Hana significantly boosts Ghanzi copper resource

VANCOUVER — Hana Mining (HMG-V, 4LHT-F) has nearly doubled the resource estimate at its Ghanzi copper-silver project in northwestern Botswana, as part of a strategy of building a major resource before moving on to engineering.

The update comes eight months after the company’s first estimate on the property and follows 42,000 metres of mostly reverse circulation drilling. The increase comes mainly from the 30-km Banana zone, as well as what the company considers a new zone on the southwest edge of the Banana zone dubbed the Chalcocite zone.

Using a 0.75% cutoff, the global resource estimate for the sediment-based Ghanzi project now stands at 93.2 million inferred tonnes grading 1.5% copper and 18 grams silver per tonne. In the Banana zone, the resource is 73.5 million inferred tonnes grading 1.47% copper and 19.44 grams silver, an 81% increase while keeping the same grades as before.

“It’s tremendous that the grade hasn’t changed,” said James Sullivan, president of Hana, in a conference call. “Basically we’ve more or less doubled the strike length tested from our last (NI) 43-101 and we more or less doubled the resource on the main zone.”

Meanwhile, the new Chalcocite zone has significantly added to the overall resource. The zone is currently estimated to contain 83 million inferred tonnes grading 0.46% copper and 3.58 grams silver using a 0.3% cutoff.

Copper mineralization in the zone is predominantly chalcocite and malachite, compared with the bornite and chalcopyrite found elsewhere at the project. The Chalcocite zone also has a shallow depth to mineralization and thicker widths of copper-bearing minerals that open up the possibility of bulk mining and heap leaching, but the company is still in early stages with this zone.

“We’re sort of just digesting the Chalcocite zone,” says Sullivan. “It’s something we just put together in this model and the significance of it was really a pleasant surprise to us. We didn’t expect the tonnage would be that high, but it’s something we’re going to sit down and decide in the coming weeks whether we want to go back and do some more infill or extend the resource because it’s a resource that’s wide open.”

For this year, the company plans to drill 86,000 metres using 5 rigs to further infill the Banana zone. Hana’s chief executive Marek Kreczmer says that by the end of 2010 he expects to have another significant increase in the resource, as well as progress on scoping and engineering.

The resource for zones 5 and 6, roughly 60 km northeast of the Banana zone, remain unchanged after the company decided last year to focus its efforts on the Banana zone.

So far, Hana has outlined a combined mineralized area extending 152 km at the project. The company still has plenty of room to explore though, with the Ghanzi project spanning 2,200 sq. km over 5 license blocks.

The company owns 70% of the project and has an agreement to acquire the remaining 30%. The Botswana government retains a 3% net smelter return royalty on base metals and 5% on precious metals and has the right to acquire a 15% working interest upon issue of a mining license.

That government has committed to building a new power plant that Hana could link-up to, and is also currently assessing the possibility of building a rail corridor through Namibia to the ocean.

Hana’s stock price was down a penny on the news to close at $2.26 after climbing as high as $2.57 on April 21 on a trading volume of 3.1 million shares. The company has a 52-week trading range of 25¢-$2.57 and 62 million shares outstanding.