Canaco Acquires Copper-Gold Exploration Assets in Ethiopia
January 21 2010 - 4:04PM
Marketwired Canada
Canaco Resources Inc. (TSX VENTURE:CAN) is pleased to announce that the Company
has entered into a letter of intent with Beijing Donia Resources Co. Ltd.
("Donia") to acquire 70% of the outstanding shares of Harvest Mining PLC
("Harvest"), a private Ethiopian exploration company. Harvest owns 100% interest
in 605 km2 of exploration concessions in the Tigray state of Ethiopia. These
concessions host several identified gold enriched, polymetallic volcanogenic
massive sulphide ("VMS") prospects.
Harvest's exploration assets (the Nefasit, Hamlo, Terakimti, Adi Nebrid, Igub
and Medri Felasi concession respectively) are located in the SW extension of the
Neo-Proterozoic Asmara VMS type Cu-Zn-Au-Ag metallogenic belt where several
deposits have been previously discovered in central Eritrea. These discoveries
include the Bisha deposit (27M tonnes grading 2.08 grams gold and 1.8% copper
per tonne) and the Emba Derho, deposit (38M tonnes grading 1.08% copper, 0.18
grams gold and 9.31 grams silver per tonne - "Copper-rich primary ore").
Initial exploration results indicate there is significant potential for the
discovery of similar deposits on Harvest's concessions. Since 2007, extensive
exploration activities have been completed including, remote sensing, geological
mapping, geochemical soil sampling, geophysical ground magnetic surveys, IP
surveys and extensive trenching and drilling on selected targets.
According to reports published by Harvest, the main exploration achievements are
as follows:
The Nefasit Concession Block
-- The Adi Angoda Prospect
-- Four intermittent sulphide zones with outcrops of surface oxides
have been mapped with strong base metal mineralization and a strong
co-incident IP anomaly.
-- Diamond drilling results for four recently completed holes indicate
the presence of a primary sulphide copper-zinc ore body below the
surface oxide cap. Two of these holes drilled to test the IP
response encountered several ten meter wide zones of base metal
mineralization, including sections of massive sulphides. Assay
results for these holes are pending.
-- These results have confirmed the potential for the discovery of a
medium-large size VMS type copper-zinc deposit in this area.
-- The Medadib Prospect
-- Geological mapping has outlined a surface oxide zone which has 360
meters of aggregate strike length and mineralization over widths of
3 to 20 meters. Analytical results have confirmed anomalous values
for copper and zinc. An IP survey completed in November 2009
indicates a strong IP response co-incident with the surface oxide
zone and is interpreted as indicating the presence of primary
sulphides at depth.
-- Previous RC drilling of the surface oxide cap intersected a gold
mineralization with an average thickness of 20m and average gold
grade of 4.6 g/t.
Terakimti Concession Block
-- Several zones of sulphide mineralization have been identified within the
felsic tuffs and at the contact of the intermediate meta-volcaniclastic
rocks and felsic tuff at Terakimti. The sulphide mineralized zone
measures 3.5 km along strike and 30 m to 110 m wide - locally reaching
widths of up to 400 m.
-- Disseminated sulphides, surface oxide zones have been identified in
outcrop. Strong copper, zinc and lead anomalies have been confirmed
associated with the surface oxide zones.
-- The Mai Sensela Prospect
-- a surface sulphide zone anomalous in Cu and Pb has been mapped with
over a strike length of 1,200 m and width ranging from 20 m to 100
m.
-- Contained within the surface sulfide zone a surface gold oxide zone
with a strike length of 800 m and an average width of 20 m has been
defined through surface trenching. The average gold grade is 3 grams
gold per tonne with peak values of 43 grams gold per tonne. IP
surveying has detected chargeability anomalies coincident with the
surface gold oxide mineralization and is interpreted as indicating
the presence of primary sulphide concentrations at depth.
