Project Area
Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment. China has generally implemented reforms in a gradualist or piecemeal fashion, including the sale of minority shares in four of China's largest state banks to foreign investors and refinements in foreign exchange and bond markets in 2005.
After keeping its currency tightly linked to the US dollar for years, in July 2005 China revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. Cumulative appreciation of the renminbi against the US dollar since the end of the dollar peg reached 15% in January 2008. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity basis, in 2007 China stood as the second-largest economy in the world after the US, although in per capita terms the country is still lower middle-income. Annual inflows of foreign direct investment in 2007 rose to $75 billion. By the end of 2007, more than 5,000 domestic Chinese enterprises had established direct investments in 172 countries and regions around the world.
Sources: World Fact Book, Wikipedia, Bloomberg
https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
Xiaonanshan Mine
Project History
The Xiaonanshan Iron Mine, the Matang iron deposit, and the Sudan concentrator plant are located a few kilometers from each other near the city of Maanshan in Anhui Province in eastern China, 270 kilometers west of Shanghai. Maanshan, population 400,000, is known for its steel production. In fact, one of the largest steel manufacturers in China, Magang Steel, is located in the city and employs nearly 70,000 people.
Small-scale production at the Xiaonanshan Iron Mine commenced in 1998. In 2005-2006, a tailings dam and the 240,000 tonnes per year (tpy) Sudan concentrator plant were constructed. A second concentrator plant was completed in June 2008, which doubled the capacity to approximately 480,000 tpy of magnetite iron ore concentrate. With targeted improvements to the plants, the total processing capacity is expected to increase to 600,000 tpy. The expanded processing capacity will allow the joint venture to capitalize on robust long term demand. Estimated 2008 production is over 300,000 tonnes of magnetite iron ore concentrate.
In March 2009, London Mining plc and Wits Basin Precious Minerals (OTCBB: WITM) executed a joint venture agreement to create a 50/50 ownership of the Xiaonanshan Iron Mine, the Matang iron deposit, and the Sudan concentrator plant.
The Joint Venture controls over 69 million tonnes of magnetite iron ore resources in a single deposit that can be processed with existing facilities at the Xiaonanshan mine and Sudan concentrator plants. Moreover, 22 million tonnes of additional resources are located in the nearby village of Matang; this resource is expected to support expanded operations. The operations currently have a total of 454 employees: 257 (17 staff) at Xiaonanshan and 197 (7 staff) at the Sudan concentrator plants.
Xiaonanshan MineOverview of Current Operations
General Geological Features of the Xiaonanshan ore deposit:
The Xiaonanshan iron deposit consists of fractured and brecciated andesite and diorite host rock at the upper margin of an underlying diorite porphyry intrusion. Fractures in the breccia contain dominantly magnetite with rare metallic minerals and gangue of plagioclase, actinolite, chlorite, apatite, biotite, quartz, and carbonates. The mineral magnetite (Fe3O4) contains up to 72% iron (Fe) and 28% oxygen (O2). Ore grades are quoted in total iron (TFe) and commonly average 24-27% TFe, which means that approximately 37% of the ore consists of magnetite.
A 1973 report shows a resource of 71.3 million metric tonnes (mt) grading 26.5% TFe using a cut-off grade (CoG) of 18-20% TFe. In a 2007 report, it was estimated that a total of 2.0 million tonnes had been extracted from this resource. The Xiaonanshan open pit mine is currently producing from a 3.7 million tonne portion of the resource.
Photo: A working face at Xiaonanshan showing magnetite (black) in typical iron ore
The Matang project is situated about 4 km to the west of the Xiaonanshan deposit. The general topography of the project site consists of isolated small hillocks and large tracts of farmland under cultivation and is amenable to open pit mining. Magnetite mineralization at Matang is similar to that at Xiaonanshan.
Photo: Matang project site
Ore grades at Xiaonanshan and Matang are reported in percent total iron (TFe). In an SRK Consulting report on the mine (1), the resources are quoted at an average grade of approximately 25% TFe. Following mining, crushing, and grinding of the ore, the mineral magnetite, which is highly magnetic, is concentrated by magnetic separation in the concentrator plants. Magnetite constitutes between one-quarter and one-third of the ore. The magnetite concentrate averages over 62% TFe, and is, therefore, nearly pure magnetite.
