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Infrastructure
The Xietongmen Project is well located for development: a paved highway and electrical transmission lines pass nearby the property and provides direct access to the city of Rikaze, with population of +100,000 and services such as fuel, food, lodging and office facilities. Other supplies, heavy equipment and equipment operators are readily obtainable in the city of Lhasa, the capital of the Tibet Autonomous Region, which is less than four hours drive from the site. A rail line to Lhasa was completed in 2006, and provides access to copper smelters and other industrial centers throughout China.
A 250 km extension of the rail line from Lhasa to Rikaze, has been approved by the Tibet government. Depending on when the rail line extension is completed, the final concentrate product would be trucked by way of a two lane paved highway that passes near to the southern part of the property to Rikaze or beyond to Lhasa. A truck loadout facility would be constructed to store the concentrate and load it into railcars for rail shipment to a smelter and refinery complex at Jinchang in Gansu Province for treatment. See Project Finance and Support for information on the off-take agreement in place.
Power would be provided by the regional power authority under their long term plan to provide 100 megawatts to the Xietongmen Project. The plan includes construction of a new 600 kV line (from Golmud) to Lhasa and a 220 kV line from Lhasa to Rikaze.
Development Plan
The positive results of a Feasibility Study were announced in 2007. The feasibility work was based on January 2007 US dollars; a US dollar to Chinese currency exchange rate of 7.8; long term metal prices for copper of US$1.50/lb, gold of US$500/oz and silver of US$8.50/oz and 182 million tonnes of proven and probable mineral reserves. Mining by owner and mining by contractor scenarios were assessed - both gave positive results.
Xietongmen Mineral Reserves at 0.15% copper cut-off |
Mineralized
Zone |
Category |
Tonnes
millions |
Cu
% |
Au
g/t |
Ag
g/t |
Oxide |
Proven |
0.9 |
0.20 |
0.49 |
2.99 |
Supergene |
Proven
Probable |
17.5
2.0 |
0.65
0.44 |
0.42
0.20 |
3.35
2.05 |
Hypogene |
Proven
Probable |
152.3
9.4 |
0.43
0.39 |
0.66
0.45 |
4.22
2.79 |
|
Total |
182.1 |
0.45 |
0.62 |
4.04 |
A Technical Report on the August 2007 Feasibility Study is filed on SEDAR at www.sedar.com. The authors of the report are Graham Holmes, P.Eng., Aker Kvaerner, Patrice Live, Eng., BBA Inc., and Lawrence Melis, P.Eng., Melis Engineering., who are independent Qualified Persons.
The Feasibility Study recommends a 40,000 tonnes per day copper concentrator to process ore mined by open pit methods. Processing facilities, concentrate storage and truck loadout facilities, repair shops, administration and maintenance facilities, assay laboratory, water treatment facilities, cafeteria and a medical clinic would be built at site. Copper recovery will be accomplished by flotation, producing a 25% copper concentrate. Recovery of other metals will be possible through treatment at the refinery.
The pre-production period is expected to last 12 months. A three-stage pit operation is proposed for the development of the mine, with each stage lasting 3-5 years. The mill feed would be 12.4 million tonnes in the first year, ramping up to an annual feed of 13.6 million tonnes by year 4. The deposit mineralization is 89% primary copper (hypogene), with approximately 11% enriched copper (supergene) and less than 1% oxide material. The plan is to mine most of the 17.4 million tonnes of supergene material in the first stage. Key parameters are summarized below:
Production Rate |
40,000 tonnes per day |
Material Moved |
480.1 million tonnes |
Strip Ratio |
1.64:1 |
Annual Throughput |
13.2 million tonnes |
Recoveries |
Supergene |
Hypogene |
| Copper |
88.4% ± 1.9% |
92.1% ± 2.3% |
| Gold |
65.1% ± 4.8% |
59.7% ± 6.4% |
| Silver |
75.8% ± 4.2% |
77.6% ± 5.1% |
Life of Mine Metal Production |
|
| Copper |
1.6 billion pounds |
| Gold |
2.3 million ounces |
| Silver |
24 million ounces |
Mine Life |
14 years |
Upon completion of the permitting process, the project would take approximately 30 months to construct, employing a construction workforce of approximately 2,500. During operations, the direct workforce would be approximately 460 people. After operations, the closure plan would take 18-24 months to implement, which would be followed by post-closure monitoring.
Project Finance and Support
In 2007, Continental entered into an agreement with Jinchuan Group Ltd, whereby Jinchuan would complete an equity financing and also provide key support, including:
- assistance in arranging for 60% of the required capital financing for mine development in the form of debt;
- contributing 30% of required capital financing in the form of either debt or equity;
- assistance with design engineering, training, maintenance and other technical aspects, as well as sales of mineral products.
Continental and Jinchuan have also agreed to a concentrate off-take arrangement in connection with the Project.
In 2008, Continental engaged Standard Bank Plc, the principal international investment banking subsidiary of the Standard Bank Group Limited, jointly with the Industrial and Commercial Bank of China as Underwriters and Mandated Lead Arrangers for the project finance debt facility for the development of the Xietongmen Project.
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