WANGUO INTERNATIONAL MINING GROUP LIMITED Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
Wanguo International Mining Group Limited
萬國國際礦業集團有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 3939)
CLARIFICATION VOLUNTARY ANNOUNCEMENT
- INFORMATION ON GOLD RIDGE PROJECT
Reference is made to the voluntary announcement of Wanguo International Mining Group Limited (the "Company") dated 13 August 2020 (the "Original Announcement") in respect of information on the Gold Ridge Project. Capitalised terms used herein shall have the same meanings as those defined in the Original Announcement unless stated otherwise.
The Company wishes to clarify that:-
- there are inadvertent typos noted in the section headed "3.1 MINE DESIGN AND SCHEDULING" on page 10 and the section headed "3.7 DEVELOPMENT AND CONSTRUCTION" on page 21 of the Original Announcement; and
- other than the above, there are also certain clerical and translation errors noted in the Chinese version of the Original Announcement.
A revised announcement (with the changes underlined for easy reference) as annexed hereto shall replace and supersede the Original Announcement.
By Order of the Board
Wanguo International Mining Group Limited
Gao Mingqing
Chairman
Hong Kong, 18 August 2020
As at the date of this announcement, the Board comprises Mr. Gao Mingqing (Chairman), Ms. Gao Jinzhu, Mr. Xie Yaolin and Mr. Liu Zhichun as executive Directors; Mr. Li Kwok Ping and Mr. Lee Hung Yuen as non-executive Directors; and Dr. Lu Jian Zhong, Mr. Qi Yang, Mr. Shen Peng and Mr. Wang Xin as independent non-executive Directors.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
Wanguo International Mining Group Limited
萬國國際礦業集團有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock code: 3939)
VOLUNTARY ANNOUNCEMENT (REVISED)
INFORMATION ON GOLD RIDGE PROJECT
This announcement is made by the Company on a voluntary basis.
Reference is made to the announcements of the Company dated 30 April 2020 and 21 May 2020 in respect of completion of the acquisition of majority shareholding in AXF Gold Ridge Pty Ltd which indirectly owns the Gold Ridge Mine in the Solomon Islands.
The Board is pleased to provide the Shareholders and potential investors with additional
information in relation to the Gold Ridge Project as extracted from the Competent Person's
Report and Feasibility Study.
Project Progress Highlights
Prior to the completion of the aforesaid acquisition, the Group fully assessed the Gold Ridge Mine and its development potentials via engaging industry experts in respect of resource estimate, mining study, metallurgical test-work, environmental study and management, engineering designs etc. The total estimated Mineral Resources are around 75.8Mt containing
3.5 million ounces of gold, and Probable Ore Reserves are around 31.2Mt containing 1.434 million ounces of gold. With the processing rate of 2.5Mtpa, the Gold Ridge Mine has a life of mine of 13 years with an average cash cost of US$792 per ounce.
The Gold Ridge Project has great exploration potential. In particular, the existing drilling data shows that the high-grade mineralization occurs at depth ranging from 150m to 300m that remains open in all directions. Based on Golder's Resource model, this orebody amounts to 10.89Mt of additional resources with an average grade of 2.62g/t Au. There is huge potential to extract the orebody through underground mining. The Group has commenced a drilling program within the Mining Lease area since September 2019 to upgrade and increase mineral
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resources. Drilling results highlight the possibility that the high-grade resources of Charivunga Deposit would be increased significantly.
As disclosed in the Company's announcement dated 5 September 2019, the Group entered into a construction and mining contract with the subsidiaries of China Railway Group Limited. Trial production is planned in fourth quarter of 2021 with full production by end of 2021. In terms of site infrastructure, the Company has made significant progress, including but not limited to tailings dam improvement, accommodation camp and the existing administration block refurbishment, access roads reinstatement and civil works in preparation for the process plant refurbishment. In addition, GRML has successfully extended the term of its Mining Lease to 12 March 2034 (with an additional 10 year extension).
