Mr. Andrew Smith reports
DISCOVERY HOLE AT CANACO'S HARVEST PROJECT IN ETHIOPIA INTERSECTS 52.1 METRES AT 1.55 GRAMS GOLD PER TONNE AND 4.10% COPPER
Canaco Resources Inc. has released diamond drill results from the Terakimti concession, part of the company's Harvest project in Ethiopia, acquired in August, 2010, and which remains subject to certain conditions and final acceptance from the TSX Venture Exchange. Significant drill results from a 1,600-metre program of 12 holes, 11 of which were drilled over an 800-metre strike length, included massive sulphide intersections:
- It drilled 52.1 metres at 1.55 grams gold per tonne, 4.10 per cent copper and 25.97 grams silver per tonne in hole 10HTD003 starting at a depth of 45.6 metres, including 23.7 metres at 1.88 grams gold per tonne, 7.30 per cent copper and 21.88 grams silver per tonne.
- It drilled 13.2 metres at 2.84 grams gold per tonne and 300.11 grams silver per tonne in hole 10HTD002 from a depth of 28.8 metres. This hole is located 350 metres northeast of hole 10HTD003 and is open at depth.
- It drilled 13.9 metres at 1.17 grams gold per tonne, 2.67 per cent copper, 3.42 per cent zinc and 21.57 grams silver per tonne in hole 09HTD005 starting at a depth of 77.0 metres. This hole is located 270 metres northeast of hole 10HTD003.
- It drilled 12.0 metres at 0.88 gram gold per tonne, 1.06 per cent copper, 4.11 per cent zinc and 24.33 grams silver per tonne in hole 09HTD002 from a depth of 42.0 metres. This hole is located 570 metres northeast of hole 10HTD003.
Drilling was conducted as part of Canaco's due diligence process in acquiring the project in an attempt to confirm the potential for a gold-enriched, polymetallic volcanogenic massive sulphide deposit beneath gold-rich gossans previously identified by surface trenching. Ten of the 11 holes contained significant mineralization, as indicated in an attached table.
From To Inter- Au AgHole No. (m) (m) val g/t g/t Cu % Zn %10HTD001 71.7 79.3 7.6 4.01 35.63 2.07 2.59 85.3 93.8 8.5 0.32 4.62 0.41 0.5910HTD002 28.8 42.0 13.2 2.84 300.11 0.16 0.0210HTD003 45.6 97.7 52.1 1.55 25.97 4.10 0.13 61.7 85.4 23.7 1.88 21.88 7.30 0.1510HTD005 164.6 167.8 3.2 1.57 8.12 0.83 5.0210HTD006 149.2 154.0 4.8 0.35 12.54 0.32 2.4309HTD001 39.0 42.0 3.0 0.39 11.22 3.75 0.0109HTD002 42.0 54.0 12.0 0.88 24.33 1.06 4.11 75.0 92.0 17.0 0.38 10.21 0.33 1.1009HTD003 17.0 22.0 5.0 0.70 41.26 0.61 1.51 41.0 52.2 11.2 0.37 2.87 0.34 0.1509HTD004 69.0 76.0 7.0 0.37 11.20 0.30 4.2109HTD005 66.3 69.9 3.6 1.58 30.12 3.05 1.68 77.0 90.9 13.9 1.17 21.57 2.67 3.42Drill intercept lengths are down-hole lengths reflecting apparent widths of mineralization, with true widths ranging between 60 to 90 per cent of the reported down-hole lengths.
Location
Canaco's Ethiopian exploration asset consists of six exploration concessions covering 468 square kilometres in a 70-per-cent-owned joint venture with Ezana Mining Development, an Ethiopian company. The Nefasit, Hamlo, Terakimti, Adi Nebrid, Igub and Medri Felasi concessions are located in the Tigray region of Ethiopia within the Neo-Proterozoic Asmara VMS Cu-Zn-Au-Ag metallogenic belt. Several deposits have been discovered along the northeastern extension of this belt in central Eritrea. The drilling conducted on the Terakimti concession is located 140 kilometres southwest along strike of Sunridge Gold Corp.'s Emba Derho VMS deposit, which is estimated to contain 62.5 million tonnes grading 0.72 per cent copper, 1.38 per cent zinc, 0.2 gram gold per tonne and 10 grams silver per tonne. Also, 150 kilometres southeast of Nevsun Resources Ltd.'s Bisha VMS deposit is estimated to contain 27.3 million tonnes grading 2.1 grams gold per tonne, 42.1 grams silver per tonne, 1.8 per cent copper and 3.8 per cent zinc. Bisha is in the commissioning stage and, once in full production, is expected to produce 1.06 million ounces of gold, 9.4 million ounces of silver, 734 million pounds of copper and over one billion pounds of zinc.
Terakimti concession
Exploration on the Ethiopian concessions has been conducted over the past three years by Beijing Donia Resources Co. Ltd. This has included remote sensing, geological mapping, geochemical soil sampling, geophysical ground magnetic surveys, IP surveys and extensive trenching, but only localized drilling on select targets. Trenching at Terakimti highlighted the potential of the area, where gold-rich gossans define a VMS target with a strike potential greater than 800 metres. Trench channel sampling gold intercepts from the gossans include (at a cut-off of 0.3 gram gold per tonne):
- 40 metres at 3.24 grams gold per tonne (TRK-TR3) including 19 metres at 5.3 grams gold per tonne;
- 25 metres at 2.68 grams gold per tonne (TRK-TR5) including 14 metres at 4.17 grams gold per tonne;
- 38 metres at 2.37 grams gold per tonne (TRK-TR7) including nine metres at 5.91 grams gold per tonne.
