Overview

Golden Queen Mining Co. Ltd. 

Golden Queen Mining Co. Ltd. is listed on the Toronto Stock Exchange (GQM) and on the OTCQX (GQMNF).

The Soledad Mountain Project

The Company presented the results of the updated feasibility study and economic analysis for its Soledad Mountain Project in a news release on April 6, 2011. The feasibility study has now been brought current as per the news release on October 25, 2012. (Click here to see the news release.)

Overview

The Company plans to develop a gold-silver, open pit, heap leach operation on its Soledad Mountain property, located just outside the town of Mojave in Kern County in southern California. The Project will use conventional open pit mining methods and the cyanide heap leach and Merrill-Crowe processes to recover gold and silver from crushed, agglomerated ore. The planned, average ore and waste mining rates are 4.71 million tons and 7.03 million tons per year with a stripping ratio of 1.49:1 for a combined mining rate of ore and waste of 11.74 million tons per year. The permitted combined ore and waste mining rate is 14 million tons per year. Gold and silver production is projected to average approximately 77,000oz and 890,000oz respectively per year although this is expected to fluctuate considerably from year to year depending upon the ore head grades. Gold and silver production is projected to be 1,067,000 oz of gold and 12,039,000 oz of silver over a period of 15 years. 

Mineral Resource Estimates

The Company announced that it had initiated an infill drill program in a news release on October 21, 2010. The drill program commenced in April 2011 and was completed in early May 2011. A total of 20 drill holes (6,288 feet) were completed in the program.

AMEC E&C Services, Inc. (“AMEC”) of Sparks, Nevada, has integrated the results from the infill drill program into updated mineral resource estimates. The estimate differs from previous estimates because the update has used a lower gold-equivalent cutoff grade, higher gold and silver prices, and current estimates of operating costs and recoveries for gold and silver. The previous estimates were based on gold and silver prices and technical parameters from the late 1990s.

The mineral resource estimates prepared by AMEC are set out in Table 1 below.

Table 1 – Mineral Resource Estimates
Effective Date: February 29, 2012

Notes:

1. The qualified person for the mineral reserve is Mark Hertel, SME Registered Member, and an employee of AMEC.
2. Mineral Resources are inclusive of Mineral Reserves.
3. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. 
4. Mineral Resources are reported at a 0.004 oz/ton (0.137 g/t) AuEq cut-off. 
5. Mineral Resources are reported as undiluted. 
6. Mineral Resources are reported within a conceptual pit shell that has been merged with the Mineral Reserve pit. 
7. Mineral Resources are reported using a long-term gold price of US$1310/oz, silver price of $24.05/oz, mining and processing costs and variable recoveries that are based on rock type classification.
8. Gold equivalent grades were calculated based on the equation: 
   AuEq(oz/ton) = Au(oz/ton) + (Ag(oz/ton) * [(Ag price(US$/oz)/Au price(US$/oz)) * (Ag recovery(%)/Au recovery(%))]
9. Rounding as required by reporting guidelines may result in apparent summation differences between tons, grade and contained metal content.
10. Tonnage and grade measurements are in US and metric units. Grades are reported in troy ounces per short tons and in grams per tonne. 
11. Mineral zones were shaped manually with a cutoff grade of 0.004 oz/ton (0.137 g/t) AuEq.

Mineral Reserve Estimates

The Company engaged Norwest Corporation (“Norwest”) of Vancouver in 2007 to assess mineral reserves for the Project as part of an independent feasibility study based upon the technical work that had been completed to the end of 2006. The results of the Norwest study were disclosed in a press release on December 14, 2007.

Norwest completed substantial additional mine design in the next three years with a focus on reducing the stripping ratios for the Project. The results of the updated Norwest feasibility study were disclosed in a news release on April 6, 2011.

Norwest has now used the information provided by AMEC to update the mineral reserve estimates and these are set out in Table 2 below.

