Environ Gold signs MOU with major Chinese Gold Mining Group

Emerging Perth-based resources development company EnviroGold Ltd has.....

  Emerging Perth-based resources development company EnviroGold Ltd has signed a major Memorandum of Understanding with Shandong Gold Mining Development Company to process gold tailings from Shandong Gold’s operations in Shandong Province, China.Shandong Gold is the development arm of one of China’s major gold mining groups, Shandong Gold Mining Company Group Limited, which is State controlled but listed on the Shanghai Stock Exchange. Shandong Province is recognised as China’s most significant gold producing region.EnviroGold executive chairman Brian Johnson said that the MOU represented a major step forward in the company’s development.“This is an important agreement and demonstrates EnviroGold’s commitment and ability to achieve milestones in developing new projects,” Mr Johnson said. The MOU outlines four stages for the development for the proposed project. In Stage 1, Shandong Gold will be responsible for the compilation of a resource inventory and defining the location, tonnage and grade of gold tailings resource controlled by or available to Shandong Gold.In Stage 2, EnviroGold will be responsible for the evaluation of the resource inventory and will select resources that are deemed suitable for treatment by a centralized Albion process plant. Representative metallurgical samples from prospective project areas will be collected by EnviroGold and dispatched to Brisbane for metallurgical test work at Xstrata’s Albion pilot plant. EnviroGold will be responsible for setting the technical parameters and funding of the initial test-work program and will prepare a preliminary feasibility study for a definitive project.On the basis that the Albion amenability test work and the pre-feasibility study confirm the economic viability of a definitive project, in Stage 3 the participants will negotiate a formal Development Agreement based on the terms specified in the MOU. The formalisation is likely to involve the incorporation of a new company in which the shareholding will be 80% EnviroGold and 20% Shandong Gold. Shandong Gold will not be required to provide equity for the project.In Stage 4, the participants will undertake a bankable feasibility study and if successful, will develop the operation of an Albion process plant in Shandong.The MOU calls for completion of Stage 2 by 30 April 2008, the finalisation of a Development Agreement by 30 June 2008 and completion of a bankable feasibility study by 31 December 2008.It is envisaged that construction could commence in mid 2009, with commissioning in 2010.Mr Johnson said that though the Shandong prospect was at a very early stage its timing suited the EnviroGold’s plans to commission its other core projects; the 70% owned 80,000 ounce per year gold project at Las Lagunas in the Dominican Republic by the end of 2008, and the 50% owned Trujillo project in Peru by the end of 2009.The Shandong project is expected to be based on a centralised Albion plant and to be fed from both existing tailings deposits scattered throughout Shandong Province and high grade refractory ore from Shandong Gold’s existing mines. The Plant size will probably be similar to that at Las Lagunas which is in its final detailed design stage, with the potential to produce 60,000 to 70,000 ounces of gold per year.The company’s objective is for its first three joint venture projects to be collectively producing over 200,000 ounces of gold per year within three years.Work has already commenced on identifying and securing EnviroGold’s second generation of projects with the focus on four other gold producing regions in China where the company has an exclusive right to utilise the Albion process for oxidation of refractory mine concentrates and tailings prior to gold extraction by tradition carbon-in leach technology.In addition, Mr Johnson has advised that the company’s strategy of profitably solving potential environmental problems through the relatively low cost application of the Albion oxidation process for re-treatment of toxic sulphidic mine workings and historic tailings has been well received by small to midsize mine owners and Government agencies.The company’s potential to build a large inventory of viable gold properties over the next four years is exceptional according to Mr Johnson.