Chapter 367: The Gold Mine That Won an Exploration Achievement Award
"Your Lianying Mining needs a loan of around 800 million to 1 billion Australian dollars, equivalent to approximately 4 to 5 billion yuan?" Bao Yanyao hesitated upon hearing Li Tang's request.
Previously, their Steel Association had actively lobbied on behalf of Lianying Mining to secure a substantial low-interest loan. After extensive negotiations, they had successfully agreed upon key terms with the banks, including interest rates, disbursement schedules, and repayment plans. However, at the very last step, the deal was abruptly vetoed by the Foreign Capital Utilization Department, bringing all their efforts to naught.
Iron ore prices were still steadily climbing, pushing steel smelting costs ever higher. Beginning in the second half of last year, steel inventories surged, causing steel prices to plummet by hundreds of yuan per ton and severely squeezing the profit margins of steel enterprises. Fortunately, this year saw a recovery in steel prices, allowing these enterprises to avoid running at a loss. Nevertheless, competition pressures continued to mount.
Securing additional sources of iron ore production to lower iron ore prices and reduce smelting costs had become the unanimous goal of all steel enterprises. It was no secret that supporting Lianying Mining had become an industry-wide consensus. The Steel Association had consistently provided extensive support to Lianying Mining in various matters within China, effectively catering to all their needs.
"Our iron ore project has successfully commenced production, and our output is guaranteed to surpass ten million tons in the second half of this year. This achievement is a major benefit not just for me and Lianying Mining's shareholders, but also for numerous domestic steel enterprises." Li Tang emphasized, even though everyone was already clear on this point. He continued seriously, "However, we're currently facing a critical challenge. All our iron ore currently depends on Litto's railway and port for transportation, and our agreement is limited to three years or 60 million tons. If we keep increasing production next year, we'll quickly exhaust our transportation quota. At that point, we'll have no channels left to ship our iron ore out, causing Lianying Mining's mines to suffocate and inevitably collapse."
His expression grew severe, and genuine concern filled his voice. "Construction of our own railways and ports has progressed rapidly, thanks to the substantial funds we raised earlier. Yet, large infrastructure projects consume capital quickly, leaving us with a considerable funding gap to complete these crucial facilities."
The funding shortfall of between 800 million and 1 billion Australian dollars had long been anticipated. All these funds would directly go toward railway and port construction. The 2 billion Australian dollars previously raised had mostly been allocated to mine construction, equipment purchases, establishing a seawater desalination plant with pipelines, and building a thermal power plant. This power plant was also designed with expansion in mind, prepared for additional mining activities in the future.
"What are your thoughts on this?" Bao Yanyao turned to Lu Chenyi. The Steel Association mainly coordinated interests among steel enterprises, but a leading enterprise like Haigang Steel represented the core industry voice. Clearly, Lu Chenyi's attitude would greatly influence the banks' decisions, essentially determining the loan approval process.
"Increasing global iron ore production is imperative. It can't wait," Lu Chenyi asserted firmly. He had grown increasingly aware of the uncontrollable rise in iron ore prices. Based on their forecasts for China's industrial economy and steel demand over the next several years, steel consumption was unlikely to decrease significantly, meaning demand for iron ore would remain strong. Prices were unlikely to drop without substantial intervention.
They urgently needed to prepare for even tougher times ahead. Few viable strategies existed, but supporting global iron ore companies like Lianying Mining and boosting overall iron ore production worldwide was crucial for resisting arbitrary price hikes from the three iron ore giants. Once global production reached sufficient levels to reduce dependency, Chinese steel companies would regain initiative.
Bao Yanyao understood Lu Chenyi clearly. As chairman of the Steel Association, he deeply understood the advantages of having more iron ore mines in production for the steel industry. "The Foreign Capital Utilization Department has always been reluctant," he sighed.
"Leave it to me," Lu Chenyi generously promised.
"No matter how iron ore prices evolve in the future, I'll always remember the support each of you has given me over these years. Without your help, Lianying Mining couldn't have come this far!" Li Tang spoke sincerely, deeply moved. "I'm willing to contribute whatever modest efforts I can toward our nation's industrial development!"
A week after returning to Yanjing, Li Tang received a call from Lu Chenyi—the loan had been approved. Through extensive coordination, China Export-Import Bank would provide Lianying Mining with a low-interest loan of 4 billion yuan, divided into two-year, three-year, and five-year repayment periods.