Notes:

1.     The qualified person for the mineral reserve is Sean Ennis, Vice President, Mining, P.Eng., APEGBC Registered Member who is employed by Norwest Corporation.

2.     A gold-equivalent cut-off grade of 0.240 g/t (0.007 oz/ton) was used to estimate the mineral reserves.

3.     AuEq is the gold-equivalent grade, which is calculated as follows:

a.        AuEq g/t = Au g/t + {(Ag/R₁)xR₂} g/t

b.        R₁ = Au price in $/oz/Ag price in $/oz; R₂ = Ag recovery in %/Au recovery in %.

Permitting Update

A detailed review of approvals and permits required for the Project is provided under the heading - ENVIRONMENTAL.  The following is therefore only a brief update.

Land Use - Conditional Use Permits

The Kern County Planning Commission unanimously approved the Project at its regularly scheduled meeting in Bakersfield on April 8, 2010. All appeals that were subsequently filed against the Commission’s decision were withdrawn and the decision made by the Planning Commission was final in 2010. The Bureau of Land Management confirmed that its Record of Decision approving the Plan of Operations under NEPA in November 1997 also remains valid. 

The State of California introduced backfilling requirements for certain types of open pit metal mines in December 2002. Norwest has prepared life-of-mine waste rock management plans and these plans incorporate sequential backfilling of mined-out phases of the open pit with limited double-handling of waste rock at the end of the mine life.

The Company announced that the Kern County Planning and Community Development Department (the “Planning Department” approved the additional information submitted by the Company in regards to Condition 107 of the Conditional Use Permits for the Project in a news release on July 12, 2012. 

Under Condition 107 of the Conditional Use Permits, the Company was required to submit, prior to the commencement of mining, additional information relating to closure and closing reclamation for the Project. The Company submitted the required information to the Planning Department on November 28, 2011 and again on June 8, 2012. In accordance with the Surface Mining and Reclamation Act of 1975, the Planning Department consulted the State Department of Conservation/Office of Mine Reclamation (the “OMR”). The OMR confirmed in a letter to the Planning Department dated June 29, 2012 that the information provided by the Company adequately demonstrated compliance with Condition 107. 

Water Quality – Waste Discharge Requirements

The Lahontan Regional Water Quality Control Board (the “Board”) unanimously approved Waste Discharge Requirements and a Monitoring and Reporting Program for the Project at a public hearing held in South Lake Tahoe on July 14, 2010. The Executive Officer subsequently signed the Board Order and this is now in effect.

Air Quality – Authority to Construct and Permit to Operate

The Air Quality and Health Risk Assessment for the Project was completed and submitted to the Kern County Planning Department and the Eastern Kern Air Pollution Control District (“EKAPCD”) on July 21, 2009. This study was approved by Kern County Planning Commission on April 8, 2010, as part of the certification of the Supplemental Environmental Impact Report.

Ten applications for Authority to Construct permits were submitted to the EKAPCD in February 2011. The EKAPCD confirmed that the information required to support the applications was complete. The draft Authority to Construct permits were received in September 2011. The Company’s consulting engineers and legal counsel completed their review of the draft Authority to Construct permits in January 2012. EKAPCD issued the Authority to Construct permits on February 8, 2012.

The Authority to Construct permits will be converted to a Permit to Operate after construction has been completed and subject to inspection by EKAPCD.

Other

The production and sale of aggregate and construction materials is expected to commence fairly early in the mine life. The Company also plans to process and sell leached and rinsed residues from the heap leach operation for a range of uses to local and regional markets. It is intended that these products will be sold over an extended mine life of 30 years as more fully described under the heading – AGGREGATE. 

A technical update with information on recoveries for gold and silver obtained in the column leach tests is available under the heading - TECHNICAL.

Mr. H. Lutz Klingmann, P.Eng., the president of the Company, is a qualified person for the purposes of National Instrument 43-101 and has reviewed and approved the technical information of this website.

Further information on Golden Queen Mining Co. Ltd. is available on the SEDAR web site at www.sedar.com.