Transcript Document

SYDNEY MINING CLUB
3 February 2005
DISCLAIMER
The information contained in this presentation has been prepared
using the information available to Sino Gold Limited (Sino Gold) at
the time of preparation of the presentation.
External or other factors may have impacted on the business of Sino
Gold and the content of this presentation since its preparation. In
addition, all relevant information about Sino Gold may not be
included in this presentation.
Accordingly, you should not rely on the content of this presentation in
relation to any further action including investment in Sino Gold.
For further information about Sino Gold, you can obtain a copy of all
recent ASX announcements made by Sino Gold at
www.sinogold.com.au.
Any person considering an investment in Sino Gold is advised to
obtain independent financial advice prior to making an investment
decision.
2005 - year of the rooster
The roosters
 1933, 45, 57, 69, 81 or 93
 Outstanding performers – shine when centre of attention
What to expect
 nonsensical plans with simple things made complicated
 overconfidence and disappointments
 hard-line politics
The best strategy
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do not fuss
keep your eyes open and mouth shut
stick to practical and proven paths
check all facts and figures
avoid speculative ventures
China - the case for consolidation
China’s Major Gold Deposits
Sino Gold plans to rule the roost
The world’s 4th largest gold producer …
• Fractured, small scale operations
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Average production approximately 16,000oz pa
No comprehensive development plan
Mining by explorers with orebodies mined to provide cashflow
Hand-to-mouth existences
Little attention to safety and environment
 No exploration expenditure
 Few lasting community benefits
• Little modern exploration carried out
• Geological prospectivity is high
 Country structural issues are the main inhibitor to development
 Ranked 10th (top quartile) on Fraser Institute 2003 survey
Ideally, what is required …
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Projects to be fully funded
Overall development plans to be implemented
Modern and efficient processes to be used
Systematic extraction of deposits through
planned and coordinated operations
• Safety and environmental standards to improve
• Ongoing exploration expenditure to occur
• Profitable operations to deliver social benefits
Government slogan “Scientific development”
Other industries are receiving investment
Foreign Direct Investment
60
48.8
50
45
40
53.5
52.7
45.5
40.3
42
41
38
34
30
28
20
11
10
4
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
Largest recipient of FDI globally
The mining industry is missing out
China <1%
Pacific/SE Asia
Rest of World
USA
Africa
Canada
Australia
Latin America
Global Exploration Expenditure
Less than 1% of FDI into mining
Chinese Government policy and direction
• Combine economic growth with social progress
• Promote coordinated, balanced development
• Aim to eliminate regional disparities – “Go West”
• Eliminate waste of resources
• Minimise environmental damage
• Sustain economic development
MLR 2004 White Paper supports
consolidation and foreign investment
What will emerge?
• Similar to Australia in 1970/80s – largest
operation (1974) Tennant Creek 171,000oz p.a
• 4-5 growth oriented, well capitalised groups
• 2-3 may well be Chinese
• Sino Gold will be there
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unique platform
10 years experience in China
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world class asset being developed
intermediate scale gold production
strong operating cash flow
JINFENG is no turkey
Hatching a big one
37 Global Development Assets > 3.5m oz
40
35
Million Ounces
30
25
20
15
10
5
0
Jinfeng
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Hatching a big one
19 deposits not held by majors and a number are
not being developed due to social, environmental
or economic issues
40
35
Million Ounces
30
25
20
15
10
5
0
Jinfeng
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Hatching a big one
2 development deposits >3.5M ozs not held
by majors in Australiasia
Jinfeng is one of them
40
35
Million Ounces
30
Telfer
25
20
15
10
5
0
Jinfeng
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Jinfeng project overview
• Will be China’s second largest gold mine
• Equity of 82% in project
• Phase 1 gold production in mid-2006
 refractory ore type, using Biox®
process, ~85% recovery
Ore Reserves of 2.1Moz
– 88% conversion ratio
 12 year mine life
~1Moz in open cut; 1.1Moz from
 capital cost approx. US$70M
underground Aug grade 5gpt
 operating costs approx. US$183/oz
Mineral Resources of 3.5Moz
 US$40 million project loan facility
upgrade of ~1.1Moz Inferred expected
finalised – Stand Bank & HVB
Likelihood of more at depth
 1.2 million tpa, approx. 180,000oz pa
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Jinfeng has entered the
development & construction phase
Jinfeng phase 2 expansion study
• Scoping study completed by Ausenco
• U/G development brought forward to start
year 2 (end of commissioning year)
• Plant upgrade from 1.2Mtpa to 1.8Mtpa at
cost of US$14 million (±30%)
• No increase in operating costs per tonne
• Gold production of approx 300,000oz pa from
open pit and underground
Will be China’s largest gold mine
Jinfeng project timetable
All Development Permits
 Relocation of Affected Families
 Access Road Upgrading
 Evaluate Site Earthworks Tenders
complete
 Start Construction
Q1 05
 Complete Detailed Design
Q2 05
 First Gold Pour
mid-06
 Ramp-up to Design Capacity
end-06
complete
commenced
commenced
Jinfeng is a world-class deposit
• Geometry
controlled
Over 50,000m
of diamond
by
structural
framework
drilling
completed
• Single
Depositmineralisation
defined over
event
grade
750m with
strikehigh
length
and to
continuity
and low nugget
700m depth
• effect
Average true thickness of
• F3
11mfault
but is
is dominant
up to 30more
thick
• domain
Contained gold ranges
• Largest
at F2-F3
betweendomains
5,000 and
fault
intersection
7,000oz
per vertical metre
well-defined
• in
F3the
splays
(eg F20)central
are
part
of the deposit
secondary
mineralised
structures
• Open at depth 700m
below surface, plunging to
ESE
Jinfeng’s “Deep-East” extension
• Deep potential
shown by strong
intensity and
widening anomalous
arsenic values
(shown by green lines)
• Broad arsenic zone
outlines fluid flow
and structurally
controlled Au
(in red lines)
• Drill rig being
mobilised
Jinfeng’s near-mine opportunities
Series 2ofground
“near-mine”
•• 442km
targets within
the
contracted
in JV’s
structural corridor
• Geological
mapping,
• geochemical
High-grade trench
sampling
values
indicate
and
ground
immediate drill
targets
geophysics
is focused
near-mine
• on
Targets
=> anomalous
prospects
geochemistry (up to
1.2gpt Au),regional
rock chips
• Extensive
and somebeing
IP built
database
Stronglyexploration
anomalous
•• US$2M
gold soil underway
geochemistry
program
Exploration focus on supporting
decision
on dome
contact to be
to proceed with Phase
2
investigated
Aero-Magnetics
with
Geological
Trenching
SamplesInterpretation
Soil
Geochemistry
Sino Gold’s pipeline strategy
Operation
 JCL
(86%)
Development

JINFENG
(82%)
Exploration
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WHITE MOUNTAIN SE GUIZHOU
SHANDONG
CHINA REVIEW
Sino Gold in summary
• Unique country franchise
 1st mover advantage
• World class Jinfeng deposit
 Currently 3.5Moz and potential for much more
• Jinfeng
 Phase 1 to generate approx US$25-30M p.a operating cash flow
 Phase 2 to generate approx US$45-50M p.a operating cash flow
• Portfolio of exciting assets
 able to continue growth
SINO GOLD - the only substantial foreign producer
in the world’s 4th largest gold producing country
Finally, Sino Gold’s advice about China …
Never
Never
Never
Give Up!
Winston Churchill