INFRASTRUCTURE AND MINING ACTIVITIES
The Group has conducted mining activities in Cheng Qiang Yan (“CQY”) since 2002. Efforts since the Wenchuan Earthquake have focused on restoration of the road access to the Mines and construction of a new primary processing plant. The access had been restored to the CQY by April 2010 and work began on the restoration of the surface facilities at that mine in May 2010. Underground workings at CQY survived the earthquake with minimal damage but the mine portals were buried at Shi Shun Xi (“SSX”).
The area which encompasses the two mines is situated in the west central portion of Sichuan Province almost exactly on the physiological break between the extension of Tibetan highlands and the Sichuan Basin. The deposits are located between the regionally dominant defining fault zones and earthquakes frequently occur with some in strong to severe categories.
The primary phosphorite bed of economic interest at CQY & SSX is of sedimentary origin. The deposits in the mines have higher phosphate content as during a period of depositional hiatus many centuries ago, this phosphorite bed in preference to others in the area, was severely weathered which created some internal structural changes and enrichment of phosphate. This is a natural ‘benefication’ process.
Location and description of our Mines
Our Mines are located approximately 45 km northwest of the Gongxing Facilities and are approximately 8 km apart. The Gongxing Facilities are strategically located in the vicinity of the Hanwang Railway Station, part of a major national railway network which connects to major PRC cities. In addition, completion of construction of the Mianmao Highway (绵茂公路) is expected to facilitate the delivery of our extracted phosphate rocks from our Mines to our plants in Gongxing Industrial Zone. We also expect to tap on other ancillary transportation networks such as roadways upon their completion, thereby allowing us to deliver our extracted phosphate rocks and downstream phosphate-based chemical products in a more timely and cost-efficient manner to our customers.
Cheng Qiang Yan deposit
We started operations for CQY in 2002. The mining right covers an area approximately 1.53 km wide east-west and 1.10 km long north-south, comprising approximately 1.65 sq km. The approved mineable depth is between 2,570m and 2,240m of elevation.
In 2008, we were first issued the exploration right which is for an increased mining depth within the area already licensed for mining and for increased mining depth for the existing area licensed for mining as well as the increased exploration area. The extent of the increase in mining depth is dependent on the result of further exploration activities to be conducted.
Shi Sun Xi deposit
We started operations for SSX in 2008. The mining right covers an area approximately 0.76 km wide east-west and 2.74 km long north-south, comprising approximately 2.02 sq km. The approved mineable depth is between 2,420m and 1,600m of elevation.
In 2008, we were first issued a new exploration right which is for an increased mining area within area already licensed for mining, and for increased mining depth for the existing area licensed for mining as well as the increased exploration area. The extent of the increase in mining depth is dependent on the result of further exploration activities to be conducted.