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TABLE OF CONTENTS
3
1. GLOSSARY
In this Announcement, the following expressions have the meanings set out below unless the context requires otherwise:
"Allied Gold" | Allied Gold Mining Plc was a public limited company |
registered in England and Wales. Allied Gold was a South | |
West Pacific gold producer, developer and exploration | |
company with ordinary shares listed on the Official List of | |
the London Stock Exchange, Sydney Stock Exchange and | |
the Toronto Stock Exchange. It was delisted in all three | |
Exchanges, after St Barbara (ASX: SBM) acquired Allied | |
Gold and became its sole shareholder on 7 September 2012 | |
"As" | the chemical element symbol for arsenic |
"A$" | Australian dollars, the lawful currency of Australia |
"ASG" | Australian Solomons Gold Pty Ltd (ACN 109 492 373), a |
company incorporated in Queensland, Australia which is | |
owned as to 90% by AXF Gold Ridge and as to 10% by | |
GCIL | |
"Au" | chemical element symbol for gold |
"Australia" | The Commonwealth of Australia |
"AXF Gold Ridge" | AXF Gold Ridge Pty Ltd (ACN 611 879 120), a company |
incorporated in Australia and which is owned as to 77.78% | |
by Wanguo, 20.22% by AXF Resources and 2% by | |
Mr Shuang Kui Ren | |
"AXF Resources" | AXF Resources Pty Ltd (ACN 604 730 181), a company |
incorporated in Australia | |
"Board" | the board of Directors |
"Company" or "Wanguo" | Wanguo International Mining Group Limited, a company |
incorporated in the Cayman Islands with limited liability, | |
the issued Shares of which are listed on the Main Board of | |
the Stock Exchange | |
"Competent Person's | a competent person's report dated 20 September 2019 in |
Report" | relation to the Gold Ridge Project issued by the |
Independent Technical Expert |
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"Director(s)" | director(s) of the Company |
"Feasibility Study" | a feasibility study report dated 29 October 2018 in relation |
to the Gold Ridge Project issued by Golder | |
"GCIL" | Goldridge Comminity Investment Limited, a company |
incorporated in Solomon Islands and which holds 10% | |
equity interest of ASG | |
"Gold Ridge Mine" | the gold mine located on the island of Guadalcanal, the |
central island of the Solomon Islands, approximately 30 km | |
south-east of Honiara, the capital city of the Solomon | |
Islands | |
"Gold Ridge Project" | the project concerning the development and operation of the |
Gold Ridge Mine | |
"GRML" or "Project | Gold Ridge Mining Limited (Solomon Islands company |
Company" | number 20111559), a company incorporated in Solomon |
Islands in which ASG owns a 100% attributable interest | |
"Group" | the Company and its subsidiaries |
"g/t" | gramme(s) per tonne |
"Hong Kong" | the Hong Kong Special Administrative Region of the |
People's Republic of China | |
"Independent Technical | Golder Associates Pty Ltd, one of the most respected global |
Expert" or "Golder" | groups specialising in mining consulting, ground |
engineering and environmental consulting services, having | |
a team of over 30 Qualified Persons (QP) and Competent | |
Persons (CP) who can audit and review mining assets to | |
current international reporting standards including NI | |
43-101 (Canada), JORC Code 2012 (Australia & others), | |
SEC Industry Guide 7 (USA), SAMREC (South Africa), | |
and PERC (Europe) | |
"JORC Code (2012)" | the 2012 Edition of the Australasian Code for Reporting of |
Exploration results, Mineral Resources and Ore Reserves | |
"km" | kilometre(s) |
"km2" | square kilometre(s) |
"kt" | kilotonne(s) |
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"Mining Area" | a place where various minable resources (e.g. ore, essences, |
stones and gems, etc.) can be mined. These may be | |
aboveground (pits, quarries or outcrops) or underground | |
(mines) | |
"Mining Lease" | the mining lease originally granted by the Minister under |
the Mining Act 1990 of Solomon Islands in respect of the | |
Gold Ridge Project on 12 March 1997 (ML01/1997) | |
"Minister" | the Minister for Energy, Mines and Rural Electrification |
(Solomon Islands) | |
"Mt" | million tonne(s) |
"Mtpa" | million tonne(s) per annum |
"NI 43-101" | This national Instrument is a codified set of rules and |
guidelines for reporting and displaying information related | |
to mineral properties owned by, or explored by, companies | |
which report these results on stock exchanges within | |
Canada. | |
"Project Agreement" | the Gold Ridge Mining Agreement dated 7 March 1997 |
between, among others, the Minister and GRML | |
"S" | Chemical element symbol for Sulfur |
SIG | Solomon Islands Government |
"St Barbara" | St Barbara Limited, (ASX: SBM), is a company |
incorporated in Australia. Its Group is engaged mining and | |
the sale of gold, mineral exploration and development | |
"TC/RC" | Treatment and refining charges for Processing concentrates |
"US$" | United States dollars, the lawful currency of the United |
States of America | |
"%" | per cent |
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2. GENERAL DEVELOPMENT OF THE GOLD RIDGE PROJECT
2.1. OVERVIEW
The Gold Ridge Project is a gold resource project located in the Solomon Islands, in the eastern Pacific Ocean at Latitude 9o35' south, Longitude 160o08" east on the island of Guadalcanal about 30 km southeast of the capital city of Honiara. Access from Honiara include about 25 km of paved state highway followed by unsealed road to the Project site.
The Gold Ridge Project consists of a Mining Lease granted 12 March 1997 (No 1/1997) that covers an area of 30km2 and a letter of intent to renewal the prospecting license (PL02/14 or SPL194) that covers an area of 130km2. The Gold Ridge Mine deposits are concentrations of low-sulfidationintrusion-related epithermal gold mineralization. It consists of five known mineralized deposits from Valehaichichi, Charivunga, Namachamata, Kupers and Dawsons.
The Gold Ridge Mine is a former producing mine that was shut down in April 2014 due to tropical cyclone and flash floods and subsequently transferred by St Barbara to the local landowner investment company GCIL. The Company controls the Mine through a Solomon Island entity GRML which holds 100% ownership of the Mine. The Mine includes historic resources and a mill facility that requires refurbishment following the transfer of the Mine to GCIL.
