Jinshan gets green light to advance Dadiangou

Vancouver – A newly received business license has allowed Jinshan Gold Mines (JIN-V) to begin delineation drilling of a bulk-tonnage gold target at the Dadiangou property in Gansu Province, China.

Jinshan President Jay Chmelauskas states that the resource definition drilling program, combined with additional surface exploration, should provide the company with “additional growth opportunities” beyond the CSH 217 mine poised to begin production in early 2007.

The Dadiangou project lies within the prolific Qinling belt of central China, and covers about 15 sq km owned by the company’s joint venture partner, a unit of the Shaanxi Nuclear Geology Bureau of China. Previous work by the Bureau has defined an extensive, shear-hosted bulk-tonnage gold system with widths up to 20 metres and a mapped strike length reported to be over 3 km.

The Chinese partner tested the gold system with three exploration adits, including cross-cuts across the zone every 50 metres. The results of continuous underground channel sampling indicate an average grade of about 1.5 grams gold per tonne over “significant widths” (more than 40 metres in some locations). Only about one-third of the system has been tested to date by underground work. The untested areas are believed to be prospective for additional mineralization along strike and below the current workings.

Jinshan can earn a 71% interest in the joint venture by spending US$3.3 million on exploration and paying its partner US$1.3 million. This can be increased to 80% by spending another US$2.8 million, including additional payments of US$300,000 to its Chinese partner.

Jinshan previously received a mining permit for its CSH 217 gold mine, now under construction in Inner Mongolia. The open-pit project is expected to become China’s fourth largest gold mine, producing about 117,000 oz. annually for at least nine years. Cash costs are projected at US$253 per oz.

Based on a April 2006 technical study, the project hosts measured and indicated resources of 110 million tonnes grading 0.83 gram gold per tonne, or about 2.9 million contained oz. gold, based on an 0.5-gram cutoff grade. Inferred resources add another 18 million tonnes grading 0.78 gram gold, or about 460,000 contained oz.