In December 2004, Majestic Gold entered into a final joint venture agreement with Shandong Yantai Muping Gold Mine on 13 licenses on the Jiaodong Peninsula in Shandong Province, China. The agreement required Majestic to commit to exploration expenditures of US$4.2 million over four years in order to earn a 60% interest in the licenses.
These licenses included a 120 tonne per day mining and milling operation on the Songjiagou license where ore was being extracted from the lower two of four levels of underground workings. At the time of the agreement, over 4,900 metres of underground tunneling existed to depths of 268 metres below surface.
Majestic’s mining licenses are located in proximity to three major northeast-southwest trending faults and are underlain by both Archean and Proterozoic basement and granite intrusions reminiscent of some of the world’s largest gold producing camps. The deposits of the Jiaodong Peninsula form one of the largest provinces of granitoid-hosted lode-gold deposits in the world and host some of China’s largest gold producers.
Gold occurrences on the Jiaodong Peninsula are of vein-type as well as disseminated and stockwork styles. The veins typically occur within second and third-order faults cutting Mesozoic granitoids and are relatively continuous, measuring from a few centimeters to several meters in thickness by as much as five kilometers in strike. The stockworks occur along regional faults and are surrounded by broad alteration halos. The vein type mineralization is described as mesothermal; the disseminated and stockwork style have some aspects of epithermal mineralization but are both spatially and genetically associated with the vein-type mineralization. The Songjiagou gold mine is a moderate temperature hydrothermal filling and metasomatic conglomerate type gold deposit with no clear boundary between wall rocks and ore. As a result, assay analysis is required to determine ore grades before mining is undertaken.
Early stage exploration was conducted on the Songjiagou property in the 1960s by various Chinese government agencies and departments. Exploration work included geological, geochemical, geophysical and drilling programs throughout an area of geological interest.
At the time of the cooperation agreement, mining activities were taking place on two of the licenses and gold was being extracted from quartz veins and from sulphide-rich shears formed in conglomerate rocks. Grades in the veins ranged from 5 to 9 grams per tonne and averaged 3 to 5 grams in the sulphide-rich shear zones.
Majestic’s initial exploration work included geochemical sampling of existing underground workings on the Songjiaguo license in order to facilitate the evaluation of the host conglomerate for bulk mineable potential. Channel samples from two sub-parallel drifts located approximately 258 meters below surface indicated that the gold mineralization permeates out from the higher grade structures, forming halos around them within the host conglomerate sequence.
In addition, sampling of two sub-parallel cross-cuts 218 metres below surface and 40 metres above level four also provided an opportunity to evaluate the bulk mineable potential. In mid-2005, Majestic initiated a major drill program at Songjiagou which supported the preparation of an independent resource report by Wardrop Engineering in April 2006. Bulk sampling commenced in late 2007 at Songjiagou.
Songjiagou Mine Development
In February 2010, Majestic entered into an agreement with seven Chinese investors who agreed to acquire a 40% interest in the joint venture company holding the exploration permit and license for the Songjiagou mineral property. The intent of the agreement was to facilitate commencement of mining operations at Songjiagou on a larger scale than previously envisioned. In addition, the agreement called for Dahedong Smelter Mill, owner of the 200 tonne and 1200 tonne per day milling operations, related buildings, mining machinery and equipment, to construct a new mill with a minimum processing capacity of 5,000 tonnes per day at their expense, handle all mining and transportation of ore and mine tailings, and deal with Chinese authorities concerning ongoing operations.
As compensation for the use of Dahedong’s mining assets and equipment during the mining term Dahedong acquired the right to earn 25% of the net profits of the joint ownership company along with a fixed amount per tonne for mining, transporting and processing services required to produce a gold concentrate suitable for delivery to a refinery or smelter.
Following the receipt of a positive economic assessment (PEA) in January 2011, construction work on the processing plant and related facilities commenced and plant commissioning was under way by the end of April. The plant achieved full operational capacity in 2012 at a total cost of $US50 million.
Mine and Milling Operations
Mining activities have been outsourced to Yantai Dahedong Processing Co. Ltd. which also supplies its own mining equipment. Road development and truck transport are adapted to transport ore from the open pit to processing plants approximately 4 km away. The mining sequence includes large diameter hole boring, blasting, secondary crushing and loading and transport. Waste benches are 10 m high and ore benches are 5 m high. Benches are combined in pairs for mining so the final bench height reaches 10 m with an overall pit slope of 48 degrees.
From 2008 to 2012, a total of 2.8 million tonnes of material grading 0.30 g/t were produced from the open pit and processed through the 6,000 tonne and 1,200 tonne per day process plants with gold recoveries averaging 83.44%.
Songjiagou Underground Gold Mine
The Songjiagou underground mine is situated approximately 405 metres northeast of the Company’s existing open pit operation. The formed concrete portal entrance provides access to a spiral ramp whose dimensions are 4.5 × 4.0 metres at a slope gradient ranging from 10-15% with the exception of curved portions which are slopped at 5% for safety reasons.
The ramp is sized to facilitate the use of trackless mining equipment including ore haulage to the surface process plant. The ramp was collared at an elevation of 80 meters a.s.l (above sea level) and is designed to achieve a total length of 2,075 meters in the first phase of development.
Construction work on the underground project was designed to achieve a rated production capacity of 300 tonnes of ore per day on a sustained basis. Development work is ongoing to ensure the maintenance of that production rate which includes accessing new work areas within the Company’s defined resource base. Ore from the underground mine is approximately four times (2.4 g/t gold) the grade of the open pit and is batch-processed in the Company’s surface plant to optimize metal recoveries.
