Location
Located in Shanxian County, Northwest Henan Province, the region covers the East section of the famous Qinling metallogenic belt; one of the most prolific gold producing regions in China. Xiaoshan is located on the same East-West trending zone as the largest gold mine in the area and on a parallel zone to Silvercorp's multi-million ounce Ying Silver Project located 30 kilometres to the south.
Work Program
A general review on exploration data from exploration programs organized in 2007 was conducted in April and May 2008. Due to the lack of significant results, Minco has decided to suspend its funding on all exploration programs within the two exploration permits.
Ownership
Minco Mining (China) Corporation, a wholly owned subsidiary of Minco Gold Corporation, entered into a cooperative joint-venture agreement with Henan Nonferrous Geological Mining Co., Ltd. ("HNGM") to jointly explore and develop the precious and nonferrous resources in the Xiaoshan project area. The project consists of two exploration permits for a total land package of 29.1 square kilometres (km2). Under the terms of the original agreement, Minco had the right to earn up to 70% equity interest in Xiaoshan with a total contribution of RMB 35 million (approx US$ 4.57 million).
The investment Minco Mining (China) contributed as of May 30, 2008 amounted to RMB 7 million. Henan Xin Xiang Rong Investments Co., Ltd. has entered into an agreement with Minco Mining (China) and HNGM whereby Henan Xin Xiang Rong Investments can acquire a 49.41% equity interest in the project through increases in the amount of investment through to December 30, 2010. Upon completion of the transfer and earned interest by Henan Xin Xiang Rong Investments, Minco Mining (China) has the right to maintain a 20.59% interest through investment on the basis of the proportional rate. The proportional rate in the reshuffled company will be as follows:
- 20.59% Minco Mining (China) Co. Ltd.
- 30% Henan Nonferrous Geological Mining Co., Ltd.
- 49.41% Henan Xin Xiang Rong Investments Co., Ltd.
Background
While mining activities for gold and silver can be traced back for hundreds of years, the Xiaoshan project remains largely under-explored by modern techniques. Over the years, exploration in the region has been undertaken by a variety of exploration teams, but has been limited to surface mapping, stream sediment sampling, trenching, and sampling of old workings and artisanal tunnels. The project is accessible via gravel road, with available water supply, and connected to major power lines that draw power from a hydro plant in nearby Sanmenxia City.
Geology and Mineralization
Xiaoshan sits on a structural zone parallel to Silvercorp's Ying Silver Project located 30 kilometres to the south. The Xiaoshan and Ying projects demonstrate very similar geological settings, structures, and mineralization styles. Regionally, both projects sit on the Southern rim of the North China Craton where the Archean metamorphosed rocks of the Taihua Group are the dominant host for the large gold-silver deposits in the East section of the Qinling belt.
Tectonically, the Xiaoshan project area sits at the Xiaoshan uplift block on the Southern rim of the North China Craton. Bedrocks within the two permits are primarily Archean migmatite, schist, and gneiss (Taihua Group) which were intruded by Proterozoic diabase dykes and Mesozoic acidic dykes. Vein-alteration zones in the region are dominantly controlled by N-NW (North-Northwest) and NW-W (Northwest-West) trending faults with the mineral deposit type similar to the mesothermal veins of the Coeur d'Alene District in Idaho, U.S.A..
Huluyu Permit
The Huluyu Permit covers 17.1 km2. Host rock for gold and silver mineralization is mainly composed of interbedded chlorite-albite schist, sericite-quartz-albite schist, plagioclase- amphibole schist, and biotite-plagioclase gneiss. At the regional scale, the Taihua Group is dominated with gneiss. Within the Huluyu permit there are three sets of faults trending NW (Northwest), N-NW, and NE (Northeast).
Thirteen gold and silver veins have been mapped at surface in this area and the largest vein has been traced for a length of 4,150 metres. Sampling by the Henan Nonferrous Exploration and Mining Company from underground workings at Huluyu have returned values ranging from 3.0 g/t to 74.6 g/t gold, 121 g/t to 726 g/t silver, 3% to 29% lead, and 1% to 23% zinc. One grab sample from underground workings returned 21.3 g/t gold, 520 g/t silver, 18.3% lead, and 16.66 % zinc while another grab sample yielded 45.8 g/t gold, 145 g/t silver, 6.26% lead, and 12.90 % zinc.
Dafangshan Permit
The Dafangshan permit covers 12 km2. In this area, 7 gold veins have been mapped at surface. The mineralization is strata bound and occurs as thin veins. Sampling by the Henan Nonferrous Exploration and Mining Company returned values for veins that vary in length from 212 m to 772 m with average widths from 0.42 m to 0.65 m and average gold grades from 3.00 g/t to 5.77 g/t. Two grab samples returned gold values of 12.8 g/t and 21.7 g/t respectively.
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