Caijiaying Project

INTRODUCTION

The Caijiaying Mine is an operating zinc, gold, silver and lead mine, together with a processing plant, camp and supporting facilities, located approximately 250 kilometres by road, north-west of Beijing in Hebei Province in the People’s Republic of China. The Caijiaying Mine is easily accessible by freeway from Beijing. The site has significant water supplies, two 35 thousand volt “kv” power lines connected to the electricity grid, full connectivity to fixed and mobile tele-communications systems and broadband access for internet services. It is 63 kilometres from Chongli, the host city of the 2022 Winter Olympic Games to which a high speed train link from Beijing is being constructed. Climatic conditions are not severe with warm summers and cold, dry winters, enabling Caijiaying to operate for 365 days a year.

Caijiaying Mine Site

 

DEVELOPMENT

Hebei Hua Ao is a contractual co-operative joint venture company entity established in 1994. Initially, Griffin held 60% of Hebei Hua Ao (through a wholly owned subsidiary) with the remaining 40% held by the Zhangjiakou Yuanrun Enterprise Management and Service Center (“Yuanrun”), the previously named Zhangjiakou Caijiaying Lead Zinc Mining Company, the shareholders of which remain the Zhangjiakou City People’s Government and the Third Geological Brigade of Hebei Province (the “3rd Brigade”).

The initial term of Hebei Hua Ao was 25 years and was due to expire in 2019. In light of the continuing increase in the resources base and production profile of the Caijiaying Mine, the Company, through its wholly owned subsidiary China Zinc Limited, purchased an additional 28.8% interest in Hebei Hua Ao from Yuanrun in 2012. Griffin now holds an 88.8% equity interest in Hebei Hua Ao and Yuanrun retains an 11.2% residual interest with a fee for services rendered, resulting in Hebei Hua Ao being in the nature of a subsidiary of the Company with a service contract to Guoxin for accounting purposes. In addition, and as part of this purchase agreement, the term of the Hebei Hua Ao joint venture was extended to October 2037.

In January 2004, a second contractual joint venture company, Hebei Anglo, was formed to hold the mineral rights to the area surrounding the original Hebei Hua Ao licence area and any other areas of interest in Hebei Province. Griffin, through its wholly owned UK subsidiary, Panda Resources Limited, has a 90% interest in Hebei Anglo whilst Yuanrun holds 10%. Griffin, through Hebei Hua Ao and Hebei Anglo, has a controlling interest in mining and exploration licences over approximately 23.8 square kilometres at Caijiaying.

Following extensive exploration, resource delineation drilling, a number of scoping studies, a feasibility study, financing and construction, Griffin successfully commissioned the Caijiaying Mine on time and within budget in 2005 with an initial design production throughput rate of 200,000 tonnes of ore per annum. Numerous upgrades to the Caijiaying Mine and processing facilities have taken place since commissioning. In January 2016, the Company completed a further upgrade of the processing facilities at the Caijiaying Mine and the construction of two new 35kv power lines connected to the main grid enabling a new third primary ball mill to be commissioned. This latest upgrade has taken name plate mill throughput capacity to 1.5 million tonnes of ore per annum.

Underground development continues with the expansion of the existing mining operations at Zone III. Access to the Zone II area to the south of Zone III has been constructed allowing for underground drilling and further exploration work at Zone II. The mining and development of Zone II is subject to the successful granting of a new mining licence over that area.

MINERAL RESOURCE ESTIMATE

An update of the Mineral Resource estimates for Zone III has been carried out, incorporating new drilling and the results of geological and structural studies. The Zone II Mineral Resource estimate remains the same as previously reported. Geological and structural studies are currently underway on Zone II, which should allow an update to this Mineral Resource estimate to be published once the studies are completed.

Further studies on the results of drilling in Zone VIII should result in a new Mineral Resource estimate. Mineralisation at Caijiaying comprises zinc domains and gold domains. The zinc domains are reported at a cut off of 1% Zn. The gold domains are reported above 0.5 g/t Au.

