Sino Gold Limited and Zhaoyuan Hexi Gold are forming a new exploration joint venture in Shandong Province – the largest gold producing province in China. The joint venture tenements cover portions of regional, deep-seated faults along strike from a number of significant gold mines. Gold mineralization has been identified on two tenement areas as a result of drilling and small-scale mining operations.
Sino Gold’s partner in the joint venture, Hexi Gold, is a local Chinese mining company. Jake Klein, Sino Gold’s CEO, said, “Sino Gold is very pleased to have gained a further foothold in China’s major gold district. Despite the substantial historical mining in this district, we believe there is still excellent exploration potential on the major gold-bearing faults within these tenements. We look forward to a mutually beneficial relationship with Hexi Gold, a company with extensive mining expertise and valuable knowledge of this well endowed district”.
Liu Ruzheng, Hexi Gold’s Chairman, added, “This joint venture will enable Hexi Gold to accelerate exploration on these prospective tenements. A key attraction of Sino Gold was its track record of successful exploration and development of gold mines in China. We believe that the aims and values of Sino Gold make it an ideal joint venture partner for us”.
The key terms of the joint venture are: the three tenement areas of Xinzhuang, Qiansungjia and Suijia are included, covering an area of approximately 38km2; Sino Gold has the right to earn a 70% interest in the joint venture upon sole funding an agreed amount of exploration expenditure; after reaching the expenditure milestone, then both parties contribute expenditure on a pro-rata basis or dilute their equity to a free-carried 10% interest; if Sino Gold withdraws prior to reaching the expenditure milestone, then Hexi Gold retains 100% of the tenements; and Sino Gold will manage the exploration programme.
Shandong Province is responsible for around one-quarter of China’s annual gold production. Located in the southeast portion of the Precambrian north China craton, Shandong hosts more than 100 known gold deposits. More than 80% of these lodes are hosted within Mesozoic granitoid rocks or their contacts with Archaean basement rocks. Regional, deep-seated, northeast trending faults controlled the distribution of the Mesozoic granitic intrusions and gold deposition in the area. The Jiaojia fault is purported to be the best-endowed fault in Shandong Province as it hosts a number of significant deposits each containing more than 1 Moz of gold.