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Minco Silver’s Shiny Future

posted on Apr 13, 2009 07:51AM


Minco Silver’s Shiny Future

By James West
Thursday, April 9th, 2009

Minco Silver (TSX:MSV) is moving closer to production at its 157 million ounce Fuwan Project, scheduled to begin in 2010 barring unforeseen delays. Minco has moved swiftly through all of the regulatory hurdles to reach the production milestone in a country where deregulation of the silver market in 2007 lifted restrictions on private ownership of silver for Chinese citizens, spurring demand.

China, though technically still a communist country, has moved to encourage private ownership of many businesses, and the mining industry is one of the main beneficiaries of that policy. Permitting and approval processes have become streamlined and efficient as is demonstrated by the seamless success of Minco’s efforts.

China is the third biggest producing silver nation, though production is derived primarily from many smaller mines as opposed to a few large ones. The Fuwan Mine will be one of the largest silver producing sites in the country.

The current resource of 157 million ounces silver is classified from results of exploration on only 5% of the complete land package under control by Minco in Fuwan province. The potential for substantial addition to those resources exists across the entire property package, and its close proximity to highways, transportation, power, water and industrial facilities means construction will be quick and painless. The Fuwan Silver Belt extends for over 10 kilometres across Minco’s property.

Minco has drilled a total of 52,833 metres across 204 holes to help it compile the resource estimate most recently updated last year.

The company filed a Preliminary Economic Assessment in 2007 as part of the regulatory regimen required by the Chinese government, and which essentially constituted a pre-feasibility report. The document outlined a production scenario whereby a 2,500 tonne per day mill would be built to yield approximately 5 million ounces of silver annually at a cash cost of US$2.40 per ounce.

Total capital costs for mine construction in this first phase total approximately US$60 million, of which Chinese banking interests are eager to finance the majority portion via debt structure.

At present Minco is awaiting the completion of an International Feasibility Study and an Environmental Impact Assessment required by the Chinese government.

The Fuwan Property is located in Guangdong Province in the southern portion of the People’s Republic of China (“PRC”), 45 kilometres southwest of Guangzhou, the capital city of Guangdong and two kilometres northwest of the town of Fuwan, population 30,000.

Last year, Minco Silver was the recipient of the Chinese Prospecter and Explorer of the Year Award at the 2008 China Mining Awards for its exemplary development of the Fuwan deposit.

Dr. Ken Cai, Chairman and CEO commented: "We are honored to receive this prestigious award from the Chinese mining community in recognition for the successful advancement of our world class Fuwan Silver project. I would like to thank our team for their continued hard work and dedication. We remain unyielding in our vision of bringing this project to production and strive to deliver value and excellence to both our shareholders and the industry."

While the Fuwan Silver project provides a rapid path to cash flow from silver production in China, Minco finds itself in possession of the Sunshine Silver Mine in Idaho as well, though its ownership is being contested by SNS Silver, a Vancouver-based explorer. If the outcome of the legal challenge goes in Minco’s favour as is widely expected by industry experts,the company will find itself with a North American permitted silver mine with remaining resources of silver in excess of 100 million ounces.

SNS Silver (TSX.V:SNS) entered into an agreement to acquire the production rights to the mine after Minco had already obtained a foreclosure order against the assets of Sterling Mining which at that time included the mining rights to the Sunshine Mine. Sunshine Precious Metals Inc., - the underlying property owner – improperly then entered into the sales agreement with SNS Silver, and observers believe the courts will void the transaction between SNS Silver and Sunshine Precious Metals Inc.

To protect Minco Silver's secured interest and property rights in the Sunshine Mining Lease, the Company has filed a motion to join the Sunshine Action and entered on February 25, 2009 a Stipulated Interim Order regarding the Temporary Restraining Order granted on February 18, 2009 to continue until further determination of the Court and Sterling shall take no action or enter into any agreements that would impair any rights that Minco Silver may have with respect to the Sunshine Mining Lease in addition to restraining Sterling and its officers, directors, agents, and employees from removing, selling, destroying, disposing, or concealing all personal and real property Minco Silver has a secured and property interest.

The Sunshine mine has been North America's most prolific primary silver mine having produced more than 350 million ounces of high-grade silver since its discovery in 1884 - an amount greater than that produced by the famed Comstock Lode in Nevada. The mine has produced between four million and five million ounces of silver annually through 2001 and has produced as high as 12 million ounces in a single year during the late 1930s (the average grade was over 40 ounces per ton). The Sunshine Mine's infrastructure includes a 1,000 ton-per-day flotation-type concentrator and two operational multi-compartment shafts and hoists, along with some 200 miles of internal shafts (winzes), drifts and other workings.

Minco Silver is headed by D. Ken Cai, who holds a Ph.D. in mineral economics from Queens University in Kingston, Ontario, Canada and has 24 years of experience in mineral exploration, project evaluation, corporate financing and company management. Dr. Cai has served as a director of several publicly-traded and private Canadian and Chinese companies. He also serves as the President & CEO of Minco Gold Corporation.

Learn more by visiting the company’s web site at http://www.mincosilver.ca

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