This news should translate into a banner year for investors in Canadian mining juniors. That was the message emphatically delivered by a number of leading mining investment industry commentators to a packed audience of about 800 people. Another 5,000-plus investors were on-hand to find out first-hand why Canadian mineral explorers are so buoyant about the promise of 2005.

 

But China was perhaps the biggest story of the whole event. Indeed, the frantic rate of urban development in China, fueled by the nation's hard turn towards a free market economy, is creating an insatiable demand for metals.

 

Lawrence Roulston, a well-known market commentator and publisher of Resource Opportunities, said he has visited China on five occasions during the last several years. And he has witnessed up-close the nation's phenomenal economic growth (at around 9.5% in 2004).

 

"You have to see the development to believe it. And the consumption going on in China right now boggles the mind," he told an enthralled audience.

 

"And it's all making for a very strong outlook for metals for many years to come".

 

China's urgent need for metals is expected to soon become daunting. China already consumes 20% of the global supply of copper, making it the world's largest consumer. Chinese economists and geologists, alike, estimate that demand for key minerals, including gold, may exceed domestic production by up to 500% during the next 30 years.

 

And with the emergence of a modern industrialized economy, the country will rely increasingly on mineral production and the need to provide employment for a displaced agricultural workforce.

 

Equally impressed and awestruck by China's phenomenal growth was mining analyst and renowned mining stock picker, Julian Baldry.

 

"About 20 million people are migrating from the country to the cities every year. And to house all these people, China is building the equivalent of a new New York City each year," he said.

 

In fact, China now has 105 cities with populations of one million or more. This compares with Canada which has had a free market economy for two centuries and still only has about half of a dozen cities of this size.

 

This building boom is creating an especially huge demand for steel and copper. But China's new middle classes, who have already burgeoned to 200 million-strong, are also flexing their new buying power for a bourgeois commodity once frowned upon by the communist regime -- namely gold.

 

Indeed, for the first time since China embraced communism in 1949, private citizens are now allowed to purchase gold bullion and gold jewelry. This is due to the fact that the Chinese gold market has been extensively liberalized since 2002, following the establishment of the Shanghai Gold Exchange. Trading and private ownership of gold is now permitted. And the pent-up demand among the first couple of generations in recent memory to have disposable income is fueling ever-increasing gold sales.

 

In fact, China's middle classes are enthusiastically wielding their newly acquired credit cards to put on display their newly-found social status. And they are doing this by acquiring the world's most timeless status symbol -- gold jewelry. 

 

But the Chinese are also buying the yellow metal for pragmatic reasons, too. The appeal of gold as the world's oldest and most widely-accepted hedge against political and economic uncertainty has become pronounced in China. Even peasant farmers are now using their meager savings to hoard gold bullion.

 

Demand is so great that China's existing production of about 200 tonnes per year already represents a shortfall of about 100 tonnes annually, according to the World Gold Council (WGC). This growing demand-supply imbalance is expected to grow exponentially. Within a few short years, China's annual demand for gold will likely outstrip the current level of domestic production by 300% to 600 tonnes, the WGC forecasts.

 

"China is a key reason why the long-term outlook for metals is phenomenal. This new era will duplicate the metals boom of the 1960s," gold stock analyst Julian Baldry emphasized to the many gold-bug investors on-hand.

 

And his outlook on China has to date been profitably prescient for this niche market of investors. A couple of years ago, he enthusiastically recommended Southwestern Resources to investors at around Cdn. $3. That was before the company's share price catapulted into the Cdn. $37 range on the strength of a world-class gold discovery in China's under-explored Yunnan Province.

 

Southwestern Resources is among the first wave of Canadian companies to capitalize on this geologically fertile nation's ripe environment for the discovery and development of multi-million ounce gold deposits. And this is good news for the Chinese, too, as well as for Western mining stock shareholders.

 

"China expects the West to advance private enterprise and is willing to help make this happen," Baldry added.

 

He went on to say that China's regional administrations are now empowered to enter into joint venture partnerships with Western explorers. Without the involvement of various central government bureaucracies, this considerably speeds up the property permitting process. And that's good news for foreign investors. Equally fortuitous is the fact that Western mining companies are now able to give the Chinese access to sophisticated modern technology, as well as mining management expertise.

 

Thus far, only a select handful of mainly North American mining companies, large and small, have been granted the opportunity to modernize China's gold industry and to spearhead the discovery of world-class gold deposits.