The Hamlo Concession Block
-- Geological mapping has outlined seven sulphidic alteration zones locally
with massive sulphide oxide caps. In the north of the Hamlo block, a
sulphide zone with strike length of 2.2 km and thickness of 200 m to 300
m has been mapped. Within this sulphide zone a massive sulphide oxide
zone with an aggregate length of 1,200 m and thickness of 10-30 m has
been identified.
-- The Wuhidet Prospect
-- Three sulphidic zones have been identified, including one zone
measuring 4 km long and 60 m wide.
-- Mapping has indicated a surface sulphide zone that measures 800 m
along strike and 20 m wide.
-- Initial field work has indicated these sulphide zones are strongly
anomalous in Cu and Zn.
-- The Hamlo area contains a geological setting favourable for the
discovery of Au-enriched VMS deposits. Initial exploration programs will
include extensive trenching, ground magnetic and profile IP surveys, and
test drilling of selected targets.
"The acquisition of Harvest Mining PLC by Canaco is a significant event in the
corporate development of the Company and is consistent with the Company's
strategy of acquiring advanced exploration projects poised for discovery
programs," said Andrew Smith, Canaco's CEO. "The geological potential for the
discovery of gold-enriched, polymetallic VMS deposits on Harvest's properties is
exceptional in the view of Canaco's technical team and in many ways this
prospect mirrors the same potential identified in the Company's Handeni property
in 2006."
The purchase price is C$6.0 million, payable on closing as follows: $4,000,000
in cash and issuance of an additional 3,508,771 shares to Donia at a deemed
price of $0.57 per share (based on the closing price of the past 30 trading days
from the date of the letter of intent plus a 5% premium).
Since 2007, Harvest has spent about USD$4.4M for the above-mentioned exploration
activities on the six exploration licenses, and has established an operating
capability based in Shire, Ethiopia with a strong technical team and exploration
equipment and infrastructure. Canaco expects to spend a minimum of C$2 million
in exploration costs on the properties in the first year.
The acquisition of Harvest by Canaco is subject to a 90 day due diligence
period, and obtaining approvals from third parties, the TSX Venture Exchange and
shareholders (if required).
Independent members of the Board of Canaco have considered a number of factors
in determining that the consideration for the acquisition is fair and
reasonable, including the amount already spent on exploration expenditures and
its potential to host commercially viable copper and gold deposits.
Dr. Jingbin Wang is a Director of both Canaco and Donia. Donia is also a sister
company of SinoTech (Hong Kong) Corporation Limited, a control person of Canaco.
Mr. Shuixing Fu, a Director of Canaco, is also an officer of SinoTech. Dr. Wang
and Mr. Fu do not directly own any shares of Canaco. SinoTech presently owns 32
million shares of Canaco, representing 27.8% of the outstanding shares of
Canaco. The 3,508,771 shares to be issued by Canaco to Donia on closing of the
acquisition represents 3% of Canaco's outstanding shares. The remaining 30%
interest of Harvest is owned by an Ethiopian company.
Andrew Lee Smith, CEO
Dr. Jingbin Wang, Chairman
The Acquisition is subject to a number of conditions as set out above. There can
be no assurance that the Acquisition will be completed as proposed or at all.
The Company relies on litigation protection for "forward-looking" statements.
This press release contains forward-looking statements that are based on the
Company's current expectations and estimates. Forward-looking statements are
frequently characterized by words such as "plan", "expect", "project", "intend",
"believe", "anticipate", "estimate", "suggest", "indicate" and other similar
words or statements that certain events or conditions "may" or "will" occur, and
include, without limitation, statements regarding the Company's plans with
respect to the exploration and development of its projects. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
could cause actual events or results to differ materially from estimated or
anticipated events or results implied or expressed in such forward-looking
statements. Any forward-looking statement speaks only as of the date on which it
is made and, except as may be required by applicable securities laws, the
Company disclaims any intent or obligation to update any forward-looking
statement, whether as a result of new information, future events or results or
otherwise. Forward-looking statements are not guarantees of future performance
and accordingly undue reliance should not be put on such statements due to the
inherent uncertainty therein. No independent consultant has rendered an expert
opinion on the property.
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