Canaco Resources explores Ethiopia (February 21, 2011)

Canaco Resources (CAN-V) may be best known for its Magambazi gold discovery in Tanzania’s Handeni district, where last December drill results yielded intercepts of 53.2 metres of 9.51 grams gold per tonne and 17.4 metres of 6.1 grams gold, but its Harvest property in Ethiopia is noteworthy as well. 

On Jan. 11, drill results from a 1,600-metre program of 12 holes over a strike length of 800 metres at Harvest’s Terakimti concession, included massive sulphide intersections. Hole 3 produced 52.1 metres of 1.55 grams gold, 4.1% copper and 25.97 grams silver per tonne starting at a depth of 45.6 metres, including 23.7 metres at 1.88 grams gold, 7.3% copper and 21.88 grams silver.

Intercepts in hole 2, some 350 metres northeast of hole 3, cut 13.2 metres of 2.84 grams gold and 300.11 grams silver from a depth of 28.8 metres, while hole 5, 270 metres northeast of hole 3,  hit 13.9 metres of 1.17 grams gold, 2.67% copper, 3.42% zinc and 21.57 grams silver starting at 77 metres. 

Canaco picked up a 70% stake in the Harvest property in August 2010 (the acquisition is pending the execution of transfer documents by Ezana Mining Development, an Ethiopian company with the remaining stake in the project) and the drilling at Terakimti was part of the company’s due diligence in the acquisition process. Canaco wanted to confirm the potential for a gold-enriched, polymetallic volcanogenic massive sulphide (VMS) deposit beneath gold-rich gossans that had been identified by earlier surface trenching.

Of the 11 drill holes, 10 contained significant gold and base metal intercepts, the company reported, and all holes held zones of disseminated and stringer-style sulphide mineralization and intense alteration, including chlorite pyrite and sericite.  

Highlights from trench channel sampling from the gossans at Terakimti, at a 0.3 gram gold per tonne cutoff grade, returned 40 metres at 3.24 grams gold including 19 metres at 5.3 grams gold; 25 metres at 2.68 grams gold including 14 metres at 4.17 grams gold; and 38 metres at 2.37 grams gold including 9 metres at 5.91 grams gold.

The near-surface Terakimti VMS body is just one of six exploration concessions on the Harvest property, which covers 468 sq. km in the Tigray region of Ethiopia. The drilling at Terakimti took place 140 km southwest along strike from Sunridge Gold‘s (SGC-V, SGCNF-O) Emba Derho VMS deposit. Emba Derho is estimated to contain 62.5 million tonnes grading 0.72% copper, 1.38% zinc, 0.2 gram gold and 10 grams silver. 

The exploration concession is also about 150 km southeast of the Bisha VMS deposit owned by Nevsun Resources (NSU-T, NSU-X). Commissioning of the Bisha mine began early January, with the first gold pour on Jan. 4. Nevsun anticipates Bisha will produce 1.06 million oz. gold, 734 million lbs. copper, 1 billion lbs. zinc and 9.4 million oz. silver over the course of its 10-year-plus mine life as an open pit.

“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,” Canaco noted in a press release. 

Meanwhile, 20 km to the southeast of Terakimti, Canaco has also drilled five holes totaling 513 metres to test VMS potential on the Nefasit concession. Two of the holes (drilled 470 metres apart) intersected zones of massive sulphide, the company said. Hole 4 returned 3 metres at 1.41 grams gold, 2.34% copper and 22.68 grams silver from a depth of 52.2 metres. And hole 1 cut 3 metres of 1.13 grams gold, 0.68% copper and 5.42 grams silver from a depth of 71.9 metres.

Over the last year, Canaco’s share price has swung from a low of 36¢ per share on Feb. 26, 2010, to a high of $6.22 per share on Dec. 31. 

At presstime in Toronto, the junior was trading at $4.80 apiece. The company has 169 million shares outstanding.