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New Cantech Taps Into China’s Vast Mineral Wealth While Also Preparing To Drill High Priority Kimberlite Targets in Canada

By Gary Brooks
March, 2004

New Cantech Ventures Inc. (TSX.V-NCV) is a junior exploration company that is developing a diverse portfolio of precious metals and diamond projects in northern

China

and

Canada

. What SmallCapMedia finds particularly compelling about this company is its focus on projects that have exceptional “blue sky” potential. Furthermore, New Cantech’s prospects for success on any of several exploration fronts are underscored by the extensive technical expertise and depth of experience of its highly accomplished management team.

The company ( www.newcantech.com ) has taken steps in recent months to infuse some more luster into its story by diversifying from the hunt for diamonds into gold exploration, as well. And New Cantech has not done this as a half-hearted fashion. Subsequent to a company reorganization and name change in 2003, management decided to move New Cantech onto the international stage with a near-term focus on gold in China. Indeed, the advent of several recent major gold finds in China, along with an improved political climate for foreign investment, has given enterprising companies like New Cantech unprecedented opportunities to tap into China’s vast mineral wealth.

Before China’s gradual implementation of economic liberalization began in 1993, the government’s main commercial interest in Inner Mongolia (where New Cantech is now established) was the mining of industrial minerals such as iron and coal. Now China’s economic reforms have subsequently transformed the planet’s most populated nation into the fastest growing economy in the world. For instance, China's industrial output grew 17% while the country's gross domestic product grew 9.1% in 2003. Notably, this phenomenal growth has precipitated a huge surge in demand for mineral commodities of every type. Moreover, the institution of a liberalized market economy and the legalization of private ownership of gold through the inauguration of the Shanghai Gold Exchange have heralded China’s emergence as a major new player in gold mining and exploration. In turn, this convergence of events has triggered an intensification of mineral exploration programs all across China. And that has particularly benefited a number of enterprising Canadian junior exploration companies that specialize in finding gold in some of the world’s most far-flung mineral frontiers.

Accordingly, New Cantech signed a significant joint venture agreement in November, 2003 with Vancouver-based Minco Mining and Metals Corporation, giving New Cantech the right to earn a 51% interest in the BYC Gold Project in Inner Mongolia (which has been annexed by China since the 1940s). This joint venture project sits within the prolific Tian Shan Gold Belt. The terms of the partnership require New Cantech to spend Cdn. $2.4 million on exploration over a three-year period. The company also has the option to earn a 60% interest by bringing the project to feasibility stage.

Since the opening of Newmont Mining’s 140-million-ounce Muruntau Gold Mine, large-scale gold mining has flourished on the western and southern reaches of northern China’s Tian Shan Gold Belt. This prolific gold belt now hosts the 15-million-ounce Kumtor Gold Mine, as well as the 100-million-ounce Sukhoi Log Deposit. It is also worth noting that the BYC Gold Project is located just 100 kilometers south of the Ivanhoe Mines’ Turquoise Hill Project in Mongolia -- which is regarded as one of the most significant gold discoveries of the past decade.

In spite of these high-profile discoveries, the Tian Shan Gold Belt’s eastern margins extend into Inner Mongolia, where little exploration has ever taken place. Indeed, as one of the remotest regions in the world, Inner Mongolia represents a great final frontier for large-scale precious metals discoveries. Hence, the region offers considerable “blue sky” potential for New Cantech and its joint venture partner. Already, the regional geology in this part of the expansive Tian Shan Gold Belt is being compared to Nevada’s famous Carlin Trend in terms of both its geological structure and its potential for large-scale gold deposits. This is where local artisan miners have previously extracted 400,000 tons of oxide ore by means of small-scale, primitive mining methods.

Gold mineralization on the BYC Gold Project occurs in four major shear zones over a very significant strike length that spans at least 12 kilometres. A total of well over 100 surface gold showings have been discovered within shear hosted vein systems. And to date, trench samples have also yielded grades running as high as 71 g/tonne of gold over 9 metres of true width, as well as 15.4 g/tonne of gold over 4 metres of true width. Furthermore, an excellent heap leach recovery rate of 85% has been determined in wide-spread oxidized ore. To better delineate the overall potential of this compelling project, New Cantech and Minco plan to embark upon an extensive 2004 drill program, commencing as early as April or May. Management of both companies believes that the BYC Gold Project has the potential to reveal a large-scale, high-grade gold deposit. Upon close examination of the partnership’s exploration results to date, SmallCapMedia therefore believes that the upcoming drill program could go a long way towards validating this theory.

On the domestic front, New Cantech is actively exploring several “grass-roots” gold-copper prospects in British Columbia. The company has an option to earn a 100% interest in each of these projects. They include the Cross Project, which consists of six mineral claims spanning 150 hectares within what is known as the Quesnel Trough. This geological environment hosts many of the province’s largest and most economically important gold-copper porphyry deposits. They include the Afton-Ajax, Copper Mountain and Mount Polley gold-copper deposits. The Quesnel Trough also hosts a number of major copper or gold skarn deposits including the Craigmont and Nickel Plate discoveries. Early stage exploration on the Cross Project has yielded up to 13% copper and 195 g/tonne of silver from an exposed copper skarn.