Wanguo engaged Golder Associates Pty Ltd ('Golder') to update the feasibility study prepared for ASG by Ausenco International Pty Ltd ('Ausenco') and assess the economic viability and technical feasibility of recommencing operations at Gold Ridge. Other specialist consultants were engaged by the Company/GRML to provide the following services:
Table1: List of independent specialist consultants engaged in Gold Ridge Project
Resource Estimates | Golder |
Mining Studies | Golder |
Metallurgical Testwork | Xiamen Zijin Technology of Mining & |
Metallurgy Ltd. ('Zijin') | |
Environmental (Baseline Study, | Coffey Australia |
Environmental Management Plan) | |
Engineering designs (Process Plant | China Nerin Engineering Co. ('Nerin') |
Refurbishment and New Tailings Storage | |
Facility) |
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2.2. HISTORY
Gold was first discovered in 1568 by Spanish explorers downstream from the Gold Ridge area. Gold was again discovered in the Gold Ridge catchment in 1931 and was traced to soils and bedrock at Gold Ridge in 1936. Prospecting commenced in 1939 but it was not until after 1982 that detailed and systematic exploration of the Project area was carried out.
From 1983 to 1992 the exploration was carried out firstly under a joint venture between Cyprus Minerals and Arimco NL. During that time 35,000m of diamond core and 21,000m of reverse circulation (RC) drilling were completed. The project was acquired by Saracen Minerals in 1992 after being relinquished by the joint venture. Saracen then sold its interest in the project to Ross Mining NL in March 1995.
In June 1995 an evaluation program commenced that included diamond core and RC drilling and a metallurgical appraisal of the Gold Ridge ore types. After a cumulative total of about 32,000m of drilling, a feasibility study was completed in 1996. Construction of the 2Mtpa open cut mine started in 1997 with mining of the Valehaichichi deposit commencing in August 1998. In 2000 ownership passed to Delta Gold Pty Ltd and ultimately via a series of takeover and mergers to Placer Dome Asia Pacific. The Mine was shut down in June 2000 as a result of escalating civil unrest in the Solomon Islands and the ownership eventually passed to ASG via public tender in November 2004. During these 22 months that the Gold Ridge Mine was actively operating the total gold production amounted to approximately 210,000 ounces.
ASG completed about 20,100m of diamond core drilling, commissioned Ausenco to complete a feasibility study into recommencing operations at the Gold Ridge Mine in 2007 and secured finance from the International Finance Corporation and European Investment Bank in 2009.
Allied Gold acquired the Gold Ridge Mine in late 2009 through the takeover of Toronto-listed ASG and invested A$150 million to refurbish and redevelop the Mine with an increase of throughput to 2.5Mtpa. The Gold Ridge Mine recommenced production in March 2011 with 200,000 tonnes of stockpiling and commenced accessing Namachamata deposit. St Barbara acquired the Gold Ridge Mine via its acquisition of Allied Gold on 7 September 2012 at the height of the market and continued operations at the Gold Ridge Mine until April 2014 when tropical cyclone Ita hit causing heavy rainfall and flash floods. St Barbara subsequently transfer the ownership of the Mine to GCIL in 2015. During the Allied Gold and St Barbara operating period (around 35 months), the Gold Ridge Mine produced around 190,600 ounces of gold, and undertook around 29,000m of exploration diamond core drilling.
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AXF Resources acquired 90% of the Mine from GCIL, and the Group acquired about 70% of the Mine from AXF Resources.
2.3. RISK FACTORS
The Gold Ridge Project is exposed to inherent risks related to the nature of mining operations, exploration and development activities, as well as risks related to its operating environment including social and environmental factors.
The Company is developing an overall risk management strategy which includes maintaining a risk register with assessments of the key risks that the Company is exposed to together with the associated mitigation strategies.
The key risks that led to project failure in the past include a low gold price together with failure to achieve the expected metallurgical recovery, extreme weather events and local stakeholder conflicts.
In relation to gold price and ore quality-related risks, the Company's mitigation strategy centers on optimising gold recovery and cost management which includes the selection of a processing method most suitable for the Gold Ridge ore type while minimising environmental risks, and careful cost management and rapid cost containment during periods of downturn.
In relation to extreme weather events and tailings storage facility (TSF) management risks, the Company's mitigation strategy involves establishing weather monitoring and emergency response policies and procedures, improving structural integrity of the spillway and dam wall, reducing the water run-off from the surrounding catchment area into the TSF, and managing processing water volume and quality. In the past, the structural safety of tailings dam and water quality management have been the key risks to the project. In November 2018, the Project company GRML has submitted plans to SIG to address these legacy issues, including tailings dam safety monitoring measures and a preliminary environmental management plan, as part of the Project's development deed submission. In addition, the Project company GRML has been taking measures in the interim, for example, construction of a water diversion channel and emergency spillway improvements, to ensure TSF safety.
Strategies to minimise conflict and project downtime include establishing a collaborative partnership with landowners, putting in place fair and equitable benefits streams, implementing socially inclusive engagement, ongoing social impact management and monitoring, removing and keeping illegal miners out of the pits and empowering landowners to understand and assist with mitigating any negative impacts on the Gold Ridge Mine. To this end, the Company has developed a full suite of social management plans, including social management, local employment and workforce localisation, local buying and business development, community and landowner development, and stakeholder engagement plans.
