China focussed Red Mountain Mining (ASX: RMX) has reported that due to above average rainfall at the Xinqu underground mine on the Zhongqu project, the proposed Stage II underground drilling program has been delayed.
The Zhongqu Project is located 260 kilometres southwest of the provincial capital of Lanzhou, in the Gansu Province of China.
Xinqu is one of three main exploration target areas within the Zhongqu Project.
Investors may recall that recently ASX listed Red Mountain made a very encouraging start to corporate life with some significant gold intersections and mineralisation encountered in the September quarter, below an operating mine at the Zhongqu Project in China during Stage 1 drilling programme.
Best results of that drilling included:
31 metres at 4.61g/t gold, incl 4m at 9.51g/t gold and 8m at 10.07g/t gold and
14.3 metres at 4.50g/t gold, incl 6m at 7.14g/t gold and 3m at 6.27g/t gold
The company has binding acquisition agreements to acquire 51% of the Zhongqu Project.
Interestingly, Zhongqu is an operating gold mine with existing infrastructure. Red Mountain established site facilities and mobilised a Chinese based, Australian drilling contractor to commence the Stage 1 underground drilling programme.
Numerous intercepts identified the width and tenor of grade that showed the potential of the mine to host mineralisation amenable to modern, mechanised mining methods.
The deepest intersection was approximately 200 metres vertically below the 6 Level and only 400 metres below surface. This is considered shallow by Australian standards and easily accessed by a decline.
Rain delays
The underground drilling contractor is now planned to mobilise and commence drilling by early December 2011.
It is anticipated this will be sufficient time to finish the planned program in January-February 2012 to outline the size and dimensions of the gold mineralisation encountered in the Stage I program.
Diebu Project
An exploration team has been assembled and will mobilise to the Diebu Project in December 2011 to commence rehabilitation of the existing exploration adits and mapping of surface and underground exposures to establish potential drill targets.
Drilling is expected to commence in the first half of 2012. The company has an agreement to acquire 90% of the Diebu Project.
Cash position
Red Mountain closed out the September quarter with cash of $7.2 million.
The Company’s strategy is to secure interests in privately owned Chinese operating gold mines and advanced exploration projects to unlock the potential of “under-developed” gold projects in China by introducing Australian mining methods and improving efficiencies to gain significant production and exploration upside.
Red Mountain listed on the Australian Securities Exchange after successfully raising $8 million (before costs) in 50% oversubscribed IPO.
It has sufficient cash to fund exploration drilling through to 2013.