Hunting the elusive majors in Tanzania

Vancouver – In 2005 Helio Resource’s (HRC-V) CEO Richard Williams and chief operating officer Christopher Mackenzie were working in Namibia, a country where Helio still holds a number of properties. But the business partners were looking for something bolder. “We realized we needed a bigger project with more meat on the bones,” Williams says.

At the invitation of a private Tanzanian company, Thorntree, Williams and Mackenzie drove the Saza Makongolosi (SMP) property in the Lupa goldfields of southwestern Tanzania that same year. As they looked out their windows and surveyed outcroppings on the ground Williams says it was easy to see the size and width potential of what is known as the Saza shear zone.

If he were to wager a figure now, since Helio has optioned around 23,000 ha. of land in the area, Williams would guess quartz outcroppings show up over 10-15% of the now 34-km-long portion of the Saza shear zone Helio has optioned. Underground mineralization can be as wide as 50 metres or so.

To evoke its size, Williams says, “You know, I tell people: get in your car, drive 34 km and imagine gold occurrences all the way along.”

At surface in the Saza shear zone outcroppings primarily occur, he says, where artisanal miners have been working the Lupa goldfields. As in other areas of the world these low-volume, high-grade miners have proven to be more of a help than a hindrance. “It’s a hard rock terrain so they’re not taking out a lot,” he says. “In fact we follow the local artisanal miners around.”

What started out as a single option of one 5 by 10-km block in 2005, has since grown to five. The latest was a western extension optioned from Thorntree. Before that Helio optioned three blocks from a different private Tanzanian company, Dhahabu Resources and Mining.

Helio’s strategy is simple. “We focus on being the first ones into an area so that we can capitalize on low entry costs and pick up the best ground,” Williams says. He believes Helio has done just that.

In terms of gold resources the typical focus in Tanzania is the Lake Victoria region to the north, Williams explains, not the Lupa goldfields in the southwest. Although the Lupa goldfields have seen important producers that was “in the old days”, Williams says, largely before independence from the British came in 1961. He believes the Lupa goldfields of Tanzania that have historically produced about 750,000 oz. gold are the countries next – and largely untapped – gold district.

In 2006 after Helio started drilling its first block optioned from Thorntree the company quickly began racking up results from pretty well every target it drilled. The Kenge target, for instance, a structure bifurcating off the Saza shear zone in the southwest returned as much as 18 metres grading 1.62 grams gold per tonne in hole 11. On the Saza shear zone proper hole 15 cut 8 metres grading 12.65 grams gold starting 92 metres downhole.

The consistent returns spurred Helio to sign its second option agreement for three more blocks covering about another 20 km of the Saza shear zone bringing at that time Helio’s coverage to about 20,000 ha. The 100% interest agreement with Dhahabu detailed a schedule for a US$1,000,000 exploration program and US$400,000 in shares and cash due over four years.

Though Williams is a bit reticent to share too much of Helio’s drilling strategy, he breaks it down to a balance between detailing a few specific targets on the Saza shear zone and nearby structures, Kenge for instance, and then also running north-south fences of drill holes beyond the detailed portions of the Saza shear zone to show the lateral extension of those areas.

At Kenge Helio has detailed three main zones over a 2-km-long strike length with mineralization open at depth. Some of the best results come from the Mbenge area of the Kenge target where results are as good as 48.7 metres grading 2.1 grams gold starting 8.8 metres downhole. He believes the Mbenge zone is part of the same structure as Kenge but has been faulted back north.

One of the higher grade zones beyond Kenge lies about 10 km east and is called the Porcupine target. In July this year Helio hit as much as 52.2 metres grading 2.2 grams gold starting 15.8 metres downhole. Testing the depth of the mineralized area in November Helio cut a 51.7 metre intercept grading 2.1 grams gold starting 142 metres downhole. It is still open at depth.

What is most interesting to Williams is that Helio has only recently hit the higher grade zones outside of the main Kenge area where the company had from the beginning concentrated drilling.

“From our perspective” he says, “we may not have drilled the best target yet.”

At Porcupine he says Helio plans to test about 1 km of its lateral extent with a shallow 3,000 metre RC drilling campaign.“This will tell us whether we might be dealing with a 1 million oz. resource or a 3 million oz. resource,” he says.

The company’s goal is to outline a large, open-pittable deposit and Williams reckons that the SMP is well poised to deliver that. Beyond the mineralized areas he sums up what he believes are the attractive features to the project: You can drive in. It’s near lakes so water isn’t a problem. The metallurgy is good; there’s no arsenic and pyrite ranges between 1% to 3%. Gold recovery has been estimated at 96%. And Tanzania is a place where it’s proven you can build mines.

Which just leaves who will develop it.

“Yeah the market’s crap,” Williams concludes. “But the majors still need to replace resources.”