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To manage the environmental risks, the Company has engaged an internationally reputable consultant, Coffey Australia, to prepare an environmental management plan to manage river and stream water potential contamination risks, excessive noise and dust, and tailings dam related risks.
3. DESCRIPTION OF THE GOLD RIDGE PROJECT
3.1. MINE DESIGN AND SCHEDULING
On 5 September 2019, the Group entered into a construction and mining agreement sub-contracting mining activities at Gold Ridge to an internationally reputable construction company. Mining activities are expected to commence before May 2021.
The Golder Feasibility Study (2018) ('Golder FS') mine design consists of multiple small pits and stages within the main pits representing the three main mineralised zones at Gold Ridge Project (North, Central and South). The design has primarily three separate conventional open pit layouts with orebody access provided through a series of ramps. The table below shows the mined physicals for Ore Reserves by year as set out in the Golder FS and reviewed by Mr Songlin Zhang (Chief Technical Advisor, Wanguo International Mining Group) and a "qualified person" for the purpose of NI 43-101. The block model provides total estimated Probable Ore Reserves of 31.2Mt containing 1.434 million ounces of gold. At a processing rate of 2.5Mtpa, the Probable Ore Reserves, being the economically mineable part of the Mineral Resources will be mined over a period of 13 years. The waste to be mined within the pits is around 36Mt giving a strip ratio of 1.2. The Golder FS has not considered the Mine's underground potential.
Table 2: Tonnes and grade of ore and tonnes of waste by year
Year | Ore Feed (kt) | Feed Grade (g/t Au) | Waste Mined (kt) |
2020 | 1,562 | 2.00 | 4,764 |
2021 | 2,500 | 1.54 | 4,980 |
2022 | 2,500 | 1.50 | 4,616 |
2023 | 2,500 | 1.59 | 3,908 |
2024 | 2,500 | 1.51 | 2,797 |
2025 | 2,500 | 1.46 | 2,463 |
2026 | 2,500 | 1.31 | 2,361 |
2027 | 2,500 | 1.42 | 2,030 |
2028 | 2,500 | 1.51 | 2,250 |
2029 | 2,500 | 1.49 | 2,869 |
2030 | 2,500 | 1.36 | 2,408 |
2031 | 2,500 | 1.22 | 543 |
2032 | 2,181 | 0.77 | - |
Grand Total | 31,244 | 1.43 | 35,991 |
In the Oxide and Transition zones a mixture of free digging, ripping, drilling and blasting methods can be employed. In the fresh, competent material at depth, conventional
10
pre-splitting followed by drill and blast will be used to extract the rock. Given the variable nature of the weathering profile it has been assumed that all ore and waste rock will require drill and blast; in practice there may be some localised areas that are amendable to free-dig.
Mining will consist of a conventional shovel operation using 100 tonnes class excavators in a face-shovel configuration and 40 -tonnes (Cat740) articulated dump trucks hauling on designed access roads. An auxiliary mining fleet of dozers, graders, water carts and utility vehicles will support the mining operation.
Whittle 4X pit optimisation software was used to determine the pit geometry that provides the highest value for a deposit considering parameters such as slope angles, mining, processing and selling costs, cut-off grades (mass recovery), product price and plant recoveries. A combination of incremental value, physical operating constraints and strip ratios was used to identify the geometry of mining phases inside the final selected pit.
3.2. METALLURGICAL TEST WORK AND PROCESS PLANT DESIGN
The Company is actively negotiating with potential engineering, procurement and construction (EPC) contractors for the process plant refurbishment for gold concentrate production. The process plant will have a built capacity of over 2.5Mtpa. Trial production is planned for 2021/Q4 with full production planned by the end of 2021. The process plant will be a conventional sulfide flotation circuit producing gold concentrate for export to processing and refining facilities in China. A gravity circuit is designed in advance of flotation.
The Company has selected the process plant design based on metallurgical test works performed by Zijin on ores from the Gold Ridge Mine. Golder audited the test works performed and confirmed the results and recommendations in the Golder FS. In the Golder FS, an average estimated 93.6% recovery for the fresh and oxide ore has been applied in the life of mine plan with a plant scaling factor of 90%. Detailed engineering redesign of the previous process plant has been contracted to Nerin.
3.3. MINERAL RESOURCES AND RESERVES
The following tables set out the Gold Ridge Mine's Ore Reserves and Mineral Resources estimated in the Golder FS. Estimation of Mineral Resources is based on information provided to and compiled by Dr Sia Khosrowshahi (Golder), a "competent person" as defined in the JORC Code (2012). The information relates to Ore Reserves is based on information provided to and compiled by Mr Glenn Turnbull (Golder), a "competent person" as defined in the JORC Code (2012). Mr Songlin Zhang (Chief Technical Advisor, Wanguo International Mining Group), a "qualified person" for the purpose of NI 43-101, is responsible for the review of Mineral Resources and Ore Reserves estimates contained in Table 3 and Table 4 below. The estimations have been prepared in line with the JORC Code (2012). Reported Ore Reserves were estimated using a long-term gold
11
price assumption of US$1,300 per ounce and Mineral Resources were estimated using a - gold price assumption of US$1,950 per ounce (i.e. 1.5 times of the assumed long-term gold price).
