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Issue 6:

Jinfeng mine: Going underground to create the second largest gold mine in China

A mining model developed in Australia and Canada is being reproduced with successful results at a mine in China whose geology resembles a site in the United States — a true example of the global nature of the mining industry. An industry where mines learn from past experiences and the best practices of one another in a never-ending search to become more productive.

Until recently, the Jinfeng mine in Guizhou province was an open pit gold mine. Today, mining has also moved underground, making the gold-rich site — which resembles the Carlin mine in Nevada, USA — the second largest gold mine in China.

Mining in China

The Jinfeng gold deposit is located within the Qianxinan Prefecture, Guizhou Province, about 240 kilometers (150 miles) southwest of the capital city of Guiyang, at an elevation of 750 meters (2,460 feet). The project area is lightly populated (mainly the Bouyei minority group) and has a subsistence farming economy.

Mining activity in the region has been ongoing from at least the latter part of the Qing Dynasty — more than 100 years — when mercury and arsenic mining of the central section of the main Jinfeng deposit was recorded.

During the mid-1980s, renewed interest in gold resulted in the completion of large government sponsored stream-sediment geochemical programs across China. This work resulted in the detection of 14 significant gold anomalies in the Jinfeng region, and follow-up in 1984 and 1985 defined 22 discrete prospects, one of which was the previously inspected arsenic occurrence on the main deposit at Jinfeng.

Intense exploration activity by a local exploration group commenced, and from 1986 to 1993 some 15 kilometers (9 miles) of diamond drilling and 8 kilometers (5 miles) of underground aditing were completed. This work successfully defined more than 50 tonnes (55 short tons) of gold and in 1992 the deposit was listed by the Central Chinese Government under the 892 National Plan because of its likely impact to the economy.

Despite the deposit’s significance, exploration and development work was curtailed in 1993 due to a lack of funding and metallurgical challenges, and Jinfeng was offered to a number of large foreign gold companies. However, aside from a limited drilling program in 1997, activity remained subdued, and it wasn’t until Sino Gold Mining Ltd. commenced negotiations in late 1999 that interest in development was reinvigorated.

Discovering a significant deposit

The largest known Carlin-type deposit in China, Jinfeng lies within Triassic clastic sedimentary rocks overlying the Permian and Carboniferous limestones of the Laizhishan Dome. The Jinfeng orebody is a structurally controlled gold deposit with some replacement style mineralization.

The deepest drilling at Jinfeng has intercepted strong gold mineralization and intense alternation at more than 1000 meters (3,280 feet) depth. This deep, down-lunge zone has now been followed to near the contact of the Triassic sediments and underlying Permian limestones, which is considered very prospective for gold deposition. Several gold deposits in China’s Golden Triangle region are located in a similar stratigraphic position near the Triassic-Permian contact.

The Golden Triangle region of China represents one of the world’s great remaining under-explored gold regions. Recognized for its gold potential relatively late in the latest gold cycle and suffering from a lack of exploration funding or application of modern exploration techniques over the last decade, the region presents one of the few remaining genuine opportunities to discover significant gold deposits within a relatively low-risk environment. The region has the potential to become one of China’s most important gold producing areas.

The Jinfeng mine in the Golden Triangle region of China

Much has been written about the deposits of the Golden Triangle and their affinities (and differences) to the Carlin deposits of Nevada, USA. Chinese academics and their American colleagues have long recognized that the deposits in general share many distinct characteristics to Carlin and, in a direct sense, represent the Chinese analogy of this important class of mineralization. Recent work has not only strongly reinforced this concept and confirmed the key characteristics for Jinfeng, but also significantly added to the exploration appeal of the area.

Jinfeng is a significant deposit, with ore reserves containing 91000 kilograms (3.2 million ounces) at an average grade of 5.2 grams per tonne (0.16 ounces per short ton) of gold. This world-class ore body has an underground grade of 5.7 grams per tonne (0.18 ounces per short ton), and the mine has a potential life of 15 to 20 years.

Drilling of this deep zone from surface was completed in early 2008. A 600-meter (1,970-foot) hole targeting the down dip extension of the main mineralization is currently under way. Testing for further down plunge extensions to the orebody is planned to resume in 2010, possibly from an underground drive.