Notes: 

Zone II Mineral Resource includes 1.49 million tonnes at 3.09% zinc oxide material.

The Mineral Resource estimate is based on 3,837 underground diamond drill holes and 624 surface drill holes.

The underground drilling was carried out using nominal fan patterns of 20m by 20m, grading to a 40m by 40m pattern at depth. Resource wireframes were interpreted by CSA Global Pty Ltd in consultation with Griffin’s geologists. The resource outlines were based on mineralization envelopes prepared on cross-sections using a nominal 1% Zn cut-off grade or 0.5 g/t Au cut-off grade.

The Mineral Resource has been depleted using a three-dimensional survey “As Built” wireframe which models all the mined-out voids at they stand at 31 December 2018.

The Caijiaying Mineral Resources are based on resource modelling work completed by CSA Global Pty Ltd in 2013 and 2019 and reported in accordance with JORC 2012 guidelines.

The information in this report that relates to Mineral Resources is based on information compiled by Mr. Steve Rose, who is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr. Rose is a full-time employee of CSA Global Pty Ltd and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.

Mr. Rose consents to the inclusion of such information in this report in the form and context in which it appears. Mr Steve Rose’s work has been peer reviewed in part as he holds options over 37,500 Griffin Mining Ltd Shares exercisable at 30 pence per share.

 

 

The New Mineral Resource estimate for Zone III provides a substantional resource upgrade to the operating mine area at Zone III at the Caijiaying Mine. The Measured, Indicated and Inferred Mineral Resources has increased to 48.8 million tonnes at 4.2% Zinc, 0.2% Lead, 21.4 grammes/ tonne Silver and 0.6 grammes/tonne Gold, a 78.5% increase in tonnes from the previously reported 2013 Measured, Indicated and Inferred Mineral Resources of 27.3 million tonnes at 4.6% Zinc, 0.2% Lead, 22.9 grammes/tonne Silver and 0.7 grammes/tonne Gold. The results lift the estimate of the contained metal at Zone III from approximately 1.22 to 2.051 million tonnes of zinc metal, from 0.574 to 0.885 million ounces of gold and from 20 to 33.6 million ounces of silver.

This increase comes after some 4.5 million tonnes of ore being mined at Zone III since the previous 2013 Resource Estimate. The full extraction of the new Mineral Resources will require the extension of the business licence beyond 2037 or increase in production capacity and enhanced permits.

It should be stressed that this new resouce is not the total ‘Global Resource’ for the Caijiaying tenement area. The big increase in resources at Zone III has been due to the combination of additional drilling and far improved understanding of the controls and the distribution of ore within the deposit. Modelling of the resources of other ‘zones’ at Caijiaying has been progressing with work well advanced on a revised Zone II resource model as well as the maiden estimate for Zone VIII (the recently identified northern resource extension of the Zone III deposit). Resource announcements for those zones should be forthcoming in the future.

GEOLOGY

 Mineralisation at Caijiaying is believed to be related to a Jurassic igneous event that affected the 2.3 billion year old metamorphic basement rocks. Base metal and gold mineralisation associated with Jurassic intrusive have replaced favourable horizons in the metamorphic rocks, most notably calcsilicates and marble. Porphyry sills and dykes intruding along faults have then cut across the sequence.

Ongoing exploration in the area surrounding the Caijiaying Mine and within Hebei Hua Ao’s and Hebei Anglo’s tenement boundary continues to confirm the area to be highly prospective, indicating significant potential for further base metal and gold deposits.

 

Click here for enlarged Map of the Caijiaying License Areas.

EXPLORATION 

The 2018 exploration programme at Caijiaying continued to expand existing areas of mineralisation whilst providing and testing new targets designed to increase the resource inventory and extend the existing mine life. This involved ongoing technical targeting studies applying advanced geochemical, structural and modelling techniques to deliver prioritised targets in the following categories:

  • In-mine areas between or adjacent to known orebodies;
  • Near-mine targets, mainly within reach of underground drilling from existing or planned drives; and
  • Regional targets both within and adjacent to existing licences.

