MINING IN AFRICA SPECIAL — Channel meets with early success

Although still in the early stages, mineral exploration undertaken by Channel Resources (TSE) in Burkina Faso has met with considerable success.

The company formed joint ventures on three large concessions in early 1994 and was later granted a fourth by the government. With more than 6,200 sq. km, Channel controls one of the largest land positions in the country. The joint-venture agreements enable the junior to earn a 90% interest in one concession and a 95% interest in the other two by spending $1.1 million, $1.4 million and $1.6 million in each of the next three years.

The four properties are underlain by Birimian Formation volcanics — greenstones which host virtually all the significant gold deposits in West Africa.

All the concessions contain numerous known gold prospects, many of which represent stockwork systems previously worked by local miners in hand diggings. Channel’s principal objective is to discover a large bulk-tonnage deposit minable by open-pit methods.

Over the past year, the company drilled 106 reverse-circulation holes on 12 of a possible 100 or more targets. Results have been disclosed for the first 62 holes, 44 of which returned significant values from 10 targets. Gordon Fitzpatrick, a director, describes the drilling to date as being somewhat “wildcat” in nature, given the large number of targets and the size of the land package. Work has jumped from one target to another because of a 3-to-4-week delay in receiving assay results. The company drills 6-8 holes in one area before moving on to another target while results are processed. Channel expects to return to the Rounga and Nimbo prospects on the Somifa concession during this year’s drilling in order to follow up on some encouraging results.

In addition, systematic surface sampling, conducted in 1994, identified targets which the company plans to drill this year.

Drilling on the Nimbo prospect, within the Somifa concession, included three holes spaced about 75 metres apart to test below a series of open cuts. The results include 4 metres grading 4.35 grams gold per tonne in hole S-45; 2 metres grading 8.2 grams in S-46; and 4 metres grading 8.4 grams plus 8 metres grading 20.9 grams in S-47. Assay results from an additional five holes on the Nimbo prospect are pending.

Some of the better results from the Rounga prospect include 6 metres grading 12 grams in hole S-35; 10 metres grading 10.2 grams in S-28; and 4 metres grading 8.2 grams in S-39.

A new phase of work, currently under way, involves drilling an additional 15,000 metres totalling about 150 holes.

Viceroy Resource (TSE) owns 30% of Channel’s 18.7 million outstanding shares and is using the company as its exploration arm in West Africa. As long as Viceroy owns a minimum of 20% of the company’s outstanding shares, it has a 5-year right of first refusal with respect to future financings for any of Channel’s projects in the region.

Channel’s 1995 exploration budget is set at more than $2 million.