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 separate freeways 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 there is a new a high speed train link from Beijing. Climatic conditions are not severe with warm summers and cold, dry winters, enabling Caijiaying to operate for 365 days a year.
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 Consulting Service Company Ltd (“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 a wholly owned subsidiary of the Company with a service contract to Yuanrun 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%. As Griffin investigates other areas of interest and projects in China, Hebei Anglo may be used to invest in potential projects of interest to Griffin in China.
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 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 down to the 1,000 relative level (“RL”) meaning metres above sea level. Access to the Zone II area to the south of Zone III has been constructed allowing development work to commence at Zone II following the receipt of a mining licence over Zone II and between Zone II and III in December 2020.
MINERAL RESOURCE ESTIMATE
An updated global resource estimate was released on 18 February 2021, click here to view the details.
GEOLOGY
The local geology comprises Early Proterozoic granulite and gneiss with marble lenses which is unconformably overlain by the Late Jurassic Baiqi Formation and Zhangjiakou Formation. Porphyry sills and dykes intruding along faults have then cut across the sequence.
The Caijiaying Mine’s deposits consist of Zn-Au-Ag-Pb orebodies hosted in a Paleoproterozoic inlier comprising a mixed sequence of amphibolite-grade metavolcanic and metasedimentary rocks intruded by three generations of Jurassic porphyry dikes and sills. The mineralisation comprises sulphide (sphalerite with lesser pyrite and minor galena) lenses that favourably replace units within the folded 2.3 billion-year old metamorphic basement rocks. The base metal and gold mineralisation have some similarities with a skarn type of deposit. Mineralisation lenses are up to 15 metres thick, tend to dip steeply to moderately west and extend along strike and down dip tens to hundreds of metres.
Click here for enlarged Map of the Caijiaying License Areas.
EXPLORATION
Hebei Hua Ao Mining Area
The strategy of focusing on near-mine exploration and resource definition drilling has delivered substantial resource growth culminating in the new Caijiaying Global Mineral Resource in 2021.
In 2020, the near mine exploration programme at the Caijiaying Mine 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. Technical targeting studies are an important ongoing component to the geological activities that service mine production. Advanced geochemical and structural modelling techniques continue to deliver prioritised targets in the following categories:
• In-mine areas between or adjacent to known orebodies;
• Near-mine targets within reach of underground drilling from existing or planned drives; and
• Administrative report compilations and tenure applications to the relevant Government agencies.
In 2020, the Zone II mining licence application was the clear administrative priority for the Company. This unflinching determination was rewarded with the approval of the new single expanded mining licence covering 3.13 km2 and includes both Zones II and III. The Zone II Mineral Resource is accessible from the existing Zone III decline and 2021 will see work commence to enable an 80% increase in production over the next 2 years to 1.5 million tonnes per annum. This is a significant achievement that lays out a clear path over the coming years for continued development.
At Zone III, the focus has been on aggressive underground diamond drilling activity to convert Inferred and Indicated Mineral Resources into Measured and Indicated categories and to target extensions of known zinc and gold lodes beyond the resource limits. Despite some Covid-19 related delays in early 2020, a total of 267 underground diamond drill holes were drilled for a total of 27,635 metres utilising 3 underground electric-hydraulic drill rigs. In 2021, diamond drilling will focus on expanding the resource within the mine corridor whilst also testing for extensions at depths well below the current level of development. Continued structural and geochemical data collection has enabled progress toward the development of a robust indicator of proximity to mineralisation. These lithogeochemical indices developed for Zone III will continue to be applied in Zone II. Significant benefits have been achieved from this detailed work resulting in the recent upgrade to the Zone II Mineral Resource estimate and to provide compelling near mine exploration targets. The revised 3D structural model used in this update will continue to be improved and applied as development progresses and diamond drilling commences. This will be the focus throughout 2021.
Hebei Hua Ao Retention Licence
During 2020 the Hebei Hua Ao exploration licence that includes Zone V and VIII was converted to a retention licence. This is the first step in the process to being granted a new mining licence for this area. The retention licence, which now covers 2.23 km2, is valid until to 16 July 2022.
