Maxy looks to play part in Chinas mining future

Getting a leg up in a country as vast and notoriously fickle as China is no easy task.

The optimism that fuelled an initial rush of foreign miners back in the early part of the decade was largely suffocated by the thick rolls of red tape unravelled by the socialist bureaucracy.

But Andre Gauthier, president and chief executive of Maxy Gold (MXD-V), is out to prove that failing at mining in China is more a problem of a lack of understanding, than any inherently insurmountable obstacles within the country.

We came in after all that stuff happened, Gauthier says of the initial surge of foreign investors. We let them sort it all out.

Gauthier, however, isnt just relying on the advantage of hindsight. With 17 years of experience with the former Cambior under his belt nine of which he spent heading exploration activities in Peru Gauthier has seen what it takes to get things done in cultures that dont run by North American clocks.

In any country you go to do business in, you have to remember that you are a visitor, he says. (Western companies) have to listen and not dictate.

With that philosophy in hand, Gauthier left South America to look for under explored regions of the world. The search brought him to China.

The first question was can we do business in China, he says. And the answer was yes on the condition that you have a partner. And by partner, I mean a real partner, one that shares in the exploration costs.

Unlike other juniors in the country, Gauthier was able to establish such a scenario by getting a deal done with Western Mining Group a government mining agency that will see the Chinese miner make proportionate contributions to exploration at their joint ventured projects.

In addition to the exploration dollars, Maxy is gaining the political and geological know how of Western Mining, as the company is already engaged in the mining and production of lead zinc and copper in China.

The joint venture centers around gold, copper, zinc and lead projects in the Qinghai province and Tibet. Maxy has the option to earn a 50% interest in both areas, but has yet to determine which properties it is most interested in.

By having Western Mining buy into Maxy it holds roughly 3.26 million shares of its roughly 31 million shares outstanding Gauthier has ensured that the two companies interests are aligned.

We have access to all the geophysical data, and that will help us to secure the best properties, he says.

In Qinghai, the Huangnan project lies near the eastern border of the province. Gauthier describes the area as a mining camp with some mines being operated by Western Mining.

Maxy has the right to 220 sq. km of prospective land, and Gauthier says the area is one of Maxys top priorities in terms of receiving exploration dollars.

Those dollars will come from the $7.25 million the company has in the kitty.

Exploration dollars will also flow to the Yunnan province which lies south of Qinghai as the company has the Luchun project and the Midu project there.

It holds an 85% interest in Luchun and a 75% interest in Midu.

At Midu seven drill holes returned highlights of 3 metres grading 1.6 grams at a depth of 31.1 to 34.1 metres and 16 metres graded 1 gram at a depth of 5.4 to 21.5 metres.

But Gauthier is especially bullish on results from an area in the heart of Midu known as Muluozuo.

It is there that one line of trenching returned 18 metres at 2.4 grams gold per tonne and 16 metres at 4.24 grams per tonne. Another longer trench returned 0.67 grams gold over 177 metres.

Gauthier describes mineralization as colluvial, which indicates that there is a source likely higher up on the formation, he says.

And while colluvial deposits aren’t typically associated with large scale mining, Gauthier points out that a portion of Newmont Minings famed Yanacocha mine takes from a colluvial deposit which Gauthier says, is similar in structure to Muluozuo.

In Toronto on Mar. 8 Maxy shares were up roughly 6% or 6 to $1.00 on 48,000 shares traded.