Gold Ridge Project is highly prospective and under-explored with attractive brownfield exploration targets. Current Mineral Resource estimates have been derived from samples collected from diamond core drilling and some RC drilling programs in the Mine's drilling database which contains 4,565 holes and 221,310m of drilling. The Golder FS has identified a number of exploration programs that could potentially increase the Mineral Resources (see Exploration Section below for details).
Table 3: Gold Ridge Mineral Resources on 31 March 2018 at 0.6 g/t Au cut-off
Mineral | Resource | Tonnes | Gold | Contained | As | Cu | S |
Class | (Mt) | Grade | Gold | (ppm)* | (ppm)* | (%)* | |
(g/t Au) | (k oz Au) | ||||||
Measured | 24.1 | 1.35 | 1,000 | 232 | 84 | 1.51 | |
Indicated | 20.4 | 1.34 | 900 | 119 | 88 | 1.43 | |
Inferred | 31.3 | 1.55 | 1,600 | 79 | 91 | 1.47 | |
Total** | 75.8 | 1.43 | 3,500 | 139 | 88 | 1.47 | |
Notes: | *Due to the sparseness of As, Cu and S assays these contaminant grades are indicative only. |
**Totals may not add up due to rounding.
The 2014 topographic mined out surface was used as the upper boundary of the Resource model. This surface was provided by mine surveys at the cessation of mining on 1 April 2014. To limit the extrapolation of grades at depth in the Resource model, a surface representing the Base of Drilling was created.
A pit shell at 1.5 times the base revenue and approximately equivalent to a pit shell optimised with a US$1,950 per ounce gold price was selected to limit the reporting of Mineral Resources above the 'reasonable prospects for eventual economic extraction' (RPEEE) pit sell. This was further constraint with a 0.6g/t Au cut-off grade.
Mineral Resources were classified according to the following criteria and assumptions:
- Measured Resource: a relative drill spacing of 25 by 25m or less;
- Indicated Resource: a relative drill spacing of 50 by 50m or less;
- Inferred Resource: all remaining estimated blocks to the Base of Drilling.
The Mineral Resource model is the basis for the mining model used for the life of mine planning, financial assessment and reporting of Ore Reserves.
The JORC Code (2012) Ore Reserve estimate is based on the revised JORC Code (2012) Mineral Resource model and incorporates a number of factors and assumptions. The base case optimization was run using Measured and Indicated Resources only with a cut-off grade of 0.6 g/t Au. Process costs and mining costs have been developed by Golder and Wanguo and compared with similar gold projects.
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Table 4: Gold Ridge Project - Ore Reserves at April 2018
Ore Reserve Class | Tonnes | Gold Grade | Contained Gold | ||||||||
(Mt) | (g/t Au) | (k oz Au) | |||||||||
Probable | 31.2 | 1.43 | 1,434 | ||||||||
Notes: The Ore Reserve conforms with and uses the JORC Code (2012) definitions The Ore Reserve was estimated using a fixed cut-off grade of 0.6 g/t Au Ore block grade and tonnage dilution were incorporated through the use of an Ordinary Kriged Resource Model
All figures are rounded to reflect appropriate levels of confidence Apparent differences may occur due to rounding.
The mining input model has retained the Mineral Resource model using a parent block model size of 5m (east) by 10m (north) by 3m (elevation). Mining is proposed to take place on 3m flitches within 6m benches. The use of Ordinary Kriging provides a fair representation of the anticipated equivalent ore loss and dilution with the proposed selective small-scale mining method.
Metallurgical test work was used to estimate the recoverable fraction from the Oxide, Transition and Fresh ore components, with grade estimates for gold, arsenic, sulfur and copper in the block model. Due to the sparseness of As, Cu and S assay data the estimates for these elements are considered indicative only.
3.4. EXPLORATION
3.4.1. Current Resource estimates based on Feasibility Study 2018
As indicated above, the Gold Ridge Project has a great exploration potential. The Golder FS identified that there is significant potential to extend the life of the Gold Ridge Mine through replenishment and potential increases in Mineral Resources by:
-
continuing an exploration program over untested or under-explored parts of areas under the Mining Lease and the prospecting license for the 'Vunusa Project'
(previously known as SPL194); - replenishment of Ore Reserves due to mining depletion by systematic conversion of Inferred Mineral Resources (being Mineral Resources for which tonnage, grade and mineral content can be estimated with a low level of confidence) to an Indicated or Measured classification (being classifications which higher levels of confidence), and regular updates to the life of mine pit design and schedule; and
- infill drilling of Measured and Indicated Resources to improve the accuracy of the Gold Ridge Mine plans.