Hebei Anglo Area
After careful consideration regarding tenement expiry dates and practical limitations to complete the necessary administration requirements, a decision was made to transfer the licence to Griffin’s joint venture partner Yuanrun to allow its retention under PRC law within the Hebei Hua Ao Group. Should a mining licence be granted over this area at any point in the future, this new licence may be contractually transferred back to Hebei Anglo at the Company’s option. Given the depth of cover and existing underground infrastructure, the Company remains in a good position to benefit from any new discovery should it eventuate.
Shitouhulun and Sangongdi
Work of late has been confined to progressing relevant permits.
Proposed 2021 Exploration
Exploration and resource development at Zones II and III will be the Company’s focus throughout 2021. At Zone II, diamond drilling will test exploration targets to the east whilst also testing areas within and adjacent to the resource model. At Zone III, exploration will target inferred depth extensions beneath the lower limits of development as well as a number of near mine exploration targets to the east.
OPERATIONS
Safety
The safety and welfare of the Company’s workforce remains a priority with underground and surface operations operated safely and consistently in 2020 without any major incidents.
A continued focus on safety and training of the Chinese workforce resulted in a “Lost Time Frequency Rate” of 1.28 (2019: 2.2) per one million hours and the “Total Recordable Injury Frequency Rate” of 4.5 (2019: 13.3) per one million hours, a significant improvement from the previous year.
PFA approvals
Following 2 years of capital development and the installation of relevant underground services, the Chinese Safety Bureau granted the 3rd Stage Zone III PFA. This significant milestone extends the underground mineable ore zone from just Zone III at the Caijiaying Mine from the current 1175m RL down to the 1000m RL. This will enable the underground operations in Zone III to extract 1.1 million tonnes of ore per annum beginning 2021 compared to the 855,000 tonnes of ore mined in 2020. This represents a 29% increase in mineable ore production per annum.
The PFA works encapsulated internal escapeways, ventilation, dewatering, electrical and communications systems. It is mandated that this critical infrastructure be in place prior to the approvals process and commencement of stoping.
Green Mine Certification
In January 2021 the central Chinese Ministry of Natural Resources (the “MNR”) published its formal list of mines operating in China which have passed the national level green mine assessment, with the Caijiaying Mine occupying the first position on the list.
Under its ‘Green Mine Construction Plan’, the Chinese Central Government is attempting to motivate mining enterprises to improve their resource utilization efficiency, protect the environment and harmonize their relationship with communities. The MNR’s Circular of Selection of Green Mines 2019 outlines the criteria for a green mine including a mine’s adherence to the law, corporate culture, quality controls relating to health, safety and environmental protection, resource utilisation strategies, environment restoration and reclamation processes and their relationship with local communities. The consequence of failing to ensure certification is closure of the designated mine. Further, in 2020, the Provincial Government of Hebei Province in its ‘Green Mines Construction Work Plan’ declared that all non-green mines in its provincial area will be shut down from the beginning of 2021.
Green Mine approval comes after the Company’s past environmental best practices were recognised by the Chinese government with the Environmental Award and the Mine Development Outstanding Achievement Award at successive China Mining Conferences.
Covid-19
Ore mined, hauled, and processed in 2020 was impacted by restrictions to contain the Covid-19 pandemic. In the first quarter of 2020, operations at the Caijiaying Mine were suspended for a month to comply with restrictions instigated by the PRC authorities to contain the coronavirus pandemic. Operations recommenced on 24 February 2020 and steadily increased such that underground mining reached 100% of budgeted rates by mid-March 2020 and processing operations by late March 2020.
As a preventative measure to protect the Caijiaying Mine neighbouring villages and townships from Covid-19 infection, workers and contractors were prevented from returning to the Caijiaying Mine immediately following the 2020 Chinese New Year Holiday, and thereafter strict quarantine requirements were imposed. Since the 2020 year end, entry restrictions to the Caijiaying Mine have been further strengthened and extensive testing implemented so that to date, there have been no positive cases of Covid-19 reported at the Caijiaying Mine.
Production
Production results for the Caijiaying Mine in 2020 can be summarised as follows:
• Ore mined of 854,566 tonnes (2019: 862,029 tonnes);
• Ore hauled of 825,412 tonnes (2019: 925,903 tonnes);
• Ore processed of 822,058 tonnes (2019: 930,613 tonnes);
Whilst metal in concentrate recoveries were broadly maintained, optimising underground stope scheduling, pillar recovery and maximising economic extraction resulted in a planned rise in the combined zinc-gold equivalent head grade to 6.2% in 2020 from 5.5% in 2019.
