million private placement.

Continental Minerals also says Jinchuan agreed to help it find 60% of the capital needed to develop the mine and give it another 30% in the form of debt or equity.

The 25% copper concentrate Continental Minerals plans on producing will be shipped first by truck and then by rail to Jinchuan’s refinery in Jinchang, Gansu province, about 1,500 kilometres to the northeast.

Continental Minerals says plans for a 250 kilometre rail extension and provision of 100 megawatts of power have also been approved.

When or if Continental Minerals receives mine permitting, the company says it will take 2 years to build the mine. Then open-pit mining will proceed in three stages, each lasting between 3 to 5 years.

On news of the report approval Continental Minerals’ share price slipped 1 to close at 89. The company has about 129 million shares issued.