According to reports on November 21, the Hunan Geological Institute under the Hunan Provincial Geology and Mineral Resources Surveying Institute has discovered more than 40 gold veins at depths exceeding 2000 meters in the Wangu Gold Mine, with the highest gold grade reaching 138 grams per ton, and a cumulative gold resource of 300.2 tons in the core exploration area.

Experts believe that the Wangu Gold Mine has a super-large scale, predicting over 1000 tons of gold reserves at depths exceeding 3000 meters, with the resource value amounting to 600 billion yuan at current gold prices.

In response to the above news, related sectors have reacted. Today, near the end of trading, the precious metals sector suddenly surged, with Hunan Gold (002155.SZ) hitting the daily limit, and other stocks like Beijing Xiaocheng Technology (300139.SZ), Sichuan Gold (001337.SZ), and Hunan Silver (002716.SZ) also rising.

In fact, the Pingjiang County, where the Wangu mining area is located, has a long history of gold mining. Hunan Gold's subsidiary, the Pingjiang Gold Cave Mine, began small-scale group mining using traditional methods in the 22nd year of the Guangxu era, which is 1896.

Although Hunan Gold's stock surged to the daily limit after today's news broke, the company remains relatively cautious. Relevant individuals close to Hunan Gold told reporters that the controlling shareholder, the Gold Group, is involved in some resource integration with relevant departments in Pingjiang County, suggesting that there is a certain connection, although the correlation cannot be considered very significant.

On October 10 of this year, during an online collective reception day for investors of listed companies in Hunan for 2024, Hunan Gold stated that its gold resource reserves, aside from those in the Wangu mining area, are primarily within the listed companies. On June 30, 2021, the company signed an 'Industry Cultivation Agreement' with its controlling shareholder, the Hunan Gold Group, to cultivate the Wangu mining area assets, assume investment risks, and agreed that the company would enjoy the right of first refusal under the same conditions once the cultivated symbol matures, with subsequent progress to be announced in a timely manner according to relevant disclosure requirements.

Today's release of exploration results from the Wangu mining area, predicting a reserves figure of 1000 tons, is quite eye-catching. The aforementioned industry insider commented that 'this (1000 tons) should be viewed rationally' and that 'gold mines discovered at depths over 2000 meters, strictly speaking, should not yet be termed reserves, as there are strict standards for defining reserves.'

He further analyzed that the gold grade reached as high as 138 grams per ton, which is very eye-catching. However, the grade of underground (gold mines) fluctuates greatly; those who are knowledgeable know that (a certain point holds over 100 grams per ton) is a normal occurrence. The focus should be on the average grade rather than the grade of a single point.

Another factor is depth, having drilled a few holes at two to three thousand meters for exploration, while the actual mining depth is only about four to five hundred meters. A few deeper holes have indeed revealed minerals, which is a preliminary estimate, but how much (reserves) there actually is below still needs further exploration and verification in the future.

He also mentioned that, based on the current cumulative discovery of 300 tons of gold resource in the core exploration area, a portion of this has already been mined. The forecast value of 1,000 tons is largely unrelated to mining companies because it is too deep.