China Goldmines (CGM) has cheered investors with a resource estimate of 1.83 million oz at Guanzhuang in Hunan Province.

AIM-quoted CGM, steered by chief executive officer Frank Vanspeybroeck, says this inferred resource estimate, which complies with the industry’s ‘JORC’ measurement standard, comes from an independent geological report by consultant Al Maynard & Associates. Northumberland-based CGM argues the Maynard report also indicates that the economic gold resource at Guanzhuang could be increased ‘by a factor of four to six’ after the implementation of ‘systematic exploration’.

With gold at US$683 an ounce, Guanzhuang could be a distinctly valuable project, with an estimated grade of 11 grammes of gold per tonne of ore. CGM, which recently completed the acquisition of eight mines forming the Shenjiaya prospect within Guanzhuang, says it hopes to achieve cash flow from these eight mines from 1 November and to have a processing facility for 2,000 tonnes of ore a day up and running within two years.

Vanspeybroeck says ‘our milestone is to create a multi-million ounce gold resource and we have confirmation this is achievable in the near term’. CGM shares, floated by Brewin Dolphin last year at 60p, have hit 151p, up 41.5p this morning, valuing the company at £34 million.

If the company can expand its resource base to the extent suggested, they should go higher.