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 two 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 a high speed train link from Beijing has been recently 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 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 above sea level. 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.

MINERAL RESOURCE ESTIMATE

An updated global resource estimate was released on 18 February 2020, click here to view the details.

GEOLOGY

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

Within Hebei Hua Ao’s tenements surrounding the mine, ongoing exploration of Zones II and VIII have utilised knowledge gained from the evolving structural model at Zone III to enable re-interpretation of structure in the adjacent zones. This is allowing the resource models for Zones II and VIII to be improved and is an ongoing process.

 

Click here for enlarged Map of the Caijiaying License Areas.

EXPLORATION

The 2019 exploration programme at Caijiaying used a strategy of consolidation, with work completed to test mineralisation along strike in the northern deposit area and down-dip for extensions.

Studies of areas outside the identified resource zones but still within the licence areas has involved reinterpretation of old geophysical data collected in 2004-6 in the light of the updated structural resource models generated at Zone III. These have confirmed new targets that were inadequately tested in the past.

Hebei Hua Ao Mining Area

In 2019 the focus was on rapid underground diamond drilling activity to target and infill down-dip extensions of known zinc and gold lodes within Zone III using the advancing decline to provide new drill locations. 313 underground diamond drill holes were drilled for a total of 42,562 metres utilising four underground electric-hydraulic drill rigs.

Further progress has been made in the application of lithogeochemical data to provide an indicator of proximity to mineralisation. The litho-geochemical indices developed for Zone III have been applied to Zone II for the new Mineral Resource estimate. This work also included interpretation of a 3D structural model for Zone II.

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 Zone III & VIII mineralisation. This licence extension expires in July 2020. A single surface diamond drill hole was completed in 2019 to test for an extension of mineralisation along strike. As mineralisation exists at depth it was decided to retain the existing licence by transferring the licence to Yuanrun to allow its retention in the Hebei Hua Ao Group with the contractual right to be transferred back to Hebei Anglo in the future should a mining licence be applied for and granted over the area.

Shitouhulun and Sangongdi

In 2019 work was confined to extending the existing agreement with the Third Brigade to obtain the relevant licences over these areas for Hebei Hua Ao when mining licencing resumes in Hebei Province.

Magnetic survey work at Sangongdi October 2018

 

Proposed 2020 Exploration

Once the Zone II mining licence is granted, underground drilling will commence to follow-up targets generated from the new structural model constructed from Zone III data. Work will continue drilling exploration holes from the bottom level of the Zone III decline, with the aim to discover new lodes and extensions to currently known lodes, both down-dip and to the east and west.

Signing Ceremony for Exploration and development of Shitouhulun and Sangongdi

OPERATIONS

The safety and welfare of Griffin’s workforce remains a priority with underground and surface operations conducted safely and consistently resulting in no major incidents in 2019.

A continued focus on safety and training of the Chinese workforce resulted in a “Lost Time Frequency Rate” of 2.2 per one million hours and the “Total Recordable Injury Frequency Rate” of 13.3 per one million hours, in 2019 being in line with the previous year.

The key focus for 2019 was the continued development of the North and South Declines and associated level access development at Zone III down to the 1000mRL to access the ore bodies below the 1175RL. By the end of 2019 the link between the two Declines at the 1000mRL and the development of the South Haulage Drive, in preparation for the commencement of development into Zone II, was successfully completed. Importantly to improve ventilation in the mine, two new 5.0m diameter ventilation shafts were safely developed from surface into the underground workings at Zone III together with an underground 5.0m diameter ventilation shaft down to the 1175mRL level. The completion of these three ventilation shafts with the Underground Fresh Air Shaft (“UGFAS”) totalling 126m, the Main Exhaust Ventilation Shaft (“MVS”) totalling 305m and the Central Fresh Air Shaft (“CFAS”) totalling 176m significantly improves ventilation and therefore the working environment underground at Caijiaying.