Meanwhile, at the Bill Project, previous soil and rock sampling programs have revealed anomalous gold, copper and molybdenum values over several hundred meters. Diamond drilling has also intersected gold mineralization (with values up to 300 parts per billion). Accordingly, trenching programs, as well as further exploratory drilling, are scheduled to commence on both properties in May of this year. Both properties, which are located near the town of Little Fort, can be accessed by existing roads close to power and railroad infrastructure.

The company is also exploring a gold property that is about 55 kilometres southeast of the city of Vernon. Thus, the property is amenable to good infrastructure and is accessible by a year-round highway. Results from previous drilling include 10.2 metres of 8.5 g/tonne of gold and 13 metres of 13.3 g/tonne of gold. Additionally, a 12.5-metre trench has returned gold values between 8.8 g/tonne and 25.5 g/tonne of gold with an average of about 14 g/tonne.

By following the philosophy of strength through diversification, New Cantech is also very active in two of Canada’s most geologically fertile diamond territories. Specifically, the company has a 20% interest in 230,000 acres of diamond properties in the Coronation Diamond District in Nunavut, as well as a one-third interest in 130,000 acres of diamond claims at McKay Lake, which is 150 kilometres south of the Ekati and Diavik Mines in the Northwest Territories.

The McKay Lake Project involves four joint venture partners, including the recent addition of Peregrine Diamond Ltd. – which is run by the renowned mining exploration entrepreneur, Eric Friedland. With equal interests in the project, each partner is committed to expending $200,000 in 2004 towards an upcoming exploration program that is scheduled to include the drilling of approximately 12 high-priority geophysical anomalies, beginning as early as April. At least 70 other anomalous geophysical targets will also be the subject of further investigation.

Further north, the Sceptre and Tiara Properties sit at the heart of the renowned Coronation Diamond District in the immediate vicinity of about a dozen kimberlite pipe discoveries, half of which are diamondiferous. New Cantech has a working interest in both the Sceptre and Tiara claim blocks, totaling 220,000 acres. These properties adjoin the Inulik Property which hosts the highly prospective, diamond-laced Knife pipe that is jointly held by De Beers and Rhonda Corporation.

In late 2001, New Cantech and joint venture partners International Samuel Exploration and Dasher Energy, granted the high-flying diamond exploration company, Stornoway Ventures, an option to purchase up to a 60% interest in the Sceptre and Tiara Diamond Properties by funding Cdn. $7 million in exploration expenditures and issuing 600,000 shares by December 31, 2006. Stornoway is the operator of the project.

To date, numerous kimberlite indicator minerals have been extracted from til samples and subjected to electron microprobe analyses. Results of this work suggest the presence of six indicator mineral trains on the Sceptre Property and two trains on the Tiara Property, all of which require additional sampling in 2004 to determine their respective sources. However, the very favourable sample distribution and mineral chemistry of these trains suggests that at least one likely diamondiferous kimberlite may be present on each of the Sceptre and Tiara properties.

One of the key catalysts to New Cantech’s prospects for success in 2004 involves the company’s renowned management team. Company president and director Dalton Dupasquier already has one diamond exploration success story to his credit. He was formerly a director and senior management figure with Winspear Diamonds Inc., which is credited with the discovery of the Snap Lake diamond deposit in 1997. So valuable was this discovery that Winspear was subsequently acquired by De Beers in 2000 for the princely sum of approximately Cdn. $500 million. Mr. Dupasquier also brings to New Cantech over three decades of experience in managing public companies, with a particular focus on the natural resources industry.

His talents are complimented by the geological acumen of fellow directors William Meyer, P. Eng., and Ross Blusson, P. Geo. Both gentlemen benefit from a combined 80-years-plus of experience in the mining business and have each served in senior roles with major mining multinationals, as well as other junior exploration companies. In particular, William Meyer even served as Senior Vice President, Exploration for Teck Corporation (now Teck Cominco), where he was responsible for exploration activities worldwide.

On a technical note, New Cantech has been trading within an approximate $0.50 to $0.65 price band on relatively light volume within the last several months. This “sideways” trading action is not uncommon for a junior exploration company during a seasonally quiet winter lull in exploration activity. However, New Cantech benefits from a very tight share structure with only about 8 million shares outstanding (approximately 13 million fully diluted). Such a scenario, matched with positive news flow, typically acts as a catalyst to high share price valuations. SmallCapMedia therefore believes the advent of a very active exploration season in 2004 should fuel a revitalization in the trajectory of the company’s share price. In particular, the recent addition of New Cantech’s highly prospective joint ventured Chinese gold project should go a long way towards making the company a strong performer among junior exploration stocks in the coming months.