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In particular, the existing drilling data shows that the high-grade mineralization occurs at depth ranging from 150m to 300m, in the area of about 200m by 200m. This high-grade mineralization cannot be converted into resources due to its depth. There is a huge potential to extract the orebody through underground mining. This high-grade zone remains open in all directions, as shown in the following two figures of N-S and W-E-cross-sections of the orebody.
Figure 1: N-Scross-sections of the orebody
Figure 2: W-Ecross-sections of the orebody
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The Golder FS further identified potentials for gold mineralisation extensions around the Charivunga deposit linking the current Namachamata and Kupers pits, and underground mining targets at the Charivunga deposit, through additional confirmation and stepping out drilling.
Most of these resources are located at the Charivunga deposit below the altitude of 295m. Controlled by 31 exploration drilling holes, Mineral Resources of this orebody are estimated to be around 26.69Mt, with an average grade of 1.65g/t of Au. This orebody (with a probable strike extent of 600m, dip extent of 400m, a depth between the altitude of 295m to -16m, and thickness of 150m to 200m) lies between the Namachamata and Kupers pits and is open long strike in both directions and at depth.
Within the current Mineral Resource estimates, additional drilling is planned to: upgrade the Resources that are outside of the designed mining pit shell which amount to 43.97Mt with an average grade of 1.45g/t Au; and test the orebody's extension and continuity.
Figure 3 Plan view of proposed Charivunga drillholes
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3.4.2. Drilling Program since 2019
The Group has commenced a drilling program within the Mining Lease area since September 2019 to upgrade and increase Mineral Resources at Gold Ridge, and for the purpose of undertaking metallurgical recovery optimization tests before commencing underground mine design works. The proposed underground mining will focus on the parts of this orebody with a cut-off grade of 1.5g/t Au. Based on the Golder Resource model, the Mineral Resources of this orebody are estimated to be around 10.89Mt with an average grade of 2.62g/t Au. The drilling program comprises of eleven designed diamond drill holes ("DDH"), including confirmation and stepping out holes, of which four DDH have been completed.
Drilling Result
Charivunga Deposit drilling result highlights are:
- DDH drilling at Charivunga Deposit intersects thick layers of gold mineralization;
- DDH WG013 returns significant intersections of total 136m @ 3.1 g/t Au from 32m, which includes a consecutive layer of 78m @ 3.5 g/t from 275m (including 30m @ 6.3 g/t from 323m);
- The host strata for gold mineralization is Toni conglomerates, mainly in the Lower Pliocene Gold Ridge Volcanics and sedimentary rocks;
- Potential for a large and high-grade gold mineralization system and open in all directions; and
- Four completed DDH reveal huge thickness of low sulphidation epithermal to mesothermal gold mineralization in altered and fresh strata.
Assay results
The assay results of the four DDH are summarized as
- WG011 - 225m @ 2.3 g/t (1 g/t cut-off grade) from 70m, and 284m @ 2.0 g/t (0.5 g/t cut-off grade) from 66m
- WG012 - 180m @ 2.1 g/t (1 g/t cut-off grade) from 31m, and 288m @ 1.6 g/t (0.5 g/t cut-off grade) from 23m
- WG013 - 136m @ 3.1 g/t (1 g/t cut-off grade) from 32m, and 207m @ 2.3 g/t (0.5 g/t cut-off grade) from 24m
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- WG014 - 139m @ 2.2 g/t (1 g/t cut-off grade) from 148m, and 225m @ 1.6 g/t (0.5 g/t cut-off grade) from 28m
Figure 4 indicates that the two drill holes of WG011 and WG012 confirm the high grade mineralization illustrated on the Golder resource model, the two step-out drill holes of WG013 and WG014 verify the high grade zone continuity to the east for approximately 150m. The high grade mineralization remains open in all direction. As shown from the current drill holes completed in Figure 4, it is highly possible that the high grade resources of Charivunga Deposit would be increased significantly, the deep portion deposit is ideal for portal decline underground development system to extract the resource economically.
Figure 4: W-Ecross-sections of the orebody with four Wanguo drilling holes
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3.5. ENVIRONMENTAL AND PERMITTING
The Gold Ridge Project was fully permitted and operated for 22 months until its closure in June 2000. ASG/Allied Gold operated under the same permits and approvals as were originally granted, including Mining Lease granted in March 1997 to mine for gold, silver and base metals at the Gold Ridge Mine, central Guadalcanal pursuant to the Mines and Minerals Act 1990 of the Solomon Islands. In the letter from the Ministry of Mines, Energy and Rural Electrification (the "Ministry") to AXF dated 18 August 2017, the SIG confirmed that all the licences, permits and approvals granted to the Project company GRML (including the key ancillary authorisations constituted Annexure J to the Mining Lease) are legally valid, binding and with good standing. These licences, permits and approvals form part of the Mining Lease. The 24 key ancillary authorities listed in the Mining Lease include tax exemptions, royalty prescription, foreign exchange approval, gold and silver export licence, Electricity Act licence, fuel depot land grant/quarantine/storage licence, mine road access licence, water diversion permit and timber cutting licence.