New Third Main Ball Mill
Caijiaying Processing Plant

Production results for the Caijiaying Mine in 2019 were broadly in line with 2018 and can be summarised as follows:

  • Ore mined of 862,029 tonnes (2018: 872,069 tonnes);
  • Ore hauled of 925,903 tonnes (2018: 922,424 tonnes); and
  • Ore processed of 930,613 tonnes (2018: 930,472 tonnes).

Whilst metal in concentrate recoveries were broadly maintained, optimising underground stope scheduling, pillar recovery and maximising economic extraction resulted in a zinc equivalent head grade of 5.5% in 2019 compared to 5.4% in 2018. As a result:

  • Zinc metal in concentrate produced was 37,413 tonnes (2018: 37,112 tonnes);
  • Gold metal in concentrate produced was 17,768 ounces (2018: 16,230 ounces);
  • Silver metal in concentrate produced was 344,228 ounces (2018: 280,712 ounces); and
  • Lead metal in concentrate produced was 1,219 tonnes (2018: 1,030 tonnes).

With three fully-enclosed-cabin, 20-tonne haulage trucks, being successfully introduced in 2019, it is planned for the haulage contractor to add a further three trucks of the same capacity in 2020 to increase haulage capacity, which will also be aided by the introduction of a one way system underground with the construction of and via the South and North Declines.

During 2019 underground development work was primarily focused on developing the future stoping horizons between the 1175mRL and 1000mRL levels. This included linking the North and South Main Declines with 7,178m of new drives in 2019 compared to 5,312m in 2018. In addition, operational development totalling 3,385m was completed in 2019 compared to 4,047m in 2018.

Long hole open stoping continues to be the predominant mining method. 2019 used a mix of backfilling methods including waste fill, hydraulic fill and paste fill. The new paste fill plant was successfully commissioned in September with one double lift stope fully backfilled with paste fill and additional stope voids partially filled with cementitious paste. Existing and future stope voids will be paste filled.

Since mining and processing operations began at the Caijiaying Mine in 2005, mining and development operations have been halted annually for 2 weeks to enable employees and contractors to return to their extended families in their home provinces for the Chinese New Year festival and holidays. This year, those holidays commenced on the 24 January 2020. At approximately the same time, the government of the People’s Republic of China declared the Covid-19 outbreak a pandemic and ordered the closure of all Provincial borders. The Company therefore did not restart mining and underground development operations until after the Chinese New Year holidays on 21 February 2020, in the mean time underground workings were placed on care and maintenance with essential services, including pumping and ventilation, maintained. All essential and senior Chinese staff remained at Caijiaying whilst all foreign and non-essential local staff were sent home and placed on standby. Ore stockpiled at surface was processed until exhausted on the 30 January 2020 at which time the mill was placed on care and maintenance.

The Caijiaying Mine was directed by Chinese authorities to restart all operations on the 21 February 2020. Unfortunately, due to continuing travel restrictions imposed by the Central Chinese authorities, the Company’s mining contractor was unable to recommence activities due to a complete quarantine of Zhejiang Province, the home Province of the majority of the mining contractor’s staff. This severely impacted mining, but more critically, capital development of future mining stopes.

Construction of New Power Line to Caijiaying Mine

Underground mining operations reached 100% of planned rates by the 13 March 2020 and, with a new supply of ore, processing operations by late March 2020, despite continuing difficulties in returning personnel to Caijiaying because of travel restrictions within and into China. At the time of writing, whilst travel restrictions within China have been alleviated, difficulties remain in bringing key foreign personnel to Caijiaying due to the prohibition of entry into China to anyone other than Chinese citizens and permanent residents. As a result, foreign national staff (including senior management, geologists and mining engineers), are having to work remotely from their home countries of Australia and the United Kingdom via Skype and Zoom. This is having a limited short-term impact upon operations at the Caijiaying Mine but presents longer term mine planning issues. In the meantime, with a full complement of Chinese staff, operations at the Caijiaying Mine continue as planned. Delivery of consumables, re-agents and spares necessary to safely and efficiently run operations have returned to normal.

New Sandvik Jumbo
Chinese Single jumbo

Historic production may be summarised as follows: