ferret's stock to watch: sino gold llmited

Ferret's Stock to Watch: SINO GOLD LlMITED
07:47, Wednesday, 19 January 2005


LOCAL MINING COY BECOMING CHINA'S BIGGEST GOLD PRODUCER


Sydney - Wednesday - January 19: (RWE)
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OVERVIEW
********

Nick Curtis and Jake Klein have come a long way since being
executives of the Macquarie Bank.

They have used their skills of capital raising and deal making
to carve out a major gold mining operation in China.

Sino Gold was formed in 2002 and since then has been developing a
gold mining exploration and production business to the point where it is
challening the industry to become the number one gold producer in the
country.

Their negotiation expertise has been reflected in being awarded a
permit to develop the Jinfeng Project which is expected to become the
biggest gold producer in China.

Construction is scheduled to begin during the first quarter of
2005.

Ore Reserves of 2.1 million ounces contained gold have been
estimated supporting production for a scheduled 12 years.

Investment will be the largest-ever by a foreign company in
China’s gold sector.

Sino Gold announced to the Australian Stock Exchange this week
that the Guizhou Development and Reform Commission (Guizhou DRC) has
recently issued the "Project Permit on Jinfeng Gold Mine Project of Sino
Guizhou Jinfeng Mining Limited" - the Project Development Permit for
Jinfeng.

Directors say this is a major milestone as the granting of this
permit gives approval from the Chinese Government for the project's
development and legally entitles the project owner to commence
development.

Obtaining the Mining Licence is now a procedural matter for the
Ministry for Land and Resources (MLR), as no further approvals are
required from other government departments.

Sino Gold already enjoys the status of being the only foreign
company to have had mining licences issued for gold projects at its
existing Jianchaling and Zhangjiashan (Jianchaling East) mines in Shaanxi
Province.

Having obtained the Guizhou DRC approval, Sino Gold will now
begin site work.

Ausenco, the EPC Manager, is currently completing the detailed
design.

Three qualified companies have submitted tenders for the first
major construction package, the bulk earthworks.

Sino Gold and Ausenco are currently evaluating the tenders and
once awarded, the successful tenderer will mobilise to site.

The expectation is that work will commence in the first quarter
2005.

SHARE PRICE MOVEMENTS
*********************

Sino Gold yesterday rose 7c to $2.12. Rolliing year high has been
$2.85 and low $1.68. Chairman Curtis is considering listing offshore,
possibly in the US due to the number of shareholders in that country.

The company has released detailed information about the Jinfeng
Project.

It is located about 180km south-southwest of the provincial
capital, Guiyang, Jinfeng is considered to be the largest known
Carlin-type deposit and the largest undeveloped gold deposit in China.

The project is scheduled to produce about 180,000 ounces of gold
annually at an average operating cost of US$183/oz in Phase 1.

It is expected that the first gold pour will occur mid-2006, with
a ramp-up to design capacity anticipated over the remainder of that year.

Capital costs have been estimated in the Bankable Feasibility
Study at approximately US$70 million, with Ausenco undertaking a
definitive estimate as part of the detailed design phase.

Ore Reserves at Jinfeng contain 2.1 million ounces of gold,
enough to support a minimum mine life of 12 years at design production
capacity.

The project has approximately 1 million ounces of gold classified
as inferred resources and the company is highly confident that this will
convert to Ore Reserves as the drilling density associated with these
resources increases.

Sino Gold also has an extremely positive view on the geological
endowment of the area.

Given the company's view on the upside for reserves at the
project, Ausenco were mandated to complete a scoping study for a Phase 2
expansion to 1.8 million tonnes per annum, adding 50 per cent to the
production capacity.

The scoping study suggests expansion capability to approximately
300,000 ounces per annum with mining of the underground and open pit
occurring in parallel.

The estimated capital cost for this expansion is US$14 million.

The exploration program for 2005 is specifically aimed at
demonstrating the resource and reserve potential in order to allow an
early decision on the Phase 2 expansion.

Commenting after this key milestone, CEO Jake Klein said: "The
development of Jinfeng will be the largest-ever investment by a foreign
company in China's gold sector.

"Once developed, Jinfeng will be the second largest gold mine in
China, and potentially the largest when Phase 2 is implemented.

"This will further cement Sino Gold's strategic position as a
significant gold producer in a country of global significance to the gold
industry, " Mr Klein declared.


BACKGROUND
**********

Sino Gold Limited listed with an initial public offering on the
Australian Stock Exchange at the end of 2002

The company has concentrated in developing and producing gold in
China.

It is focused mainly on the operating Jianchaling Gold Mine and
the development of the Jinfeng Project.

In August this year the board of Sino Gold gave the green light
for the construction of a modern US$70 million mine at Jinfeng. This
180,000 oz/y, open-pit followed by underground, operation will be China's
largest mine when it opens in 2006.

Although the ore is refractory, most of the gold is tied up with
arsenopyrite, recoveries of 85 per cent can be achieved through the use
of Gold Fields' proprietary bio-oxidation process.

ENDS

Copyright © 2005 RWE Australian Business News. All rights reserved.