Of the 11 holes drilled at Terakimti, 10 contained significant gold and base metal intercepts and all holes contained significant zones of disseminated and stringer-style sulphide mineralization and intense alteration including chlorite pyrite and sericite.
Like Bisha and Emba Derho to the north, the near-surface Terakimti VMS body is vertically zoned due to weathering and supergene processes. This weathering provides important enrichment of gold at surface in gossans, enrichment of gold and silver in a leached zone beneath the gossans, and strong copper enrichment in the supergene transition to fresh rock. At Terakimti, there is strong evidence of the following:
- There is evidence of surface gold enrichment in gossans at surface indicated from systematic rock channel sampling (that is, 19 metres at 5.3 grams gold per tonne). Start-up pits on VMS deposits such as Bisha lead the company to believe this gold-rich surface mineralization should provide strong cash flow at the commencement of the project.
- There is evidence of gold and silver enrichment at depth in the weathered zone (13.2 metres at 2.84 grams gold per tonne and 300.11 grams silver per tonne in hole 10HTD002 from about 22 metres true depth to below 35 metres depth). This is highly encouraging as it demonstrates a thick zone (greater than 35 metres deep) of gold and spectacular silver enrichment (10 grams silver per tonne).
- There is evidence of copper enrichment in the supergene transition. Hole 10HTD003 intersected 52.1 metres at 1.55 grams gold per tonne, 4.10 per cent copper and 25.97 grams silver per tonne from 45.6 metres depth (true depth of about 40 metres). This intercept has been recalculated for the important zones of weathering:
- Strongly weathered zone -- 16.1 metres at 1.41 grams gold per tonne, 0.90 per cent copper and 44.76 grams silver per tonne from 45.6 metres depth;
- Supergene zone -- 25.0 metres at 1.79 grams gold per tonne, 6.96 per cent copper and 20.83 grams silver per tonne from 61.7 metres depth. This highlights a thick zone of very high-value copper enriched mineralization with significant gold credits.
- There is evidence of high-grade massive sulphide in fresh rock. The last part of hole 10HTD003 intersected fresh chalcopyrite-rich massive sulphide, yielding 7.0 metres at 1.37 grams gold per tonne, 3.46 per cent copper and 13.29 grams silver per tonne. This is extremely important as it indicates the presence of high-grade primary massive sulphide mineralization. Other primary sulphide mineralization intersected includes 13.9 metres at 1.17 grams gold per tonne, 2.67 per cent copper, 3.42 per cent zinc and 21.57 grams silver per tonne (hole 09HTD005 from 77.0 metres depth).
Nefasit concession
Five diamond drill holes totalling 513 metres were also drilled to test VMS potential on the Nefasit prospect approximately 20 kilometres to the east-southeast of Terakimti. Two holes intersected significant zones of massive sulphide, indicating the presence of a second target with potential to yield significant VMS mineralization. Peak results from two holes drilled 470 metres apart include:
- Three metres at 1.41 grams gold per tonne, 2.34 per cent copper and 22.68 grams silver per tonne in hole 09HND004, from 52.15 metres depth;
- Three metres at 1.13 grams gold per tonne, 0.68 per cent copper and 5.42 grams silver per tonne in hole 09HND001, from 71.93 metres depth.
Drilling at Nefasit is in its infancy and detailed work is expected to be conducted to locate targets associated with the proven massive sulphide system.
2011 program
Canaco has commenced a dynamic exploration program aimed at defining drill targets at both Terakimti and Nefasit, whilst regional exploration is also accelerated (see the company's Aug. 31, 2010, Stockwatch news release for information on other concessions). Exploration under way or planned for the near future includes gravity and microgravity (2,800 stations planned as a first pass), 50 line kilometres of time domain electromagnetic (EM) survey, detailed Niton handheld XRF-based soil-geochemical sampling over principal targets and all known gossan occurrences across all concessions, one-metre topographic contour generation and acquisition of high-resolution Quickbrid stereo photos, and reprocessing airborne EM over the southern half of the concession areas. This exploration work is directed toward targeting drill holes to maximize the chance of success and allow rapid advancement of the project.
The closing of the Harvest acquisition is pending the execution of transfer documents by Ezana Mining Development, the owner of the other 30 per cent of the project, and final acceptance from the TSX Venture Exchange.
Once the Harvest acquisition is complete, Canaco will consider options for maximizing the value of the acquisition for Canaco shareholders, including the possible spin-out of its Ethiopian assets into a new public company. The spin-out strategy is expected to allow Canaco to continue focusing on its promising gold exploration properties in Tanzania and the spin-off company to focus on its Ethiopian mixed mineral resource properties. If the spin-out strategy is selected, all existing shareholders of Canaco will own shares of a company which is expected to be listed on the TSX Venture Exchange. The company is currently pursuing legal and tax advice as to the exact procedures it will undergo to achieve the spin-out in the most expeditious manner with the least onerous tax consequences possible. Any spin-out transaction will be subject to board, shareholder and regulatory approvals.
Quality control
The planning, execution and monitoring of Canaco's quality control programs at the Harvest project are under the supervision of Jeff Heidema, PGeo, Canaco's vice-president of exploration, and Dr. David Groves, Canaco's director of project development. Mr. Heidema and Dr. Groves are qualified persons as defined by National Instrument 43-101. Canaco utilizes an industry standard quality assurance/quality control protocol with respect to sampling procedures. Blanks and certified reference standards are inserted into the sample stream to monitor laboratory performance, and duplicates of pulps and bulk rejects are also used to monitor laboratory performance.
We seek Safe Harbor.