Minco Silver Corporation and its wholly-owned subsidiary, Minco Investment Holdings HK Ltd, have entered into a share purchase agreement with Minco Gold Corporation for the purchase of a 51% undivided interest in the Changkeng Gold Project in Guangdong province, for an aggregate purchase price of $13,732,260.
The sale follows a strategic review of Minco Gold’s mineral properties by its board of directors.
Changkeng is held by Guangdong Mingzhong Mining Co Ltd, a Chinese corporation owned 51% by two indirect wholly-owned subsidiaries of Minco Resource Ltd, itself a wholly-owned subsidiary of Minco Gold, with the remaining 49% held by an unrelated third party.
Minco Resources also holds exploration permits in various other regions of China, including the Longnan project, Gold Bull Mountain project and Tugurige Gold Project. Following completion of the sale, Minco Silver will continue to hold, directly or indirectly, these other projects in trust for the benefit of Minco Gold. Minco Gold will also continue to hold its investment of 11 million common shares in Minco Silver.
Changkeng is contiguous to, and part of the same mineralized system, with Minco Silver’s flagship Fuwan project. This project currently includes a 51% interest in the silver mineralization within the Changkeng mineral exploration permit.
As the transaction shall proceed by way of a purchase by Minco Investment of all of the outstanding shares of Minco Resource, by acquiring Minco Resource the company would hold the entire right to the 51% ownership of Mingzhong and therefore both the gold and silver mineralization of the Changkeng property.
The company believes the acquisition will allow it to have direct control of both the Fuwan Silver Project and the Changkeng Gold Project. The trust agreement on the Fuwan Silver Project between Minco Gold and the company will be terminated at the closing of the transaction. The company intends to acquire a mining licence and develop the Fuwan and Changkeng projects together as one to significantly reduce capital and operating costs on the project.
An updated independent resource estimate was calculated for Changkeng by P&E Mining Consultants and released on March 25, 2009. The estimate contains indicated gold resources of 4.0 million tonnes @ 4.89 grams/tonne gold for a total of 623,100 ounces and inferred resources of 4.0 million tonnes @ 3.01 grams/tonne for 386,800 ounces.