RNS Number : 2400A
Tianshan Goldfields Ltd
31 July 2008
Tianshan Goldfields Limited
(Tianshan" or the "Company")
Quarterly Report For The Period Ended 30 June 2008
Highlights
Gold Mountain Project, NW China (90%)
Development
* Pre-Feasibility Studies continued including process plant and environmental studies, pit optimisation and heap leach pad.
* Studies targeting low cost, low capex open pit heap leach operation with an initial production target of 80-100,000oz per annum
from processing 5Mtpa of ore.
* Chinese design institute, Beijing General Research Institute of Mining & Metallurgy (BGRIMM), appointed to co-ordinate the
preparation and submission of the Chinese Feasibility Study and Mining Licence Application.
* Compilation of documents progressed in the key areas of Mine Area Scoping, Environmental Impact, Social Assessment, the Mineral
Resource Development Plan and Utilisation Proposal.
* An established Task Force allocating key government support staff to assist the engagement of local authorities and facilitate
permitting and licencing requirements.
Exploration
* 3,080 metres (14holes) of near resource and evaluation drilling completed.
* Drilling confirmed mineralisation extends to the southeast at Jinxi deposit - assays results pending.
* Regional mapping and sampling exploration has confirmed extensive mineralisation at three prospects on the Nalensayi tenement and
two prospects on the Gold Mountain tenement. A complete assessment of results is pending.
Corporate
* AUD $19m in cash as at 30 June 2008.
* Conversion of company options at 30 June 2008 for net proceeds of approximately AUD $4m.
* Shareholder meeting scheduled for 18 August 2008 to seek approval for the Company's delisting from the AIM market.
Overview
Tianshan Goldfields Limited ("Tianshan" or the "Company") (AIM/ASX: TGF) is focused on developing its 90%-owned Gold Mountain Project,
located in the Xinjiang Province of North West China. The Project comprises 13 Exploration Licences in the Tulasi Basin covering a combined
total area of 632 square kilometres.
During the June Quarter, the Company continued to make positive progress on a number of fronts towards its objective of developing a
large tonnage, open pit mining and heap leach operation based at the Gold Mountain Project, which currently comprises Measured, Indicated
and Inferred Resources totalling 94.8 million tonnes at 0.9 g/t gold for 2.64 million contained ounces.
The Company's primary focus during the Quarter has been the commencement of a major 20,000m exploration push initiative, with initial
focus on the highly prospective new targets identified in 2007 on southern tenements and near resource high grade results at southern Jinxi.
Regional exploration has commenced with extensive geological mapping and rock chip sampling of targets. A planned 15,000m intensive
regional drilling programme is scheduled to commence in August 2008.
Additionally this Quarter, the Company has been busy finalising the Pre-Feasibility Studies, due for completion by Q3 2008.
Tianshan made significant headway towards Mining Permit approval through the appointment of the highly experienced, Beijing General
Research Institute of Mining & Metallurgy (BGRIMM), as the lead Chinese Design Institute for the project.
Gold Mountain Project - Pre-Feasibility Studies and Development Update
Pre-Feasibility studies continued during the Quarter with Bateman Engineering completing process plant studies, Cube Engineering
undertaking pit optimisation studies and Golder Associates progressing heap leach pad and environmental studies.
The Pre-Feasibility Study (PFS) is currently focused on progressing work commenced in the first quarter on basic process plant design,
leach pad studies for the Yelmand and Mayituobi deposits and open pit optimisations and mine planning. The PFS is expected to be finalised
during the September Quarter, with the Mining Licence Application for the Gold Mountain Project scheduled to be submitted in late 2008.
The Chinese Design Institute, BGRIMM, has been contracted to lead the coordination and seek approvals for all aspects of the works
required to submit a Mining Licence Application. During the Quarter, four BGRIMM engineers completed a site familiarisation meeting and met
with key agencies in Yining and Urumqi. Planning, data exchange and qualification sessions were a priority focus of this process.