Accelerating development

In April 2001, Sino Gold Mining, Ltd. earned an 82 percent interest in the project for the staged payment of US$800,000 and a commitment to bring the deposit into production. In late 2009, Vancouver, Canada-based Eldorado Gold Corp acquired Sino Gold to form the leading international gold exploration and mining company in China. With the acquisition, Eldorado now has three operating mines in China: the Tanjianshan, Jinfeng and White Mountain mines.

Eldorado is active in exploration and development in Brazil, China, Greece, Turkey and surrounding regions. The company has set a goal to produce over 28300 kilograms (1 million ounces) of gold annually by 2013. As one of the lowest cost gold producers — one with a strong balance sheet — analysts say the company is well positioned to grow in value with the creation and pursuit of new opportunities like those in China.

Initial mining of ore was from the Jinfeng open pit, with 0.7 million and 1.4 million tonnes (0.8 and 1.5 million short tons) of ore mined in 2007 and 2008 respectively. Ore is now being sourced concurrently from the open pit and the underground mine, with 1.2 million tonnes (1.3 million short tons) of ore mined in the first nine months of 2009.

In 2007, Jinfeng produced 56,981 gold ounces and in 2008 it produced 150,928 gold ounces at a cash operating cost of US$400 per ounce. In 2009, Jinfeng produced 166,828 gold ounces at a cash operating cost of US$405 per ounce. Ore is currently being mined from the Jinfeng open pit with the use of a mining contractor and the new development of the underground mine. Jinfeng’s production is planned to increase as higher-grade ore from the underground mine increasingly supplements ore from the open pit.

When working at full capacity, the underground mine is expected to operate on three main levels, with each level providing approximately 400000 tonnes (441,000 short tons) of ore.

Accessing the underground mine

Eldorado Gold has used an Australian/Canada mining model at other sites, and has reproduced it at the Jinfeng underground development. This is the first example of this type of mining in China, with the company’s White Mountain underground development being the second. The model’s main feature is the use of a large haulage decline.

The mine is accessed via a 5.5-by-5.5 meter (18-by-18 foot) haulage decline and its gradient is averaged at 1 in 8. To date, 1.7 km (1 mile) of the decline has been developed and it will be extended to over 5 km (3.1 miles). Traditionally mines in China prefer the shaft hoisting ore handling method. While decline haulage is common in many underground mines, it is not common in China.

Long haulage vs. hoisting

Chief mining methods at Jinfeng underground are overhand and underhand cut-and-fill methods. When fully developed, the underground production capacity will reach 1 million tonnes (1.1 million short tons) per year.

“We’ve been able to consistently achieve a decline advance rate of over 150 meters per month,” says Dr. John Chen, manager of mining technical services for Eldorado Gold. “We give credit to our efficient mobile fleet for helping us meet this high production target.”

Both the Jinfeng and White Mountain mines use Cat underground equipment. Jinfeng operates Cat R2900G and R1700G Load Haul Dump loaders and AD45B trucks, purchased from China Cat dealer ECI-Metro Engineering Machinery Co. Ltd.

The AD45B and R2900G were delivered to the Jinfeng site at the beginning of March 2008 and started work March 5. At the end of January 2010, both units had clocked over 10,000 hours, averaging nearly 458 hours per month. The site also took delivery of an R1700G and AD45B in early 2009 and another R1700G in late 2009. Another AD45B will be delivered to the site this year.

Cat AD45B truck and R2900G loader

“This fleet is on target to reach 5,500 hours for a 12-month period,” says Ron de Haan, a senior product specialist for Caterpillar Global Mining, based in China. “For a mine that is currently undergoing development, this is a great example of best practices.”

The AD45B trucks were selected to help meet production targets, while the R1700G is used to muck horizontal development and ore headings.

“We have really benefited from buying Cat equipment — in particular due to the support of our dealer,” says Chen. “From training to parts availability, the partnership with Caterpillar and our dealer has truly helped make this venture a success.”

With warehouses in Singapore, Shanghai and a number of cities in China, spare part availability and services have met or exceeded the mine’s expectations, Chen says.

A Caterpillar team provided on-site operator and service training for both the dealer and customer as the machines were the first Caterpillar Underground units in China. This training was also followed up in June with a site study, production study and Fleet Production & Cost (FPC) Analysis and an operator review.

Improving cycle times

Continuous Improvement is an aspect of every relationship between Caterpillar, Cat dealers and their customers. A variety of processes are use to identify, implement, track, measure and replicate value-added activities.

“We don’t just build machines,” says de Haan. “Along with the dealer, we do all we can to make sure our customers get the most from their Cat equipment and get their cost-per-tonne to the lowest level possible.”