Below are the magnetite iron ore resources at Xiaonanshan and Matang:
|
Measured (mt) |
Indicated (mt) |
Inferred (mt) |
Total (mt) |
| Xiaonanshan |
| 0 – -30m |
181,100 |
3,513,000 |
|
|
| -30 – -200m |
36,600 |
10,233,400 |
17,272,200 |
27,542,200 |
| 1975 Report* |
4,332,300 |
27,843,600 |
7,887,800 |
40,063,700 |
| Subtotal |
4,550,000 |
41,590,000 |
25,160,000 |
71,300,000 |
| Less Mined |
|
|
|
2,010,000 |
| Total |
|
|
|
69,290,000 |
| Matang |
| Above -50m |
|
9,030,000 |
60,000 |
9,090,000 |
| Below -50m |
|
3,170,000 |
9,620,000 |
12,790,000 |
| Total |
|
12,200,000 |
9,680,000 |
21,880,000 |
| Total |
91,170,000 |
* Resources certified by a Chinese government agent as of February 27, 1975.
There are two processing plants (No 1 and No 2) located in Sudan. These plants are operated as two separate and independent units and, jointly, have a current annual capacity of 440,000 tonnes of magnetite concentrate at 62% iron (Fe) (+/- 1% Fe) at a moisture content of about 10%.
Photo: The No 2 Processing Plant viewed from No 1 Plant.
Note: Common platform for concentrate loading.
The No 1 Processing Plant was commissioned in December 2006 and has been operating at a production rate of between 200,000 tonnes and 240,000 tonnes of magnetite concentrate per year from a feed of 900,000 tonnes of run-of-mine ore.
The No 2 Processing Plant is identical in layout and design to that of the No 1 Plant and has a similar production capacity. It was commissioned in June 2008 and has been operating with little to no start-up problems.
The two concentrating plants are currently operating up to a rate of 1,700 tonnes per day. This base rate plus planned improvements can confidently be expected to achieve the targeted production rate of 600,000 tonnes of iron ore concentrate per year.
(1) SRK Consulting China (July 2008). Technical Assessment of the Xiaonanshan and Matang Iron Projects, Anhui Province, People's Republic of China. Report prepared for Wits Basin Precious Minerals.
Xiaonanshan MineFuture Plans
The project has two primary means of growth. The first is through implementing more efficient mining and concentrating procedures at the current operating mine and concentrating plant to increase existing production. The second is through mining and processing additional reserves. A comprehensive geological and engineering study of the deposits and operations will be conducted by the new owners in an effort to provide focus to improvements.
Calendar year 2009:
Magnetite concentrate production is planned to increase to at least 450,000 tonnes per year, from 1,800,000 tonnes of run-of-mine ore.
The required increase in the production rate could come about by improving efficiencies in the current system and/or by the addition of more processing capacity. Notable areas include:
- Higher recovery at the mine’s preparation plant, resulting in a higher grade of feed to the processing plant and, thus, higher concentrate produced for the same volume.
- Improvement to the utilisation of the processing plants.
- Raising the recovery levels at the magnetic separators.
- Increasing the requisite capacity by the addition of more equipment; and/or
- Replacing current equipment with higher volume throughputs and more technically advanced/efficient units.
Calendar year 2010:
Magnetite concentrate production is planned to increase to 600,000 tonnes per year, from 2,400,000 tonnes of run-of-mine ore.
Actions to be investigated to achieve this target are:
- All the above for calendar year 2009.
- The potential to lease available processing plants in the immediate area. The previous owner has intimated that there are two processing plants each of 200,000 to 300,000 tonnes per year capacity that could be leased to provide for the additional processing capacity.
Xiaonanshan MineMaps & Statistics
Chinese Iron Ore Production
Chinese Domestic Production Increasing by 7-8%p.a. in 2008-10e
Xiaonanshan MineLinks
Chinese Embassy in London
http://www.chinese-embassy.org.uk/eng/
Chinese Government
http://english.gov.cn/
Ministry of Land and Resources
http://www.mlr.gov.cn/mlrenglish/
Steel and Iron Ore Companies in China:
Magang Steel,
www.magang.com.cn/eng/
Baogang Steel,
www.baosteel.com