Work undertaken during the Quarter also involved continued compilation of all the necessary documents required by the PRC Ministry of
Land and Resources (MOLAR) for the Mining Licence Application. Essentially, the documents are broken into the following key categories:
* MAS - Mine Area Scoping which is a map of the mining area boundaries;
* EISA - Environmental Impact and Social Assessment; and
* MRDUP - Mineral Resource Development plan and utilization proposal.
A programme has been devised to progress all field studies required for Chinese standards for environment, social and hydrology studies
appropriate for inclusion in the Chinese ESIA.
MAS -Mine Area Scoping Study
The compilation of the Chinese Geology and Mineral Resource Report has advanced with the completion of the Micromine Chinese resource
statement. Further discussions with BGRIMM in the company of Micromine have been completed. Micromine will provide a series of Datamine
formatted block models, sections and plans, at given cut-off grades, for BGRIMM to estimate the Industrial Cut Off Index - crucial for
presentation and acceptance by MOLAR of the Report.
Significant further progress has been made in refinement to the mine site layout.
EISA -Environmental Impact and Social Assessment
Of the 22 different baseline studies identified by Golder Associates for completion of a Chinese Environmental Impact Assessment, 11
have commenced - representing those requiring multiple reference periods. The meteorological station established at the Gold Mountain site
in conjunction with the Yining Meteorological Group continues to provide daily climatic data.
Scoping documents for the remaining base line studies have been prepared by Golder Associates and the Company will issue these to
appropriately qualified design institutes for completion in the coming months.
With the assistance of Golder Associates technical documents are being prepared by the company for the Land Reclamation Plan and the
Water and Soil Conservation Plans. Discussions have already commenced with the Xinjiang Water Resources Bureau for commencement of the Water
and Soil Conservation Plans.
MRDUP - Mineral Resource Development Plan and Utilisation Proposal
Work has commenced at Beijing General Research Institute of Mining & Metallurgy (BGRIMM) for the Industrial index recommendation and the
Chinese Feasibility Study(CFS). The Indices recommendation is required for approval of the Mineral Resource and frames the Mine Area
Scoping (MAS) requirements.
A proposal to complete a Geological Hazard Assessment of the Gold Mountain Project has been received from Xinjiang Environmental
Protection Supervision and Monitoring Centre of BOLR Xinjiang was and is being evaluated.
A seismic geophysical survey was conducted at the Gold Mountain site and a drill programme commenced indicating that stage one of the
Seismic Safety Assessment Study has been completed.
Topographic survey requirements were discussed with BGRIMM and suitable scales and areas selected for the pending study work. The
Xinjiang Survey Institute will quote on two proposed scales/areas with survey work to commence in the next quarter.
Metallurgical Test work
Mayituobi and Yelmand core for both HPGR crushing tests in Germany and column leach tests by Kappes Cassidy & Associates were prepared.
Samples were selected on an ore-type basis for each resource based on visible alteration criteria and BLEG recoveries, reported on 5m
composite pulps in the first quarter 2008. Samples aggregating 1.75 tonnes been received at laboratories in Germany and Nevada and await
commencement of tests.
HPGR tests are designed to confirm initial tests that indicated that HPGR crushing could improve leach recoveries. The column leach
tests will further confirm overall recoveries for each of the deposits.
Samples for Jinxi ore types are currently being prepared by SGS Tianjin and will be shipped early
GEOTECHNICAL DRILLING
Geotechnical drilling for pit slope stability assessment was commenced at Mayituobi with four holes (20% of the planned programme)
completed. Next quarter geotechnical drilling for pit slope structural analysis will commence at Jinxi and Yelmand.
Project Support and Community Matters
Registration of the JV Company (Xinjiang Gold Mountain) in Yining County, a requirement to advance the project, is complete with an
office opened in Yining to support all field operations.
The Yili-Kazahk Prefecture has established a Task Force allocating key government support staff to assist the engagement of local
authorities and facilitate permitting and licencing requirements such as the mining licence. This local support is most encouraging for all
aspects of future project development.
Exploration - Near-Resource and Evaluation Drilling
The first priority of the 2008 exploration programme was to undertake drill testing of the southern extension to Jinxi where the 2007
exploration programme intersected 51m @ 4g/t Au highlighting the potential of a high grade shoots beneath blanket mineralisation. An initial
near resource drilling programme of 5,000 metres commenced in the June quarter.