As a result of the lower tonnes mined and processed:
• Zinc metal in concentrate produced was 32,472 tonnes (2019: 37,413 tonnes);
• Gold metal in concentrate produced was 11,250 ozs (2019: 17,768 ozs);
• Silver metal in concentrate produced was 292,301 ozs (2019: 344,228 ozs); and
• Lead metal in concentrate produced was 1,428 tonnes (2019: 1,219 tonnes)
Operational developments
Underground development work in 2020 was primarily focused on developing future stoping horizons between the 1175m RL and 1000m RL levels with 1080m RL, 1040m RL and 1000m RL levels being developed in 2020 for production in 2021.
Capital development in 2020 totalled 4,510 metres and operational development totalled 4,459 metres compared to 7,178 metres and 3,385 metres respectively driven in 2019. The lower capital metres driven in 2020 was due to the critical completion of development of the North and South declines in late 2019.
The programme to further modernise the Caijiaying Mine continued throughout 2020 with the 3rd Stage PFA approval work, Green Mine Certification, ventilation upgrade programme and other numerous upgrades.
A key focus for 2020 was the completion of the installation and commissioning of the main ventilation exhaust fan as part of the ventilation upgrade project (see pages 24 & 25). For the primary ventilation airways, a Central Fresh Air Shaft, Underground Return Airway Shaft, Central Stoping Vent Rise and two Northern Stoping Vent Rises were installed. The Main Ventilation Shaft primary fan and the corresponding backup power arrangement were also installed. A new Howden primary exhaust fan was commissioned in the second quarter of 2020 increasing the exhaust capability to 250 cubic metres per second, significantly enhancing ventilation control and environmental safety of the underground workings.
Significant other infrastructure was installed that will be of benefit over the life of the Caijiaying Mine including at the 1000m RL a new pump station, new electrical substation and new emergency refuge chamber. These were all required as part of the safety production requirements for the lower Zone III PFA approvals.
The Paste Fill plant commissioned in September 2019 was fully utilised in 2020, thereby limiting the storage requirements for tailings facilities. Backfilling methods consist of cemented paste backfill with secondary stopes filled with generated waste rock material.
A new 40 tonne low emission boiler has been installed as part of the upgrade to the Caijiaying Mine’s heating system and to limit emissions at the Caijiaying Mine. As well as reducing any emissions the low emission coal boiler has an automated coal feeding system negating the necessity to manually feed coal reducing the need for manual labour and increasing safety.
A new Manitou lifting device, a new underground loader and a 20 tonne haulage truck with a fully enclosed cabin were acquired in 2020. It is planned to acquire a further two 20 tonne haulage trucks in 2021 to increase haulage capacity aided by the one-way traffic system underground with the completion of the North and South Declines. In addition, the Third Brigade is expected to update its fleet in 2021 with a new fit for purpose lifting device, a new electric over hydraulic production drill rig, a new single boom electric over hydraulic development drill rig and a new electric over hydraulic ground support installation drill rig. It is also planned to enhance remote bogging capabilities with two new underground loaders in 2021.
In 2020, new electronic detonators were introduced with the safety and mining teams together with the on-site mining contractor collaborating with the detonator manufacturer and the Chinese Public Safety Board to ensure their safe and effective use for both development and production blasting purposes.
Historic production may be summarised as follows:
Zone II
On 28th December 2020, a new mining licence covering both the Zone II and Zone III areas was approved and issued by the MNR.
The magnitude of this accomplishment cannot be diminished. This major milestone was finally reached after 8 years of lengthy and arduous document preparation and written submissions which continually needed to accommodate a significant number of legislative and regulatory changes throughout that time.
The new mining licence allows for the mining of significant additional resources. The granting of the 3rd Stage Zone III PFA Permit will increase the annual mined ore from Zone III to 1.1 million tonnes in 2021, but with the increased ore accessed from Zone II, this will increase to over 1.5 million tonnes per annum in 2022, increasing as more capital development is completed. No additional capital is required for any above ground processing facilities which were upgraded and completed some time ago whilst waiting for the new mining licence.bus leo.