China Goldmines plc
China Goldmines plc is a gold resource company focussed on the discovery and development of gold projects in the Hunan Province. China is now the world’s largest gold producing nation.
China Goldmines’ Shenjiaya and Xiaotaoyuan Prospects sit in a mineralised and base metal region in the western part of the province. It has been independently estimated that a JORC code compliant inferred resource estimated a gold resource of 1.83 million ounces is contained in the Shenjiaya Prospect.
The eight gold mines within the prospect are expected to extract 150,000 ounces of gold annually over the long term.
In early 2008, China Goldmines poured its first gold to mark the opening of its new production plant at its Shenjiaya Prospect.
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China Goldmines sells all current assets
There certainly appears to be a fair amount of capitulation in recent months from mining juniors with assets in China. After a surge of investment from small cap explorers in the past decade, more recently the restriction of capital combined with difficulties in developing assets through to production have forced a number of companies to sell up and move on.
China Goldmines added its name to the list today, announcing that it would sell its subsidiary Westralian Resources to Cosmos Castle Management for a gross consideration of US$26.35m (China Goldmines expects net proceeds of US$20.65m).
Westralian Resources holds all of China Goldmines current assets, which includes eight gold mines plus associated equipment, infrastructure, licences and permits, and two exploration permits in the Guanzhuang Project, Hunan Province.
Since early 2008, China Goldmines has been attempting to ramp up production at the underground goldmines through upgrading the infrastructure and equipment in place. The company however has run into difficulties with theft, despite beefing up security, and "other local community issues".
Today the company noted that the project still required at least US$15m in capital to develop the underground infrastructure.
Assuming the transaction completes, China Goldmines intends to use the cash to acquire other assets.
