Further to the last item above, there’s a lot of potential for major gold discoveries in China.
And no one knows very much about it.
I’ve been talking to colleagues this week about the news of a nearly 18-million ounce find in Shandong province. And it’s been amazing just how mysterious China’s gold sector continues to be, even for many global experts.
In his 2021 year-end letter, Baupost's Seth Klarman looked at the year in review and how COVID-19 swept through every part of our lives. He blamed much of the ills of the pandemic on those who choose not to get vaccinated while also expressing a dislike for the social division COVID-19 has caused. Q4 2021 Read More
Most observers in the gold space know that China is the world’s number one gold-producing nation. A title it claimed in 2008, when it passed Australia for the top spot worldwide.
But the details of this production are much more obscure. For a number of reasons.
There hasn’t been much exploration activity by international firms in China recently. The last exploration boom in the country ended in 2007 — when results from prominent Canadian-listed China explorer Southwestern Resources were revealed as fraudulent.
That case resulted in a 6-year prison sentence for the company’s CEO. And cast a spotlight on big problems — both real and perceived — around doing business in the Chinese mining space.
Even those with insider access have had a tough go. Illustrated this past January by Rio Tinto terminating a China-focused joint venture with Aluminum Corp of China — an enterprise that turned up little over its six-year existence.
But this week’s news shows there are few doubts about China’s geologic prospectivity. A fact I’ve witnessed firsthand when I travelled to Henan province in 2005 to look at Silvercorp’s Ying mine. A project that was returning spectacular high-grades up to thousands of grams silver equivalent.
Getting detailed information about China’s big mines however, is difficult. Even finding a map of gold deposits across the country isn’t straightforward — the one below is from a 2002 academic paper.
A rare (and somewhat dated) map of gold deposits in China. Black circles, half-circles and triangles are major deposits while smaller grey circles are lesser finds (Zhou et al., 2002).
The map shows how much of China’s gold is concentrated in just a few areas of this massive country.
One string of deposits runs north-south up the center of China from Myanmar. Another cluster is found in the far northwest, where the Tian Shan mountain range runs into the country from the Stans.
But the biggest gold endowment in China is in the east. Where this week’s big find was also located, in the Jiaodong Peninsula (you can see the breakout circle for the cluster of mines in this area at the far right of the map above).
That small bit of land alone is estimated to hold 1,000 tonnes (32 million ounces) of gold. The map below shows a closer view of the mines in this gold hotspot.
Most of China’s gold is in the east, and the Shandong (Jiaodong) Peninsula (center right) alone holds an estimated 32 million ounces.
Geologically, this area is unique on Earth. Because the host rocks are very old — up to billions of years — and yet the gold mineralization is young by geologic terms, only about 130 million years old.
That’s a situation geologists don’t see elsewhere. Usually when we have billion-year old rocks, we find gold deposits of about the same age — a common occurrence in places like eastern Canada, western Africa and Guyana/Brazil.
There’s been a lot of debate over the years about the weird timing of China’s gold mineralization. But we do know something very unusual happened here. And in mineral exploration, unusual is good — places where strange conditions come together often host exceptional deposits.
That’s why it’s especially interesting that exploration in this high-potential terrain seems to be entering a new phase. This week’s release from Shandong Gold noted that the company is using new exploration approaches to find deeper mineralization in eastern China — potentially heralding in a period of discoveries.
If so, China could take an even more-commanding lead in global gold production. Making this a critical spot to watch in terms of specific projects, and for the gold market as a whole.
Here’s to going east,