 

John Kaiser, a renowned newsletter writer and publisher of the Bottom Fishing Report, also told investors at another conference presentation that China is probably the world's last great frontier for epic gold discoveries.

 

And the industrialization of China's fragmented mining sector is long overdue. To date, China has over 10,000 government-sponsored, small-scale artisinal (low-tech) mining operations that mainly focus on "underground-type narrow-vein mining," Kaiser added.

 

These mines also include unsophisticated gold placer operations and small oxide deposits that are treated with simple, low-cost, heap leach or vat leach methods. These oxide deposits are often merely the surface expressions of underlying primary gold or copper deposits that have not been developed for lack of funds and local mining expertise.

 

In fact, Chinese gold and copper mining still represent a "cottage industry" that is literally just "scratching the surface". Especially when compared to China's largely untapped potential for the development of its vast mineral wealth.

 

Furthermore, many existing mines tend to be inefficiently operated and some even lose money. However, in spite of this, China still ranks as the world's fourth largest gold producer. Now government funding to these outdated mining operations is beginning to taper off. And the recent privatization of many state organizations that hold mineral rights has forced Chinese miners to shift their focus to finding larger deposits. Or at least to more efficiently expand existing deposits.

 

Again, that's where North American mining companies fit into the picture. The liberalization of Chinese foreign investment regulations after China's entry into the World Trade Organization had created an ideal climate for Western explorers.

 

Indeed, China realizes that the systematic exploration and development of prolific ore bodies requires major capital investments and sophisticated, modern technical mining acumen. Most Western companies are now committed to developing large bulk-tonnage deposits in partnership with Chinese geological teams that know best where to find them. These types of discoveries can often host millions of ounces of gold, making healthy profits a factor of economies of scale.  Likewise for copper deposits.

 

Among the lucky few North American mining juniors to "cherry pick" some of China's best gold prospects to date is Pinnacle Mines Ltd. (TSX.V-PNL), a Vancouver-based company. The company's CEO, Andrew Bowering, says Pinnacle examined up to 30 different properties before settling on a partially-developed gold deposit in mineral-rich Yunnan Province. (This is the same province and geological environment as where Southwestern Resources made its celebrated multi-million-ounce Boka gold find).

 

"These days, China is very much open for business and offers some great opportunities. It really is one of the world's last untapped frontiers," Bowering told SmallCapMedia.

 

"We're in a province that has geology that is ideal for Carlin-style disseminated gold deposits. And the government wants us to go after these harder-to-mine, lower grade bulk tonnage deposits".

 

"And that suits us just fine as some of these deposits can prove to be incredibly profitable".  

 

This serendipitous "meeting of the minds" is a key reason why China's President, Hu Jintao, personally selected a highly qualified geologist as the country's new Premier (second-in-command) in late 2003. Better known as an accomplished top-level Beijing government administrator, Premier Wen Jiabao is a fine choice. An enthusiastic proponent of China's new pro-business philosophy, his mandate is to oversee the nation's economic reforms. And this includes an emphasis on the expedited development of all of China's most promising metallurgical projects.

 

He is also a strong advocate of providing incentives to foreign companies to invest in China's poorer western provinces. Premier Jiabao has also been very instrumental in the recent reformation and Westernization of China's mining laws and its regulatory climate.

 

China's central government now views resource development as a cornerstone of its social development strategy for many of the non-industrialized regions of the country's hinterland. It is hoped that the advent of a robust mining industry in these under-developed inland provinces will reduce the population pressures on the well-developed, more affluent coastal cities.

 

And there?s no shortage of gold waiting to be unearthed, according to the experts. The China Geological and Mineral Survey Bureau estimates that China's ten major gold producing provinces have untapped gold resources amounting to 1,000 tonnes.

 

Even the U.S. Geological Survey stated in a report on China in 2002 that "...it is likely that many of the Carlin-type gold ore districts in China, when fully developed, could have resource potential comparable to the 1,000-tonne gold resource in northern Nevada".  And Nevada has produced over 50 million ounces of gold to date with a prolific current annual rate of production of about eight million ounces.

 

In summary, the confluence of liberalized business regulations, a booming economy and China's need to exploit its vast mineral wealth via the aggressive recruitment of foreign investment and mining expertise, has created a modern-day Chinese Gold Rush. And some of North America's more shrewdly-managed, early-stage entrants are surely primed to reward their shareholders with at least a handful of "home run" discoveries.