Inter-Citic keeps the faith at Dachang gold project

It’s been eight long years since Inter-Citic Minerals (ICI-T, ICMTF-O) signed a joint-venture agreement with the provincial government-owned Qinghai Geological Survey Institute on a promising grass-roots gold project called Dachang near the headwaters of the Yellow River in western China’s Qinghai province.

Despite the lengthy timeframe and a stock price that at less than a buck is trading at about the same level as it was four years ago, Inter-Citic’s enthusiasm for the project has not waned. Last year the Toronto-based miner mounted the largest-ever exploration program at Dachang with 28,000 metres of drilling.

The result was the publication in April of an updated resource estimate that was a 45% increase over the previous one. Dachang now hosts an inferred resource of about 24.9 million tonnes grading 3.63 grams gold per tonne, for a total of 2.9 oz. of contained gold. (The vast majority of the resource estimate was based on mineralization at surface to depths of less than 150 metres.)

And with comfortable cash reserves, (the company closed a C$16 million private placement in early February), Inter-Citic plans 50,000 metres of drilling this year, half of it allocated to resource expansion and the other half to detailed infill drilling along the current resource area. The company is in the thick of initiating work on a preliminary assessment or scoping study, too.

For now the resource area remains open at depth.

The system of gold mineralization at Dachang is large and the area has been the site of extensive gold placer working in streams over the past two centuries.

Nearly 30,000 soil samples were taken in 2004 and 2005 over the entire 279-sq.-km property. So far Inter-Citic has pinpointed, through soil geochemistry, more than 50 major new gold anomalies in addition to the original inferred resource, along with dozens of smaller ones.

Trenching remains one of the most successful and cost-effective methods of exploration at Dachang due to the thin soil cover and near-surface mineralization, Inter-Citic writes on its website.

In 2007 the company completed 196 drill holes for a total of 27,926 metres of drilling. Of those, 24,312 metres of drill testing was on the Dachang Main Zone (DMZ) and its eastern extensions.

Six drills are currently turning on the property. On January 8, results came in from 25 new diamond drill holes, 24 of which returned mineralized gold zones, with aggregate widths up to 34 metres within potential open-pit depths.

In early March, Inter-Citic reported on the final 27 diamond drill holes of 2007 at Dachang of which 25 returned mineralized gold zones, with aggregate widths up to 44 metres within potential open pit depths.

Earlier this month, Inter-Citic reported results from its third set of drill holes from this year’s drill program. Twenty-five of 26 holes encountered multiple zones of gold mineralization.

Highlights included drill hole CJV-414, which intersected multiple mineral zones including 31.8 metres averaging 3.39 grams gold per tonne and another with 18.2 metres averaging 2.34 grams gold per tonne.

Hole CJV-370 intersected multiple mineralized zones including 15.4 metres averaging 2.62 grams gold per tonne and hole CJV-397 intersected multiple mineralized zones including 18.6 metres averaging 3.80 grams gold per tonne.

Inter-Citic is currently trading at about 82 a share. Over the last year the company’s share price has traded within a band of 77-$2.50 per share.

The company has 82.49 million shares outstanding.