China Goldmines hopes to raise £1.26 million through a share placement in order to further advance the Guanzhuang gold project in the Hunan Province of China.

The proceeds will enable the company to meet its immediate working capital requirements having recently spent about £800,000 towards a deposit, transfer fees, stamp duty and taxes in respect of the acquisition of the licences and assets of the eight mines in the Guanzhuang project.

China Goldmines is preparing a feasibility study on the project, where a resource of 1.8 million ounces within the top 325m from surface and over a strike distance of 1.5km has been identified from the Shenjiaya prospect. The target is to further increase this resource by a factor of four to six times with a continuing exploration program.

The Shenjiaya prospect consists of eight gold mines which the company plans to consolidate with the aim of having a long life mining production of 150,000 ounces of gold per annum in the near future.

China Goldmines is continuing to investigate the potential of the project area that remains under explored.