On the surface, the loan came without additional conditions. Privately, however, an agreement had been signed stipulating that, if necessary, Lianying Mining would assist the China Steel Association in achieving its goals during iron ore price negotiations. This clause was symbolic rather than clearly defined.
For many years, the China Steel Association had suffered in international iron ore price negotiations, frequently forced into accepting substantial price hikes imposed by the three giants. Often, negotiations reached critical points or showed signs of progress, only for Japan Steel to quickly reach initial price agreements with Vale or Litto, effectively setting global benchmarks. Everyone understood the complicated ties between Japan Steel and these iron ore giants, with intertwined interests and complex motives.
Once Lianying Mining grew sufficiently to turn the three giants into four, it would earn a seat at the negotiation table. At that point, more strategic options would be available to the China Steel Association and Li Tang. Lower iron ore prices would affect Lianying Mining's immediate economic interests, but as insiders, any domestic losses could be compensated through other channels.
Fred arrived from Perth to Yanjing, assuming responsibility for the loan's subsequent procedures from Li Tang. In financial operations and management, Fred and Alice clearly surpassed Li Tang in expertise.
Li Tang boarded a flight directly to Toronto City.
His trip had two main purposes: first, inspecting the status of the Maruhe Coal Mine and Malihe Iron Ore projects and engaging with local authorities to prepare for future mine development approvals; second, fulfilling his promise to Mark.
His first stop was Barrick Gold's headquarters. Besides Mark and Barrick Gold's senior executives, Bill had brought along his geological exploration team.
Although Barrick Gold had its own exploration department, they habitually hired geological experts from Ontario's Geological Association to support or consult on projects. These veteran experts had decades of experience exploring Ontario's terrain, deeply familiar with its geology.
After brief greetings, Bill unfolded a detailed map of Ontario in front of Li Tang. "Ontario holds Canada's highest gold reserves, totaling around 800 tons." He pointed toward the northern region of the map. "Near this large lake lies the famous Red Lake mine, an enormous deposit containing 130 tons of gold. Throughout the past century, several significant gold mines were discovered in this vicinity, making it Ontario's primary gold-producing region."
"Correct, our company also operates a gold mine in that area," Mark confirmed, staring intently at Li Tang, clearly filled with anticipation over his presence.
"If we're going to initiate a new gold exploration project, it would be most logical to continue in this proven gold-rich area. Many locations there still show significant exploration potential," Bill elaborated. As a respected expert and founder of Ontario's Geological Association, Bill had extensively prepared materials after receiving Mark's invitation, eager to assist Li Tang.
"We've found some preliminary signs of gold mineralization here—elevated levels of indicator elements typical for gold deposits," Bill shared detailed data. "However, this area is on the periphery of the main gold-producing belt."
Bill looked up at Li Tang, his aged face wrinkled yet animated with enthusiasm. "Knowing your arrival, I specifically reviewed the Tropicana Gold Mine project. That mine was also discovered outside mainstream exploration zones, situated within ancient river sediments, originally placer gold deposits transformed over time into sedimentary gold formations. Our selected target area draws inspiration from the Tropicana discovery, believing that significant deposits may have been overlooked beyond the traditional mining zones."
Li Tang, appreciating Bill's sincere effort, listened attentively and nodded occasionally. After glancing at the target area's location on the map, he noted they were currently in Toronto, at Ontario's southeastern tip, while the proposed exploration area lay at the far northwestern corner—over three thousand kilometers away, given Ontario's expansive million-square-kilometer area.
"Isn't it quite cold there?" Li Tang asked.
"It's summer now, the climate's decent," Bill laughed. "At least better than Baffin Island."
"Li, speak openly," Mark interjected upon noticing Li Tang's thoughtful hesitation. He mistakenly thought Li Tang was being overly considerate of the elderly Bill's feelings.
Barrick Gold had long worked with Bill's team but had only moderate success—far short of their ambitions. Thus, Mark had vigorously sought Li Tang's expertise.
Every miner worldwide now recognized Li Tang's reputation: any project he touched inevitably yielded major discoveries.
Beyond financial gains, Mark aimed to reclaim Barrick Gold's title as the world's leading gold miner—a position lost to Newmont after their aggressive acquisitions post-2000.
As CEO of Barrick Gold, losing this top rank on his watch was profoundly distressing.