Hebei Hua Ao Mining Area

In 2018, due to the Zone II mining licence continuing to be delayed in being issued, the focus was on aggressive underground diamond drilling activity to target extensions of known zinc and gold lodes within Zone III. 320 underground diamond drill holes were drilled for a total of 38,112 metres utilising four underground electric-hydraulic drill rigs. These results have been incorporated into the new Zone III resource update.

Whilst there was no surface drilling conducted in 2018, the results of the major surface drilling programme undertaken in Zone VIII in 2017 were integrated into an updated 3D geological and mineralisation model for the area and a non-JORC Chinese Resource (a license retention requirement of the Chinese government) was completed for Zone VIII. Zone VIII contains similar rock types and mineralization styles already seen in Zones II & III and drilling confirmed that mineralisation not only continues along strike from Zone III into Zone VIII, but that mineralisation remains open to the north of the Zone VIII drilling.

Significant progress continues to be made in the application of litho-geochemical data to provide an indicator of proximity to mineralisation. The lithogeochemical indices developed for Zone III have been applied to Zone VIII, regional exploration targeting and prospect generation.

A major update to the 3D structural model was completed for Zone III which has directly impacted the effectiveness of exploration targeting, grade control drill design and ore block modelling and has resulted in improved stope designs.

A major programme of relogging and lithogeochemistry sampling has commenced for Zone II. This is to ensure that the knowledge obtained from Zone III lithogeochemistry and structural geological modelling advances can be applied to Zone II ahead of the granting of the Zone II mining licence. 

Hebei Anglo Area

Following the results of the 2017 surface drilling programme, Hebei Anglo was granted a 2-year extension to its exploration licence, which contains the possible northern strike extension of mineralisation observed in Zones III & VIII. This licence extension expires in July 2020 and an exploration strategy is currently being formulated to optimise this opportunity.

Shitouhulun and Sangongdi

Regional exploration focused on the Sangongdi prospect, 11 kilometres northwest of the Caijiaying Mine, wheresurface geochemical exploration in 2015-2017 (using the lihtogeochemistry indicators developed for Zone III) identified a significant mineralisation indicator anomaly. This work was followed up in 2018 by two surface geophysics programmes aimed at improving the geological understanding of the Sangongdi prospect ahead of the granting of approvals to conduct drilling at the area.

A static seismic survey was completed in April 2018 that successfully defined the depth of recent wind-blown cover sediments at Sangongdi. This survey also highlighted several major structural trends that appear to have controlled recent basin architecture and may have implications for mineralisation in the area.

A detailed ground magnetic survey was also completed over the prospect during 2018. The data collected has helped define the major geological structures in the area and modelling of the magnetic data has also provided an indication of the depth to the prospective Proterozoic basement rocks (that hosts the mineralisation at the Caijiaying Mine). The combination of the geophysics, lithogeochemistry and surface mapping has facilitated the development of a solid geology interpretation and a structural map upon which the geochemical anomalies have been overlain. The work has culminated in a prioritized exploration target map for the Sangongdi prospect which will form the basis for further exploration.

Whilst Griffin retains an exclusive right for exploration at Shitouhulun and Sangongdi, further work is being minimised until such time as exploration licences over these areas are received.

Magnetic survey work at Sangongdi October 2018

 

Future Exploration

Geochemical analysis and detailed structural mapping and 3D modelling will continue within the Caijiaying Mine to increase the understanding of the nature of the orebody. Regional exploration will continue with additional surface geophysics, surface geochemical sampling and analysis to evaluate targets for further consideration and drilling. Exploration will also be carried out in the Hebei Anglo exploration area.

Signing Ceremony for Exploration and development of Shitouhulun and Sangongdi

OPERATIONS

The underground mine and surface processing plant operated safely and consistently during 2018.

