Capital's favor for gold has never faded.

Yesterday (July 29), the Xinjiang Bureau of Geology and Mineral Resources announced the discovery of a super-large gold mine in Wuqia County, Xinjiang, drawing market attention. The reporter learned from the bureau that as of June this year, the gold mine has submitted a gold resource reserve of 127 tons, with a potential economic value of over 40 billion yuan, making it the largest gold mine discovered in Xinjiang so far. Domestic gold giants such as Shandong Zhaojin Group, China National Gold Group Corporation, and Zijin Mining have all expressed intentions to cooperate in development.

In response, a senior executive of Zijin Mining said that he had not heard of this at company meetings. An insider from Xinjiang Tongyuan Mining Co., Ltd. (hereinafter referred to as Tongyuan Mining), the owner of the mining rights, stated that there is currently no substantive cooperation with any gold enterprise, but did not rule out introducing external investors to participate in development in the future.

Although officials promote that the gold mine has undergone 20 years of continuous exploration, a Hong Kong company named "Alex Investment Co., Ltd." successfully "sneaked in" in 2012, established Tongyuan Mining with the Xinjiang Bureau of Geology and Mineral Resources for cooperative exploration, and holds controlling rights in Tongyuan Mining. This Hong Kong company is somewhat mysterious, and the natural person behind it, Chen Yihui, is quite legendary. He has two listed companies in Hong Kong, China, and Canada and serves as an executive, being well-versed in mining capital operations.

40 Billion Yuan Gold Mine Hotly Pursued

In recent years, the Xinjiang Bureau of Geology and Mineral Resources has continuously submitted two super-large gold mines with gold metal resources of over 50 tons each: the Kateba'asu Gold Mine in Xinyuan County, Xinjiang, and the Dunde Iron-Zinc-Gold Polymetallic Mine in Hejing County. Since 2014, news of large gold mine discoveries in Xinjiang has been frequent.

According to information obtained by the reporter from the news center of the Xinjiang Bureau of Geology and Mineral Resources, in 1993, the Second Geological Brigade of the bureau discovered a gold mine in the Sawaya'erdun area along the border between China and Kyrgyzstan in Wuqia County. After 20 years of continuous exploration, within a 20-square-kilometer exploration area at altitudes of 3,100 to 4,300 meters, 21 gold mineralization zones were discovered, with an average grade of 2.45 g/t, submitting a gold resource of 127 tons and a prospective resource reserve of over 200 tons.

Among them, the No. 4 mineralization zone is 85 meters wide and 4,000 meters long, with an average grade of 2.57 g/t and a local maximum grade of 63.88 g/t, with an estimated gold metal content of 98.33 tons. Currently, the Second Geological Brigade is focusing on exploring the No. 4 mineralization zone and others, having discovered 11 gold-bearing mineralization zones with an average ore body thickness of 25 meters, accounting for over 98% of the resources.

Cui Hongbin, head of the Second Geological Brigade, introduced that the potential economic value of the mine is estimated at over 40 billion yuan. According to the plan, building a mining enterprise with an annual output of 1 ton would generate an annual output value of over 300 million yuan and provide 200-300 local jobs.

According to Cui Hongbin quoted by the Xinjiang Economic Daily, if further exploration is conducted on the Sawaya'erdun gold mine, more new discoveries are not ruled out, and the prospective reserve will reach 200 tons. The Xinjiang Bureau of Geology and Mineral Resources stated that in 2008, the huge resource potential of the Sawaya'erdun gold mine attracted Hong Kong Weifu Mining to cooperate in exploration with the bureau. After this year's exploration submitted a gold resource of hundred-ton level, several domestic gold giants have expressed intentions to cooperate in development.

Mysterious Hong Kong Investor Lurking Within

The reporter found that a rather mysterious Hong Kong enterprise already controls the gold mine.

The reporter learned from the Xinjiang Bureau of Geology and Mineral Resources that the mining rights of the gold mine are owned by Tongyuan Mining, a company jointly established by two companies under the bureau and Xinjiang Weifu Mining Co., Ltd., with Xinjiang Weifu Mining holding 70% equity. The reporter found from the industrial and commercial information system that this company is a wholly-owned subsidiary of Hong Kong Alex Investment Co., Ltd.

According to the industrial and commercial information of Alex Investment Co., Ltd., its shareholder is an overseas offshore company with a capital of 10,000 Hong Kong dollars. The company director is Chen Yihui, a natural person with a Hong Kong ID card. Chen Yihui is also the legal representative of Xinjiang Weifu Mining Co., Ltd. and directly serves as a director of Tongyuan Mining.

In fact, Chen Yihui has an impressive track record in mining capital operations. At the end of 2008, Xinxin Mining (03833, HK) invested 542 million yuan to acquire the largest copper-nickel mining and processing enterprises in the Hami region—Yakesi Resource Development Co., Ltd. and Hami Jubao Resource Development Co., Ltd. Alex Investment Co., Ltd. was one of the major shareholders of the acquired companies at that time.

Moreover, Chen Yihui is also a major shareholder and executive director of Timeless Software [0.00%] (08028, HK). According to the 2013 annual report of Timeless Software, Chen Yihui has 30 years of experience in metal trading and also serves as the chairman of the board, president, and CEO of Canadian listed company GobiMin Inc. (GMN.V), which is mainly engaged in gold exploration in Xinjiang.

Although the Xinjiang Bureau of Geology and Mineral Resources stated that Weifu Mining cooperated with it in 2008, the reporter found in the "Public Notice on the Transfer of Exploration Rights by Agreement for the Peripheral Detailed Survey of the Sawaya'erdun Gold Mine" published on the bureau's official website that in March 2012, Tongyuan Mining acquired the mining rights from Xinjiang Majiasi Mining Co., Ltd. by agreement at a price of 0 yuan. Xinjiang Majiasi Mining Co., Ltd. is a joint venture between the Xinjiang Bureau of Geology and Mineral Resources and a Canadian listed gold mining company MAJESTIC GOLD CORP (MJS.V).

Regarding this peculiar transfer, an insider from Tongyuan Mining told the reporter that the previous company did not do as much exploration work, and when the company acquired the mining rights, it did not expect such a large discovery, but it certainly paid a price. Environmental assessment materials show that Tongyuan Mining is currently carrying out a 450t/d gold ore mining and processing technical renovation project.