Echo Bay, Canarc join forces to explore Guyanese project

Gold producer Echo Bay Mines (TSE) has acquired a 10.5% stake in Canarc Resources (TSE) and chosen the Baramita gold property in Guyana for further exploration.

The senior acquired the interest by purchasing 3 million shares of Canarc in a private placement. The price was $2.36 per share, for a total of $7.1 million. The arrangement gave Echo Bay the right to select one Canarc property in either Guyana or Suriname for exploration.

Canarc will spend about $5 million exploring the Baramita play, as operator, up to the prefeasibility stage. For its part, Echo Bay can earn a half interest in the property by spending at least as much as Canarc. It must then deliver a bankable feasibility study within three years and pay Canarc a “success fee” equivalent to 5% of the world spot gold price multiplied by 50% of the reserves identified in the feasibility study.

Upon acquiring a half interest in the property, Echo Bay would likely become the operator.

The 5,500-hectare property is northwest of Georgetown, near the Venezuelan border. Accessible by boat along the Barama and Baramita Rivers, and by aircraft to an on-site airstrip, it has a history of mining dating back about 100 years.

Artisanal workings have dug into surficial and alluvial gold occurrences, as well as veins.

Based on historic workings and recent exploration surveys, Canarc has outlined seven bulk-tonnage gold prospects which lie along an 8-km, west-northwest-trending mineralized corridor that follows a structural zone developed along a regional, granite-greenstone contact.

Trench sampling on the Millionaire prospect, at the eastern end of the mineralized corridor, showed assays of 2.3 grams gold per tonne over a 51-metre true width in saprolite, and 11.46 grams over a 40-metre length in quartz tailings for an old stamp mill.

At the other end of the corridor is the Last Resort prospect, where artisanal mining recovered 14,000 oz. from 28,000 tonnes at one pit. The Last Resort contains a sheeted, flat-lying, quartz-sulphide vein system in highly altered granite.

Canarc is planning an aggressive program to explore and drill all seven targets in 1995. A program of 40 holes (constituting 6,000 metres of drilling) will test each target.

Echo Bay has no intention of acquiring any further shares of Canarc, but has formed similar alliances with several other small exploration companies, including Baja Gold (TSE) in Mexico, Santa Elina (TSE) in Brazil and Orvana (TSE) in Bolivia. In the African countries of Niger and Ghana, partnerships have been formed with Etruscan Enterprises (VSE) and International Gold Resources (TSE), respectively.