Mark had always acknowledged that whatever had been lost must be regained with his own hands.
He was determined to bring Barrick Gold back to the number one position globally!
That was his ultimate goal during his tenure.
Achieving this goal essentially involved two methods. The first was the approach commonly employed by global mining giants: spending vast amounts of money to acquire gold mines and mining companies around the world. By paving their path with gold and pouring money into acquisitions, they aimed to build a glittering gold empire. However, this approach was extraordinarily capital-intensive and risky. Even a minor mistake could plunge the company into a deep abyss from which it might never recover. Thus, decisions on targets and fund approvals required extreme caution.
The second method involved discovering new mineral deposits through exploration. This method was comparatively cost-effective. Unlike acquisitions—which often required investments of tens of billions of dollars—an exploration project usually cost only a few million, or at most a hundred million dollars. Annual exploration expenditures typically hovered around one or two hundred million dollars. With good fortune, finding a large deposit within a few years guaranteed substantial profits and steady returns. However, such investments were long-term, filled with uncertainties. Occasionally, luck would strike, and multiple successful discoveries would occur within a year. More frequently, an entire year of exploration, despite substantial investments, yielded no meaningful results.
Combining both methods, Mark discovered a shortcut—inviting Li Tang to carry out gold exploration!
Initially, Mark had targeted Li Tang's shares in Lombur Resources. Unfortunately, Li Tang had no intention of selling. As a second-best solution, Mark spared no effort and was willing to employ any means necessary to convince Li Tang to collaborate on their gold projects.
"Well..."
Li Tang rested his chin thoughtfully, staring at the Ontario provincial map for a long time, his eyes shifting continuously.
"If you have any ideas, please share them so we can discuss," Bill said eagerly, clearly anticipating Li Tang's insights.
Bill had already retired. His acceptance of Mark's invitation to come out of retirement and join the gold exploration project wasn't driven by money but by Li Tang's involvement. He bore the expectations of numerous geological exploration scholars in Canada, hoping to explore and understand Li Tang's mysterious and innovative exploration methods. What advanced technology allowed him to surpass Canada—recognized globally as a leader in exploration techniques and education?
Having presented his own ideas, Bill genuinely hoped Li Tang would offer critiques and propose innovative opinions.
"I feel the area near Red Lake, that mainstream gold-producing region, has been mined and explored extensively over several decades. It doesn't hold much potential anymore," Li Tang expressed candidly without much deliberation.
"Where do you think is a better target area?" Bill's elderly eyes sparkled with anticipation, excited to hear Li Tang's unconventional approach.
This was precisely what they sought—to explore and decipher Li Tang's unique methods of exploration!
"How about here?"
Li Tang found Toronto on the map, moved his finger slightly northwestward, and stopped at an area in southeastern Ontario.
The spot he pointed to was about five hundred kilometers from Toronto. Compared to the Red Lake area, which was roughly three thousand kilometers northwest, Li Tang's chosen location was relatively warmer and had a climate similar to Toronto's.
"Why initiate a project there?" Bill was filled with questions. Internally, however, he marveled at the world's top exploration expert, whose thinking was indeed exceptionally unique!
Exactly as expected!
He had worried Li Tang might not reveal his secrets, but as long as Li Tang displayed his methods, they could be learned. Once Li Tang's exploration methods were published, they would undoubtedly benefit Canada's exploration industry and educational fields enormously! In just a few years, Canada could cultivate hundreds of thousands—even millions—of explorers like Li Tang, maintaining its global lead in geological exploration!
Eager and excited, Bill quickly added, "The place you pointed to is near Chapleau township. No significant gold mines have ever been found nearby."
Indeed, apart from the Red Lake area—where 650 tons of gold reserves had been discovered—the vast remaining land of Ontario, spanning over one million square kilometers, held merely 150 tons of scattered gold reserves. Bill knew this fact better than anyone else. Outside of the Red Lake district, the possibility of finding substantial gold deposits seemed negligible. Bill's belief in this was founded firmly upon objective technical analyses.
"Quartz vein gold deposits have always been the world's primary host rocks for gold ores, generally formed due to structural movements," Li Tang casually explained. Then, pointing at the Chapleau area on the map, he tapped three times: "I've studied geological data from this region. Not far from this spot, there are geological structures and quartz veins."