Previous exploration work by the No. 3 Brigade immediately north of the open pit outlined at least 12 discrete gold-rich vein structures that represent a continuation of mineralization that is presently being mined in the open pit. The structures follow the general regional trend, striking north-easterly at about 040 degrees, with dips ranging from 30-65 degrees to the southeast. Gold-dominant mineralization remains open along strike and at depth in many of the vein structures explored by the No. 3 Brigade.
Underground mining operations are highly mechanized and include high efficiency, rapid- penetrating, hydraulic jumbo drills for development work, rotary drilling equipment employing extension steel for inclined medium and longer holes, 20 tonne dump trucks for ore haulage to surface via the ramp, and electric scrapers to facilitate ore recovery and loading in work areas.
The Company employs a mix of mining methods which are based on mining and geological conditions that are expected to be quite variable. Where warranted by ground conditions, mined out areas will be backfilled with tailings which - in addition to providing good ground support - reduces output into the surface tailings disposal area.
Ore blocks are typically 50-60 metres in length, with the thickness of the ore blocks determined by mining to an assayed rock face at a specific cutoff grade. One of the more common mining methods employed at Songjiagou is shrinkage stope mining whereby one third of the broken ore is drawn from the stope following blasting. The "swell factor" (broken ore expands by about one third when it's blasted) allows miners to work from a solid floor to facilitate ongoing mining
Ventilation is provided by high capacity axial fans through air ducts secured by hangers on the side of mine passageways, while compressed air and water are introduced to the mine through metal pipes sized to accommodate fluctuating demand. Pumping stations have been installed underground to deal with water inflows - which are common in most underground mines – and the lifting system for the service shaft utilizes a multi-rope friction hoist with dual cages for transporting miners and their gear.
The Company takes safety very seriously at Songjiagou and has training programs in place for its contract miners. Should there become a need to evacuate the mine, there are three exit routes: an auxiliary shaft, a ventilation shaft and the ramp. In addition, the Company has implemented a ground control system which utilizes rock and cable bolts, shotcrete (a mixture of cement and metal fibres - sometimes used with mesh screening) and other proven support systems that are designed for specific ground conditions.
For additional images of the Songjiagou underground mine please refer to our Picture Library at: https://majesticgold.com/projects/picture-library/
There are three fully operational processing plants at Songjiagou. Two plants with a processing capacity of 200 tpd and 1,200 tpd respectively commenced operations in 2006. Another plant with a capacity of 6,000 tpd was put into production in May 2011, bringing the aggregate processing capacity at Songjiagou to 7,400 tpd. (In the past the 200 tpd processing plant has been used exclusively for underground feed while the other two plants are fed with mining inventory from open pit mining).
The Songjiagou processing plant includes conventional three stage crushing within a closed circuit, grinding within a closed circuit, and flotation consisting of one stage of roughing, one stage of cleaning and two stages of scavenging.
Songjiagou Mine Resource Estimate
|NI 43-101 Compliant Resource Estimate Within Optimized Open Pit (January, 2013)|
|Category||Tonnes||Grade Au (g/t)||Ounces Au|
|Open Pit (cut-off 0.30 g/t Au)|
|Underground (cut-off 0.80 g/t Au)|
The resource estimate is categorized as Indicated and Inferred as defined by the CIM guidelines for resource reporting. Mineral resources do not demonstrate economic viability, and there is no certainty that these mineral resources will be converted into mineable reserves once economic considerations are applied. The Indicated and Inferred mineral resource estimate has been prepared in compliance with the standards of NI 43 – 101 by Anshun Xu, Ph.D., F AussIMM.
Songjiagou Apartment Complex for Nearby Villagers
In 2019, Majestic Gold completed construction work on six residential apartment buildings near the Company’s Songjiagou gold mining operation in Shandong Province, China. The buildings were constructed after receiving unanimous approval from residents of the nearby villages located approximately two kilometers from the mine site.
The residential complex is comprised of six buildings with sufficient capacity for up to 280 families who, after relinquishing their village leases, will retain access to their farmland in return for a 75-year condominium lease. A third village was relocated several years ago to facilitate construction of the tailings disposal site located south of the Company’s Songjiagou mining operation.
The relocation plan became necessary when the size of the Songjiagou mine license was increased in 2015 by almost 75% from 0.342 to 0.594 km² to facilitate ongoing operations and the potential expansion of surface mining activities in the future.
The construction program was completed under budget at $US14.4 million and includes six five- story buildings aggregating 19,944 square metres in total. Each residential building includes four living units on each level averaging approximately 80 square metres each.
The modern five story frame buildings are constructed with load-bearing beams and columns made from reinforced concrete, with precast hollow concrete and other lightweight materials utilized for partition walls.
The fully-serviced buildings include appliances, central heating, recreation rooms, child playgrounds and other modern amenities including elevators, air conditioning and parking lots. Each household is equipped with a garage on the ground floor of the residential building in addition to a 10 square metre storage room. All construction was completed in accordance with national standards and approved following inspection by competent government authorities.
The two villages are situated in close proximity to the active open pit at Songjiagou and are currently home to about 240 families who are sustained by agriculture, primarily apple orchards. In the past, Shandong Province has accounted for approximately 22% of Chinese apple production, ranking it the second largest producer in the country. In addition to subsistence agriculture, some of the villagers work under contract at the Songjiagou gold mine.
Scientific and technical information contained herein has been reviewed and approved by Stephen Kenwood, P. Geo and is a Director and Officer of Majestic Gold Corp. and is a “qualified person” as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”)