Red Dragon seeking Chinese zinc projects

As it plays the waiting game for permits at its Boaming zinc project in southwestern China’s Yunnan province, Red Dragon Resources (DRA-V, RDDRF-O) is making plans to expand its zinc portfolio by optioning neighbouring properties in Yunnan’s Weixi district.

Red Dragon has signed a letter of intent with private Chinese company AP Energy Investments to buy, explore and develop several zinc properties, some of which are located about 25 km southeast of its Boaming and Shanchuan zinc projects.

AP Energy has purchased Baimaji Mining, which owns a mining lease on one of the properties, but the company is still in discussions with several property owners to buy and consolidate the surrounding mining leases and exploration concessions totalling 15 sq. km.

The properties are about 100 km north of the Lanping zinc mine — the largest in the country. Lanping produces about 100,000 tonnes of zinc per year.

The area is known to host lead-zinc mineralization over an 8-km strike length, and is mined by small-scale artisanal miners.

Grab samples taken from outcrops and adits on the AP Energy properties graded up to 27.6% zinc with an average of 6-10% zinc.

Red Dragon will have a 9-month due-diligence period to evaluate the potential of the project. If the company decides to continue after that, it has the option to earn up to 60% by funding further exploration or a feasibility study costing 1.5 times AP Energy’s total investment in the property. The amount spent during the due-diligence period will count towards the 60% earn-in.

Meanwhile, Red Dragon has been unable to start drilling at the Boaming project because it hasn’t received a drilling permit from the Chinese central government. The company must wait until the borders of a proposed nearby nature reserve are determined before the permit will be awarded.

“I am confident that we will eventually receive the permit, although the permitting process has taken longer than expected,” said Alvin Jackson, Red Dragon chairman and CEO.

Just in case, Red Dragon is considering moving the drill and crew to the Baimaji project to get started on due-diligence drilling.

Until it gets the permit, the company will continue with low-cost exploration programs on both the Boaming and Shanchuan projects to define new drill targets.