announced today that it has issued an open letter to shareholders:
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Dear Shareholders:
The last 12 months have been complex and challenging. Despite the adversity in the equity market, we are pleased to have joined with London Mining Plc in forming the China Global Mining Resources (BVI) Limited (CGMR) joint venture. Total capital in excess of $45 million was infused into this project and serves as a benchmark to measure our value as a company. This is a significant achievement.
As a result of this joint venture, we now hold equity in a producing property. On March 17, 2009, we announced that CGMR acquired two companies: Maanshan Xiaonanshan Mining Co., Ltd ("XNS") and Nanjing Sudan Mining Co., Ltd ("Sudan"), an iron ore mine and concentrator plant, respectively, located in the Anhui and Jiangsu Provinces of the Peoples Republic of China. 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.
As a result of an expansion in June 2008, the Sudan plant has an annual capacity of 400,000 tonnes of magnetite concentrate grading 62-64%, with production in 2008 estimated to have been over 300,000 tonnes. CGMR plans a three-fold increase in capacity to 1.2 million tones per annum (mpta) by the end of 2011.
For the remainder of 2009, CGMR plans to increase magnetite concentrate production capacity to at least 450,000 tonnes per year, as processed from 1,800,000 tonnes of run-of-mine ore. We believe that improving efficiencies in the current system, adding more processing capacity, and/or mining and processing additional reserves will result in the projected increase in production. A comprehensive geological and engineering study of the deposits and operations will be conducted in an effort to provide focus to improvements.
In 2010, CGMR plans to increase the magnetite concentrate production capacity to 600,000 tonnes per year, as processed from 2,400,000 tonnes of run-of-mine ore. To achieve this target, CGMR will investigate the methods already mentioned above as well as consider leasing available processing plants in the immediate area.
CGMR expects operating margins to remain robust as a result of the realization of significant cost savings from the expansion of existing operations. Also, with the close proximity to local steel mills, CGMR will be able to capture a transport-related pricing premium for its concentrate. CGMR expects this premium to be enhanced through the implementation of a more focused marketing strategy.
In the near future, we look forward to providing you with other updates including the following:
- The addition of a FAQ section in our web page
- The date of our next shareholder meeting
- The status of our gold properties in Colorado and South Africa
- The status of our Mexico silver project
- The Company’s financial plans throughout the end of 2009 and beyond
Thank you for your investment in our company. We look forward to a prosperous opportunity to grow together.
Sincerely,
Stephen D. King
Chief Executive Officer