Actually, Li Tang had never conducted geological work in Ontario nor traveled extensively beyond Toronto. He had never specifically studied the area's geology. Yet, in his memory, there was indeed an impression—a large gold mine located near Chapleau.
Why did he remember such a remote mine clearly?
Because that gold mine had received the Exploration Achievement Award from Canada's Exploration and Developers Association!
This award was considered one of the highest honors globally in exploration circles. Of course, such awards had never been granted to Chinese explorers or discoveries made by other nations. Nevertheless, as an award conferred by a country widely acknowledged as the global leader in exploration techniques and education, it was well-known worldwide and highly influential.
"Is that so?" Bill still couldn't grasp Li Tang's uniquely insightful reasoning. Quartz veins existed in numerous geological structures—very common indeed. Yet the vast majority of quartz veins contained no gold at all. Initiating gold exploration solely due to the presence of quartz veins seemed insufficiently justified.
"Great, then let's start the project in Chapleau!"
Mark didn't care much for technical nuances. Having finally convinced Li Tang to participate, of course, he would listen to Li Tang! If he'd kept listening to Bill, they would have discovered many large gold deposits decades ago!
"Mr. Mark is a straightforward person!" Li Tang smiled slightly, gazing confidently at Mark. "It's truly an honor to work with you!"
"The honor is mine!" Mark responded politely. When it came to top technical experts like Li Tang, he always showed immense respect. Such capable individuals were as valuable as companies worth billions of dollars! A small investment yielding substantial returns made it worthwhile to treat Li Tang exceptionally well.
Li Tang wasn't engaging in small talk; he had key matters to discuss.
"Am I working for free?" Although Li Tang was modest and humble, he wasn't a saint nor a Western deity. Compensation for work was perfectly justified. Without adequate incentives, he wouldn't waste his breath or travel far to remote towns in Ontario for exploration projects. One thing he was very confident about: even after clearly indicating that a large gold deposit existed near Chapleau, these people would have to expend great effort—possibly wasting several years—to discover concrete clues about the mine's exact location. For Mark, time was of the essence!
"Of course, it's not free labor!" Mark laughed heartily and then sincerely approached the topic. "Now that we've addressed technical matters, let's discuss compensation."
"Please go ahead," Li Tang wouldn't proactively set a price, preferring to gauge Mark's offer before responding accordingly.
"I heard you often accepted invitations from other mining companies in China, assisting them with exploration projects," Mark came prepared. "Usually, you didn't charge fixed consultation fees but rather received rewards based on results."
"What kind of reward does Barrick Gold intend to offer me?" Li Tang understood Mark's plan clearly. If they discovered a large deposit, giving rewards based on the scale of discovery would be very cost-effective for Barrick Gold.
Mark shared this perspective and suggested with a smile, "I know you're extraordinary and will definitely find a major deposit. I believe you can help us discover at least 100 tons of gold. Let's use this as our benchmark: we'll reward you 100 million USD for a gold mine of 100 tons or more. For every additional 100 tons, we'll give you another 100 million..."
"Do you really think I'm God?" Li Tang couldn't help interrupting Mark, laughing jokingly. "Different companies here calculate reserves differently, determined entirely by your own technical teams. Besides, according to Chinese standards, a large-scale gold mine starts at just 20 tons. China is a mineral-rich nation, yet we have few gold mines over 100 tons! You're immediately asking me to find at least 100 tons—you're flattering me too much. I'm overwhelmed and can't accept."
"You can definitely do it—I believe in you. The whole world believes you can accomplish this!" Mark laughed, trying to sidestep the issue.
Li Tang stopped smiling and shook his head. "Large gold mines aren't easy to find. Even in Canada, Bill has more experience and knowledge than me, yet he doubts gold mines exist outside the Red Lake area. My visit this time is purely exploratory, testing gold prospecting techniques. I genuinely have no certainty of success."
Mark's offer of 100 million dollars seemed generous, unprecedented globally. Previously, when Mark tried buying Lombur Resources shares from Alice, he offered merely 200 million Australian dollars. But now, conditions had changed dramatically. Since late last year, gold prices had skyrocketed along with copper, nearly doubling from 400 USD per ounce to around 730 USD per ounce! Gold mine valuations naturally soared, making acquisitions increasingly difficult.
Unable to gauge Li Tang's exact thinking, Mark tossed the ball back into Li Tang's court: "You decide. What kind of reward terms should we establish?"
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