The Mining Lease is for a term of 25 years, expiring on 11 March 2022 with a right of renewal for additional successive terms not exceeding ten years, each to be agreed by GRML and SIG. However, due to a number of force majeure events (i.e., civil unrest in 2000 and tropical cyclone in 2014) that had affected the project, GRML applied for the term to be extended to accommodate such force majeure events and as per its rights under the Mining Lease and the Mines and Minerals Act 1990 of the Solomon Islands. In the letter from the Minister of the Ministry to GRML dated 16 April 2019, SIG agreed to an aggregate force majeure extension for the Mining Lease of 12 years. The expiry date for the Mining Lease (together with the rights and obligations therein, including the required licences, permits and approvals) is therefore 12 March 2034.
The Mining Lease is administered under the Project Agreement between GRML and SIG, pursuant to which GRML has the exclusive right to mine for minerals in the Mining Area during the term of the Mining Lease. Under the Project Agreement, the Gold Ridge Project is subject to a gross royalty payment of 3% on all production, of which 1.5% is held by SIG, 1.2% is held by the landowners, 0.3% is held by the Guadalcanal Provincial Government.
The Mining Lease was granted based on the original Environmental Impact Statement prepare by Ross Mining in 1997 and the Agreement with the Goldridge Community and Landowners Association dated 4 October 1996. A Social Impact Assessment was conducted by Ross Mining in 1998. These environmental and social performance standards for the Gold Ridge Mine were updated and supplemented by the Golder Associates' 2005-06 reports on geotechnical, geochemical and environmental investigation of the Gold Ridge Mine Site, Project Environmental Management Plan and Agreements with the Goldridge Community and Landowners Association, Kolobisi Tailings Dam Association and Matepono Downstream Association dated 31 May 2006.
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The Company has commenced an audit of the 1996 and 2006 Agreements with landowner associations to ascertain the ongoing obligations that require to be met. In addition, the current Project requires to complete an updated Environmental Management Plan prior to commencing mining activities.
The Project company GRML has submitted a prospecting licence application to SIG to renewal the Project's prospecting licence (SPL194/PL02/14) in March 2019 and has been issued a letter of intent to grant the prospecting licence subject to the signing of a surface access agreement with relevant landowners. Applications for the other three tenements have been completed but not yet submitted.
3.6. INFRASTRUCTURE
The Gold Ridge Project is a brownfield development, with considerable infrastructure remaining from the previous operations, although major refurbishment is required to most of the plant and equipment at site. Mine site infrastructure includes workshops and warehouse, water supply, power generators and building, road access, tailings storage facility and an on-site camp for 150 people (which has recently been refurbished).
The access roads within the Mining Lease area have suffered some degradation and will need to be reinstated and upgraded prior to resumption of mining and pre-mining activities. The Company has made significant progress in reinstating access roads. The installation of drainage culverts and re-building of the river crossing will be required prior to resumption of mining activities. The surface of the off-site access road from the highway through the oil palm plantation to the Mining Lease boundary is in poor condition and subject to ongoing reinstating and maintenance.
The accommodation camp and the existing administration block have mostly been repaired and refurbished.
The existing power generation facilities were removed by the supplier after suspension of operations in 2014. The existing power station building does appear to be in suitable condition for refurbishment and reinstatement as a power station for the Gold Ridge Project. The Company intends to acquire its own diesel-powered generator sets initially while exploring hydropower options.
The existing tailings storage facility designed by Golder in 1998, is situated around 7.5km north of the processing plant. It was designed to be built in 5 stages with a total capacity of around 20 million m3. Currently completed stage 2, the facility's capacity was around 8.735 million m3 with 1.6 million m3 remaining. Even with the completion of all 5 stages, its remaining service life is less than 5 years, which is not sufficient to cover the life of the Mine. As such, in tandem to continue releasing water from the existing tailings facility and constructing flood diversion channel and improved emergency spillway, the Company is engaging Nerin to prepare design options for a new tailings dam.
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3.7. DEVELOPMENT AND CONSTRUCTION
To recommence production at the Gold Ridge Mine as soon as possible, the Company plans to develop the Mine in two phases:
- Phase One ('Brownfield Phase') - to recommission the Mine in accordance with the Golder FS, which is based on the following key parameters:
- Currently confirmed Mineral Resource and Ore Reserve estimates;
- Open pit mining;
- Flotation processing method to improve recovery of fresh ore; and
o Continue to use the current tailings storage facilities (with structural strengthening).
- Phase Two ('Greenfield Phase') - to investigate and develop the 'potentials' mentioned in the Golder FS including:
- Increase Mineral Resources and Ore Reserves;
- Underground mining;
- Onsite smeltering to gold dore; and
- Construct a new tailings facility to accommodate mine life.
The Phase One redevelopment of the Gold Ridge Mine comprises of refurbishing parts of the existing 2.5Mtpa process plant and related facilities, construction of the additional flotation process plant and pre-strip for the open pit mining operations.
Process plant refurbishment includes but not limited to:
- repairing the power supply system for all necessary equipment;
- repairing all necessary electrical equipment;
- replacing all necessary engines;
- repairing and restoring the crusher, grinder and beneficiation system to its original designed production capacity; and
- construction of the new flotation process plant.
