Gold Canyon in new approach at Springpole project

Vancouver – Gold Canyon Resources (GCU-V) has hit healthy gold intercepts in a new drill program at the company’s 100%-owned Springpole project northwestern Ontario.

The project in the Red Lake gold district has been the subject of extensive exploration since the 1980s by the likes of Gold Fields (GFI-N, GFI-J), Noranda and Santa Fe Pacific Gold. It has eluded development in part because of the unusual geology on the property.

Last fall Gold Canyon initiated an extensive review of the project to better focus exploration. The company re-logged and re-sampled a number of drill cores to re-evaluate the geology of the system.

It was a shift for a company that has controlled the 8,000-hectare property since 1996.

“For a small company, all we could do was raise money and drill,” said Akiko Levinson, president of Gold Canyon in a phone interview. “We didn’t have the luxury to sit back and study the whole plan, until last year.”

Levinson brought on Dr. Quinton Hennigh to help with the review. Hennigh had becoming interested in the project after reviewing it for Newmont Mining (NMC-T, NEM-N) several years ago.

The company concluded that mineralization at Springpole is associated with an alkaline igneous complex consisting of shallow intrusions and associated diatreme breccias. This differed from the more common metamorphic-based deposits of the Canadian Shield that occur at deeper levels.

“Most geologists who have worked on the project have treated it like a typical Canadian deposit,” said Hennigh in a phone interview. “A kind of shear zone hosted deposit with limited size potential, and it really has done a disservice…it’s a gold system associated with an alkaline porphyry.”

Hennigh was quick to credit Keith Barron with originally identifying Springpole as an alkaline gold system. Barron, who went on to help discover the Fruta del Norte deposit in Ecuador, did his dissertation on the alkaline gold workings at Springpole after working there as a consulting geologist in 1986-87.

“It’s important because it says this thing is associated with a very large intrusive hydrothermal driver,” said Hennigh. “It’s not just a small mesothermal gold system, it could be quite large.”

Another of the company’s key findings in the review was that the Main, Camp and Portage zones are likely part of the same 1,200-metre long, 300-metre wide northwest trending body of mineralization.

Based on the review, the company launched a three-phase drill program to fill the gaps between the zones. The first stage targeted gaps in the Portage zone, which is under Springpole Lake, and the Camp zone, on-shore northwest of Portage.

“So far the results that we’ve seen say there’s significant gold where the past drill campaigns had not seen gold, so we’re quite encouraged with things,’ said Hennigh.

The company has assayed one of three drill holes from the Portage zone. Hole 2 hit 64 metres grading 3.3 grams gold per tonne and 16.59 grams silver per tonne starting at 247 metres.

From the Camp zone, hole 1 hit several intersection of gold, including 21.5 metres averaging 1.31 grams gold starting at 12.5 metres, 8 metres carrying 1.9 grams gold at 50 metres and 9 metres grading 1.84 grams gold from 118 metres. Hole 4, also from the Camp zone, cut 41 metres averaging 1.08 grams gold starting at 31 metres.

The company had planned to carry out up to 6,000 metres of drilling but an early spring thaw cut the program short and only 1,778 metres were cut.

The next phase of drilling is planned to start in June, when the company expects to drill 10,000 metres. Henningh said the total drill program should be about 18,000 metres and should fill in the gaps enough to move towards a prefeasibility study.

Gold Canyon has already established a resource estimate for the East zone of the project. The 2006 resource had both open pit and underground estimates, which combined totalled 249,000 measured and indicated tonnes grading 5.66 grams gold and 1,353,000 inferred tonnes grading 4.53 grams gold, all using a 1 gram per tonne cut-off.

Past drill intercepts in the East zone by Gold Canyon included 27.41 metres grading 14.96 grams gold, 24.55 metres averaging 18.63 grams gold and 16.4 metres carrying 67.46 grams gold.

“It is a very exciting old project, but with fresh life” said Levinson. “I’ve been personally with this project since 1989. If you stay with something that long, something good will happen.”

Gold Canyon’s share price shot up 17¢ to close at 45¢ in early April after the result from the Portage zone was released, but dropped 5.5¢ to close at 34¢ when the latest results from the Camp zone were announced. The company has 66 million shares outstanding.