A continued focus on safety and training of the Chinese workforce resulted in a “Lost Time Frequency Rate” of 2.2 (2017: 1.1) per one million hours being reported for the year while the “Total Recordable Injury Frequency Rate” of 13.3 per one million hours was maintained in line with the previous year.

A key focus for 2018 was the development of the North and South Declines from the 1175 metre level down to the 1000 metre level. By year end, both declines had been advanced to the 1060 metre level with an interlink drive connecting the declines at the 1100 metre level and only requiring a further 70 metres of additional development to connect the drives. Work also commenced on the establishment of a new 5 metre diameter, 300 metre deep, main exhaust shaft and a 5 metre diameter, 180 metre deep, fresh air intake shaft. Previously reported work on the development of a second portal was successfully completed in April 2018.

New Third Main Ball Mill
Caijiaying Processing Plant

Compared to 2017, ore mined, hauled and processed for 2018 were impacted by the planned focus on the near term development of Zone III from the 1175 metre level down to the 1000 metre level. Capital development in 2018 was significantly higher than in 2017.

Production results for the Caijiaying Mine in 2018 can be summarised as follows:

  • Ore mined of 872,069 tonnes (2017: 920,168 tonnes);
  • Ore hauled of 922,424 tonnes (2017: 980,849 tonnes);
  • Ore processed of 930,472 tonnes (2017: 968,080 tonnes);

Whilst metal in concentrate recoveries were broadly maintained, optimising underground stope scheduling, pillar recovery and maximising economic extraction resulted in a planned fall in the zinc equivalent head grade to 5.4% in 2018 from 6.3% in 2017. As a result:

  • Zinc metal in concentrate produced was 37,112 tonnes (2017: 43,403 tonnes);
  • Gold metal in concentrate produced was 16,230 ozs (2017: 20,489 ozs);
  • Silver metal in concentrate produced was 280,712 ozs (2017: 394,117 ozs); and
  • Lead metal in concentrate produced was 1,030 tonnes (2017: 1,421 tonnes).

The programme to further modernise the Caijiaying Mine continued throughout 2018 with a twin boom electric hydraulic development drill and three fully enclosed cabin, 20 tonne haulage trucks, added to the fleet by the haulage contractor. The addition of the larger capacity haulage trucks has already had a positive benefit with more material being hauled from deeper in the Caijiaying Mine with less truck movements and greater reliability.

Construction of New Power Line to Caijiaying Mine

Underground development work was primarily focused on developing future stoping horizons between the 1175 metre and 1000 metre level. Capital development totalled 5,312 metres and operational development totalled 4,047 metres.

Long hole open stoping continues to be the predominant mining method. The resulting voids are backfilled with cemented hydraulic fill or development waste.

New Sandvik Jumbo
Chinese Single jumbo

Historic production may be summarised as follows:

2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
Ore mined (tonnes) 872,069 920,168 863,077 571,815 747,775 877,803 789,692 695,848 389,496 276,880 433,724 430,891 301,168 155,000
Ore hauled (tonnes) 922,424 980,849 817,506 597,061 735,160 914,919 792,653 733,656 361,238 293,930 501,380 418,525 281,692
Ore milled (tonnes) 930,472 968,080 874,983 839,713 572,390 838,431 800,288 715,955 420,928 320,883 491,848 409,193 301,101 92,096
Head grade (%) 4.47 4.67 3.87 4.82 4.73 4.93 5.3 5.3 5.44 5.55 4.9 5.6 7.4
Zinc in concentrate produced (tonnes) 37,112 43,403 31,948 38,560 25,901 39,724 40,581 36,283 22,044 17,167 22,922 21,781 20,138
Lead in concentrate produced (tonnes) 1,030 1,421 1,439 1,785 857 1,553 2,402 1,909 690 500 1,127
Silver in concentrate produced (ozs) 280,712 394,117 310,611 343,576 201,982 323,808 409,596 312,509 157,679 89,227 171,888 6,470
Gold in concentrate produced (ozs) 16,230 20,489 12,654 10,363 7,623 11,468 8,322 10,281 7,067 3,726 2,421 15