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The Company's expected timetable for the redevelopment construction works is as follows:
Redevelopment Construction Works | Expected commencement date |
Peak recommissioning | September 2020 |
Trial production | Q42021 |
Full production | End of2021 |
This timetable assumes that SIG relax its COVID-19 related border restrictions or grant entry exemptions by August 2020.
With the planned onsite activity restart date of August/September 2020, concurrent to progressing Phase One peak recommissioning activities, the Company plans to:
- complete the drilling program by the end of 2020 to enable the detailed underground mine design;
- complete the flotation concentrate refinery test program by the end of 2020;
- commence Environmental and Social Impact Assessment (ESIA) for the new tailings facility site in September 2020;
- commence land discussions with landowners regarding the new tailings facility site once the ESIA is nearing completion;
- further progress the engineering design of the new tailings dam and underground mining facilities based on the completed ESIA; and
- complete Phase Two bankable feasibility study by the end of 2021.
3.8. SALE OF PRODUCTION
The Project's revenue is expected to be generating principally from sale of gold concentrate to processing and refining facilities in China. Gold is a readily traded commodity in open markets. The selling price of gold concentrates is based on the spot price traded in open markets, after deducting 3% royalty charged by SIG and TC/RC costs of US$104 per ounce of the gold in concentrate.
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4. ECONOMIC ANALYSIS
4.1. CAPITAL COSTS SUMMARY
As the Gold Ridge Project is a "brownfield" project, being redevelopment of a previous operating mine, the estimated capital cost is largely related to the refurbishment of existing infrastructure and process plant with modifications where necessary. Nerin has been engaged by the Company to provide a detailed estimate of the redevelopment costs of the Gold Ridge Project.
The Golder FS estimates that the total required capital expenditure ("Capex") to reinstate the Gold Ridge Project is around US$85.4 million, as itemized in the following table.
Table 5: Brownfields Capex costs for refurbishment of the Gold Ridge Project, February 2018
Item | Capex (US$ M) |
Construction camp and offices | $2.20 |
Process Plant | $40.00 |
Tailings Dam Raise (Lift) | $23.40 |
Infrastructure (roads, etc.) | $5.00 |
Mining equipment & workshops | $7.00 |
Subtotal | $77.60 |
Contingency (10%) | $7.76 |
Owners Project costs | $0.00 |
TOTAL | $85.36 |
4.2. OPERATING COSTS SUMMARY
4.2.1. Mining operating cost estimates
Golder has been provided with an estimated expected stripping cost of US$3.22 per tonne of waste and mining cost of US$3.37 per tonne of ore. An additional allowance of US$0.25 per tonne has been allocated to mining costs reflecting the additional cost of ore control and laboratory analysis for the ore control samples. An estimated contract mining cost of approximately US$ 3.25 per tonne is in line with mining cost estimates with which Golder is familiar from other similar sized contract mining operations in the Pacific Region.
4.2.2. Operating expenditure for processing
The operating expenditure ("Opex") for the processing of the ore of the Project has been compiled from a variety of sources and compared against existing and planned operations elsewhere of similar type and size by Golder, and equates to an estimated US$17.10 per tonne milled. Power costs are approximately one third of the total Opex. The option of a company-owned and operated power generation facility is being planned.
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The Golder FS estimates Opex of the Gold Ridge Project as follows:
Table 6: Gold Ridge Project Opex cost estimate (Feb 2018)
Item | Opex (US$/t milled) |
Power | 6.15 |
Operating consumables | 5.50 |
Maintenance | 1.10 |
Laboratory | 0.25 |
Process and Maintenance labour | 1.00 |
Tailings disposal allowance | (Included in sustaining capital) |
G & A Costs (Plant and site) | 1.35 |
Fresh ore Opex | 15.35 |
Grade control drilling | 0.50 |
Owner's G&A allowance | 1.25 |
Total Allocated Ore Cost | 17.10 |
4.2.3. Cash costs
The Gold Ridge Project appears financially sound based on the input cost drivers and assumed long-term gold price. The unit cost of production is closely related to the achieved throughput and ore feed. Based on the case of a plant throughput of 2.5Mtpa, the average cash cost for 13 years life of mine is estimated at US$792 per ounce. A component included in the cash cost is the concentrate transport costs of US$105.7 per ounce of the gold in concentrate. Transport inland freight costs and port handling and shipping costs of concentrates from the Project site to processing facilities in China have been provided from various sources and compared against other operations that Golder is familiar with.
By Order of the Board
Wanguo International Mining Group Limited
Gao Mingqing
Chairman
Hong Kong, 13 August 2020
As at the date of this announcement, the Board comprises Mr. Gao Mingqing (Chairman), Ms. Gao Jinzhu, Mr. Xie Yaolin and Mr. Liu Zhichun as executive Directors; Mr. Li Kwok Ping and Mr. Lee Hung Yuen as non-executive Directors; and Dr. Lu Jian Zhong, Mr. Qi Yang, Mr. Shen Peng and Mr. Wang Xin as independent non-executive Directors.
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Wanguo International Mining Group Ltd. published this content on 18 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 August 2020 15:33:33 UTC
