Hana grows Banana resource ahead of PEA

An updated estimate has increased the copper-silver resource at the Ghanzi project in Botswana by more than 40% for Hana Mining (hmg-v), providing a solid foundation for a preliminary economic assessment (PEA) due out in February.
The new estimate also upgraded portions of the main Banana zone to indicated status for the first time: Banana is now home to 37.4 million indicated tonnes grading 0.93% copper and 13.4 grams silver per tonne, for 762 million lbs. copper and 16.1 million oz. silver. Inferred resources, covering the rest of Banana as well as the Chalcocite zone, now stand at 423.9 million tonnes averaging 0.6% copper and 6.3 grams silver, containing 5.6 billion lbs. copper and 85.4 million oz. silver.
With a larger resource outlined, Hana decided to lower its resource cutoff grade to 0.3% copper, from 0.75% copper. The company, which so far focused on defining resources within 150 metres of surface, says the lower cutoff better reflects open-pittable mineralization.
While the lower cutoff certainly helped increase the resource tonnage, the increase in contained metal also stems from six months of drilling that delineated new mineralization in the Chalcocite zone and along the south limb of the Banana zone, where drillers found mineralization where earlier, more widely-spaced drilling had left gaps. The contained copper count at Ghanzi increased by 43% while contained silver climbed 48%.
“The fact that we have a significant indicated component to our resource gives us a solid base for the PEA, still expected to be completed by Q1 of 2011,” says Hana’s chairman and CEO Marek Kreczmer. “And I want to point out that this resource confirms in our mind that, together with Discovery Metals, we are developing a new copper-silver mining district.”
Discovery Metals (dml-a) is focused on developing the Boseto copper project, which lies some 50 km to the northeast of Ghanzi. Boseto is home to 18.5 million indicated tonnes grading 1.4% copper and 17.8 grams silver plus 80.3 million inferred tonnes averaging 1.4% copper and 16.9 grams silver. Of that, a 24-million-tonne reserve is providing the basis for potentially developing an open-pit mine producing 76 million lbs. copper and 1 million oz. silver annually.
The copper-silver mineralization at Ghanzi occurs in sediment-hosted deposits. Generally, the project is located within the Ghanzi-Chobe fold and thrust belt, a 140-km-wide zone of deformed metavolcanics and metasediments that is also known as the Kalahari copper belt.
At Ghanzi, copper-silver mineralization is associated with a redox front between the oxidized footwall sandstones and the reduced hangingwall siltstones and shales. This target horizon has been folded once along a northeast axis and refolded about a northwest axis, then eroded. The result is limbs of mineralization starting at surface, sometimes connected at a fold nose.
The Banana and Chalcocite zones are of precisely that form. Banana comprises two parallel limbs that join in fold noses at the northeast and southwest ends; the southwest fold nose area is the Chalcocite zone. Each limb of Banana is 32 km long, which means the zone hosts 64 km of strike.
The Banana deposit is just one area at Ghanzi where the target horizon is apparent at or near surface. Folding and thrusting along northeast trends within the 2,169-sq.-km property has created more than 600 km of prospective strike at Ghanzi, of which only some 70 km has been drill tested.
Hana has already defined resources at two other Ghanzi targets, known as zones 5 and 6. The company kept its latest drilling effort focused on Banana and Chalcocite, in order to upgrade and expand those resources to support the PEA, but now Hana plans an exploration program for 2011 that will include returning to the other two deposits.
“Mineralization in those two zones, especially in zone 5, is as good or better than any mineralization we’ve discovered at Banana,” says Kreczmer. “Zone 5 is a really great target that’s open for another 40 km of strike. So we will have a very aggressive exploration program on (zones) 5 and 6, to expand on the inferred resources already there.”
Exploration efforts will also target a host of new anomalies identified in a recent high-resolution magnetics survey. Hana will cover each area with a soil sampling grid, and follow up strong results with drilling.
In addition, the Banana and Chalcocite zones remain open at depth. Hana recently completed a drill program aimed at testing the continuity of mineralization below 200 metres and results are expected in January. Kreczmer says deeper mineralization “could again significantly increase the mineral resources at these two zones.”
The PEA will contemplate an open-pit operation churning through roughly 7 million tonnes of ore annually, or 19,000 tonnes per day. It will be the first economic study of Ghanzi.
The centre of the Ghanzi property is 250 km from the city of Maun; at its northern end the property is just 30 km from the Trans-Kalahari Highway. And two infrastructure expansion projects will likely improve the economics of developing a mine at Ghanzi. First, the World Bank and the governments of Botswana and Namibia are conducting a feasibility study on a rail line connecting Botswana to the Namibian port of Walvis Bay. And second, construction has begun on a 600-megawatt expansion of the government-owned Moropule power plant, which would then have more than enough power to support a Ghanzi mine.
Hana has also been exploring for water at Ghanzi and recently announced that five of seven holes returned significant volumes of water. Blow yield tests show there should be enough water to support a processing plant at Banana.
On the updated resource news, Hana’s share price lost 75¢ in three days to close at $4.70. The company has a 52-week trading range of 85¢-$5.68 and 81 million shares outstanding, 92 million fully diluted.