For example, during an operator review, a team from Caterpillar, ECI-Metro and the mine conducted a study of operator performance and provided additional training where required. Their goal was to lower cycle times.

“We spent several days traveling underground and viewing the operators working,” says de Haan. “Trainers from the mine owner also accompanied us and gained a firm understanding of how the machines should be operated.”

The study showed that operator skill was good, with only a few small improvements needed to get the optimum cycle time. The team suggested a small improvement in the decline and also first bucket readiness to reduce loading times and truck cycle times.

“All the areas we visited were new developments, which makes it difficult to have consistent cycle times,” says de Haan. “Now that the mine is in full production, the operation can be fine-tuned to get the optimum cycle times. The first key items to review would be truck placement and loader efficiency.”

Sites can achieve faster cycle times in a number of ways, including improving floor conditions and material condition, correcting the orientation to the face and truck placement, and ensuring the proper tram distance to and from the truck.

“We found load placement was good and material sizing was excellent,” says de Haan. “The load cycle time was increased by about 20 seconds by the operator patting the load down on the final load — a practice that we pointed out was not required as the haul road has plenty of clearance.”

Load placement

The team found the haul roads were in good condition but suggested cycle times could be improved by removing any uneven areas in the main decline, changing the camber on some of the corners so that they are slightly banked, and putting down a firm aggregate base where there is tire penetration of more than 25 mm (1 inch).

“Now that the mine is in full production, we’d like to conduct another site study to see how we can give them even more value from their Cat equipment,” says de Haan.

Processing the gold

Both the open pit and underground ores are stockpiled at the ROM pad near a surface crusher station. A loader is used to muck ore from the stockpiles to the crusher.

Jinfeng ore is refractory in nature, with the majority of gold encapsulated in sulfide minerals. As such, the gold is not readily amenable to dissolution in a conventional CIL circuit. In order to extract gold at economic recovery rates, the Jinfeng gold processing plant was designed and constructed using BIOX® technology, a process that has been available commercially for more than 15 years. Rights to the technology are currently held by Biomin Technologies SA, a subsidiary of Gold Fields Ltd.

The BIOX process, which pre-treats refractory sulphide gold ores such as pyrite, arsenopyrite and pyrrhotite, was developed to increase gold recovery rates during the metallurgical extraction process. The gold in these sulphide ores is encapsulated in sulphide minerals which prevent the gold from being leached by cyanide. The process destroys the sulphide minerals and exposes the gold for subsequent cyanidation, increasing recovery rates.

Caring for people and communities

As foreign companies like Eldorado move into China, they take great care in recognizing the impact they will have on the communities there.

Eldorado Gold recognizes that its existence as a company depends on the goodwill of the community within which it operates. The company is committed to seeking any opportunity to bring benefit to communities — from exploration to development, to construction and training, to mining and processing and finally reclamation and closure.

Site development includes infrastructure initiatives, such as improving roads, building sewage systems and building water wells, according to the needs of the communities. Eldorado makes it a priority to hire local residents, training all employees and instructing construction contractors in the best environmental, health and safety practices.

Eldorado Gold provides on-the-job training and works with local technical schools and universities to enhance their mining-specific programs to help increase employability. Safety is also a priority, with a focus on making sites safe, buying equipment with a strong safety record, and making sure employees are trained in safe practices on an ongoing basis.

Competitive salaries and benefits paid to employees and contractors improves their families' standard of living. In addition to job creation, Eldorado promotes many sustainable economic development initiatives. Since the life of any mine is limited, the company encourages and works with local communities to create new opportunities for economic development, even after the mine is closed.

Eldorado is also committed to protecting the environment. Activities like continually monitoring the quality of air, water and soil at Jinfeng are a high priority. The company also implements programs to preserve biodiversity, monitor noise and dust levels and adopt waste reduction and recycling programs.

The commitment continues once a mine is no longer profitable to operate. The mine is closed and reclamation activities are conducted so that the physical environment can successfully transition to a productive ecosystem.

Looking toward the future

Jinfeng’s gold production is planned to increase as higher-grade ore from the underground mine increasingly supplements ore from the open pit. When working at full capacity the underground mine is expected to operate on three main levels, with each level providing approximately 400000 tonnes (441,000 short tons) of ore. Developing the underground mine will provide the capacity to deliver in excess of the nominal 1-million-tonne (1.1-million-short-ton) annual design capacity of the plant.

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