JINXI DRILLING
During the quarter a total of 14 drill holes were completed at Jinxi for a total of 3,083 metres drilled. Most drill holes intersected
brecciated and hydrothermally overprinted volcano-clastics. Assay results are pending for a total of 2,000 samples which have been submitted
for analysis. Holes drilled in the central eastern portion of the north-south aligned Jinxi feeder zone, where mineralisation is typically
of higher grade, have intersected significant intervals of disseminated sulphides in hydrothermal breccias and extend further east than
previously known, possibly extending the size of the Jinxi deposit.
Drilling in the far south east of Jinxi has located the contact between tuffs and volcanic breccia units with the Lion Hill andesite. A
10m zone of disseminated sulphide in tuffs and volcanic breccia was intersected immediately above the andesite contact.
In the coming quarter, prospective structures near to Yelmand-Balake will be evaluated, in particular the areas that will be affected by
mine plan layout infrastructure. Additionally, the zone of disseminated sulphides, intersected at the Lion Hill andesite contact east of
Jinxi, will be further explored by drill testing.
Regional Exploration
Regional exploration commenced to evaluate the highlighted 31 anomalous targets within the 13 granted tenements which cover
approximately 623.3km2. Initial exploration efforts focussed on the Nalensayi, tenement where follow up drilling is required at prospects
identified in 2007 namely Tikexi, Jin Gu and Awuliya. This work will initially involve extensive prospect scale geological mapping and
sampling together with acquisition of ground magnetics which has shown to be invaluable in interpreting key structures that appear to
control mineralisation. A 15,000m intensive regional drilling programme is scheduled to commence in August 2008.
GOLD MOUNTAIN
Detailed structural geological mapping with emphasis on structure has commenced on the Gold Mountain tenement concentrating initially in
mineralised areas. Prospect mapping commenced in the Jilande area - 3km east of Mayituobi - has located hydrothermally altered breccias
along a northwest aligned thrust contact with basement limestone. Results are awaited before drill testing in the coming quarter.
Further mapping and sampling in the Chart area, extending coverage to the north and south, commenced in the June Quarter.
A 3D Induced Polarisation (IP) and resistivity survey has been planned to cover all deposits and prospective areas adjacent to the known
deposits. The IP/resistivity technique is used to locate zones of sulphidic alteration associated with gold mineralisation. The survey will
commence in August 2008 and will cover the entire proposed mine infrastructure footprint area, including leach pads and waste dumps.
REGIONAL TENEMENTS
Renewal reports for the seven XGM regional tenements, not including Gold Mountain, were completed and accepted by MOLR and BOLR. The
Naogaitu tenement was not renewed as encouraging results were not obtained.
NALENSAYI
Sampling and mapping in the Tekexi area (located 2km northwest of Jin Gu) has located some ten discrete alteration zones. The zones are
characterised by strong argillic alteration with quartz veins associated with gold mineralisation in volcaniclastic rocks. Results for
2,011 assay samples (from 3,200 collected to date) have been returned. A full interpretation and evaluation of results is pending and tend
to indicate wide gold anomalous zone at Tekexi 10 (30-50m wide) with values up to 0.5g/t Au.
Jin Gu and Awuliya North were further evaluated with mapping and sampling and two additional alteration zones have been located. Infill
sampling is planned on both areas in the coming weeks.
In addition, four BLEG anomalies further to the east of Awuliya are to be followed up, sampled and mapped. Drilling has been planned at
Jin Gu to test the potential for a cross cutting structures as host to mineralisation.
Strategy and Targets moving Forward
* Completion of a Pre-Feasibility study on the Gold Mountain project. The company is targeting a low cost, low capex open pit , heap
leach mining operation with an initial production target of 80-100,000oz per annum from processing 5Mtpa of ore;
* Mining Licence Applications to be submitted to MOLAR in second half of 2008;
* Continue the extensive 2008 exploration programme and fully define recently generated drill targets at the Nalensayi and Gold
Mountain tenements;
* Further near resource drilling to identify extensions to high grade feeder zones confirmed at Jinxi and 15,000m intensive
regional drilling programme is scheduled to commence in August 2008.
