Date of Update – December 1, 2003
INSIDE GOLD NEWSLETTER UPDATE – MINCO MINING & METALS CORPORATION (MMM-TSX)
On November 1, 2003 , we released our first InsideGold newsletter. It featured Minco Mining & Metals Corporation, a company with an excellent blend of people, properties and prospects. Minco has been operating in China since 1996, and has built up invaluable relationships with officials and local governments, not to mention an extensive database of properties and projects. The one-liner we used to describe the company was “a company whose time has come”. On November 1, the previous closing price on the Toronto Stock Exchange in Canada for the company was $0.95. Since the report was released, it has traded as high as $2.70 and closed on December 1 at $1.89, a 100% gain from our initial report. Several material events have transpired since November 1 which we want to make sure our subscribers are aware of.
One, on November 5 the company announced that it had entered into several agreements with Gansu provincial government and two other companies in Gansu for the exploration and development of the Anba gold deposit in the Yangshan gold field, Gansu , China . Minco's joint venture company, Gansu Keyin Mining Co. Ltd., has the right to acquire a 40% equity interest in Yangshan Gold Mining Co., Ltd. (YGM), a joint venture company to be established for the exploration and development of the Anba gold deposit. YGM will acquire a 100-per-cent interest in the Anba gold deposit for US$6-million. The Anba deposit is located near the middle of the Yangshan gold field and is one of the largest gold discoveries in China in recent years. Total resources (calculated using local practices, not National Instrument 43-101 standards), based on grid drilling and trenching, are estimated by the Gansu provincial government at 16.1 million tonnes grading 5.64 grams per tonne gold. The resource has potential to be expanded. Minco has stated it will seek the opportunity to increase its interest in this significant gold deposit. This major property represents an extremely attractive opportunity for the company and its shareholders.
Two, the stock price has undergone some volatility in recent days as a result of an announcement on November 27 saying that the gold resource mentioned in the November 5 press release was not supported by a 43-101 compliant study completed by an independent consultant. The company's Chinese partners and its local geologist as well as Minco head office personnel reviewed the available data and made the decision to enter into the joint venture agreements on the strength of that data. The company went on to say that it had commissioned a 43-101 report and expected it to be complete by February 2004. On December 1, 2003, the company further explained that the estimates used in the November 5 release were based on “ exploration work of 8,000 metres diamond drilling, 1,263 metres of underground aditting and 18,632 cubic metres of trenching conducted by the current Chinese permit holder over the last several years. Management is very confident that the resource estimate on the Anba project provided by the Chinese parties will be verified by the independent qualified person. The company is committed to having the technical report prepared on an expedited basis. ”
Three, on November 14, Minco announced a bought-deal financing for 2.5 million units priced at $2.00 (with an over allotment of 500,000 units) which was subsequently expanded to a total of 3,748,848 units for total proceeds to the company of roughly $7.5mm. Should the financing be closed as announced, the company will be fully funded to commence extensive work programs to advance their holdings in China .
Four, the financing announcement also noted the acquisition of further mineral properties as one of the uses of proceeds. After working in China since 1996, Minco has likely compiled an impressive list of targets to pursue.
Five, the company announced a joint venture with New Cantech Ventures Inc. (New Cantech) on the BYC property, whereby New Cantech can earn a 51-per-cent interest in the project located in Inner Mongolia by spending $2.4-million on exploration over a three-year period. A further 9 per cent can be earned by bringing the property to feasibility. The first year's commitment is $400,000. In our opinion, this is an excellent way to realize the value of Minco's extensive property database for shareholders while focusing resources on core situations.
Gold surpassed and closed above the important US$400.00 per oz barrier today for the first time in six years. China is one of the most attractive places in the world to find new gold deposits since it is relatively underexplored. We continue to believe that Minco is at the early stage of what could be tremendous growth given its focus on gold and strong presence in China . We are pleased to have been able to identify this opportunity for our readers early last month and continue to like Minco's people, properties and upside potential going forward.
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