* Complete geotechnical pit slope drilling and undertake key infrastructure site condemnation drilling;
* Undertake a semi-regional 3D Induced Polarisation (IP) survey to locate potential mineralised systems in the footprint area of the
proposed mine layout; and
* Complete extensive column leach tests on ore-type samples for Yelmand, Jinxi and Mayituobi, together with HPGR crushing tests to
determine recoveries and optimum crush size.
Corporate
CONVERSION OF COMPANY OPTIONS
During the Quarter the following options were converted into fully paid shares:
* 7,821,429 options at an exercise price of $0.175; and
* 13,024,168 options at an exercise price of $0.20.
The conversion of these options raised gross proceeds of AUD $3,973,584.
There are currently a total of 268,363,194 ordinary shares and 18,150,000 options on issue.
For further details regarding the issued and quoted securities for the Company please refer to the latest Appendix 5B.
SHAREHOLDERS MEETING
During the June 2008 Quarter, it was announced that a meeting of shareholders would take place on Monday 18 August 2008. Shareholder
approval is sought for the cancellation of the Company's admission on the AIM market of the London Stock Exchange. Under the AIM rules, the
proposed cancellation requires the consent of not less than 75% of votes cast by its shareholders at the general meeting.
CASH ON HAND
As at 30 June 2008, the cash balance was:
Tianshan Goldfields Limited AUD $18.410 million (Australia)
Xinjiang Gold Mountain Mining Company AUD $ 0.552 million (China)
Limited
AUD $ 18.962 million
Background: Mineral Resource
In the first Quarter of 2008, Tianshan reported an updated Mineral Resources estimate for the Yelmand-Jinxi, Mayituobi and Lion
deposits, located within the 90%-owned Gold Mountain Project (Table 1). The Yelmand, Jinxi and Balake prospects, previously reported
separately as the Yelmand and Jinxi deposits, are now reported as the Yelmand-Jinxi deposit.
Table 1: Gold Mountain Micromine January 2008 Mineral Resource Estimate (at 0.4 g/t Au cut-off grade) in accordance with JORC
guidelines
Tianshan Goldfields - Gold Mountain Project - Total Mineral Resource as at January 2008
Measured Indicated Inferred Total Resource
Deposit Tonnes Au g/t Au Ounces Tonnes Au g/t Au Ounces Tonnes Au g/t Au Ounces Tonnes Au g/t Au Ounces
Yelmand-Jinxi 21,942,000 0.9 642,000 46,422,000 0.9 1,268,000 16,807,000 0.9 473,000 85,172,000 0.9 2,383,000
Mayituobi 1,269,000 1.1 43,000 2,251,000 0.9 62,000 436,000 0.7 10,000 3,957,000 0.9 115,000
Lion 26,000 0.7 538 1,221,000 0.6 22,000 4,398,000 0.8 119,000 5,644,000 0.8 142,000
Total 23,237,000 0.9 686,000 49,894,000 0.8 1,352,000 21,641,000 0.9 601,000 94,772,000 0.9 2,640,000
Note: Figures used are rounded
Mr SL Allnutt (AusIMM, MAIG), Chief Geologist of Tianshan Goldfields Limited, and Mr K S Liddell (FAusIMM) a director of the Company,
compiled the technical aspects of this report relating to the Gold Mountain Project. Mr Liddell and Mr Allnutt has sufficient experience
that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being reported on to
qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Mineral Resources and Ore Reserves.
Mr Allnutt and Mr Liddell consent to the inclusion in the report of the matters in the form and context in which it appears.
For Further Information, Please Contact:
Tianshan Goldfields Limited
Level 22, Allendale Square
77 St Georges Terrace
Perth WA 6000
Telephone: +61 8 9221 7729
Fax: +61 8 9221 7866
Keith Liddell - Chairman
Jason Bontempo - Chief Financial Officer
WH Ireland Limited
11 St James's Square
Manchester
M2 6WH
Telephone: +44 161 8322174
David Youngman
Katy Mitchell
This information is provided by RNS
The company news service from the London Stock Exchange
END
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