Canaco Ramps Up Drilling in Tanzania

By Claire O'Connor

On September 28th 2009 Canaco Resources (TSX-V: CAN) drilled their 3rd most successful drill hole in 3 years on their Magambazi gold prospect located in the Handeni region of the United Republic of Tanzania. The company is now embarking upon a 10,000 metre drill program at Handeni and gearing up to expand their rapidly developing assets.

Other recent significan drill results include:

  • 48.0m @ 2.71g/t gold, including 7m @ 6.21 g/t gold and 13.6m @ 4.54g/t gold; and
  • 16.0m @ 5.45g/t gold, including 9.4m @ 8.59 g/t gold.

Canaco was formed in 2004. The company got off to a shaky start, beginning exploration in Alaska then moving onto an acquired project in Mexico before stumbling across the scent of something special in Tanzania.

Tanzania Calling

Canaco President and CEO Andrew Smith explains what it was that drew them to the Eastern Africa Republic. “The opportunity in Tanzania Came through an association with an OTC company that had a basket of 30 properties, but limited technical capability to assess their projects. Canaco was looking for acquisitions and had a very strong technical management and the ability to raise finances. So, we entered into a strategic alliance with them, a partnership, whereby we would fund and carry out all the assessments of their entire portfolio in exchange for the right to option any projects that met our criteria.”

The next 2 years saw the company optioning and exploring various Tanzanian properties. Although it brought them little success, it did create a very significant operating platform. “We acquired an office, geologists, trucks, tents… but most importantly we developed a network there and started to get our ear to the ground and hear about opportunities.”

Having their ear to what would soon present itself as the very lucrative ground bided well for the company. Upon hearing of gold discoveries by local artisanal miners in an area of Tanzania that had never before seen exploration, Canaco moved quickly, acquired a position and have been developing, what is now known as the Handeni Gold District, ever since.

The Handeni Gold Project

The Handeni Gold Project consists of two contiguous claims totaling 200 km²; Magambazi 0.34 km² and Kilindi 199 km². The Kilindi property is owned 100% by Canaco and has an option agreement with local miners to acquire a 100% interest in the Magambazi PMLs subject to cash payments of US$180,000 over two years for the rights to explore and US$1.8 million to acquire 100% interest subject to a 2% NSR.

Canaco’s focus at the moment is on the well-exposed Magambazi prospect. Here, high gold-grade sulphide-bearing quartz veins are enclosed in up to 40m thick alteration zones with lower-grade, sulphide-associated gold ore over an exposed strike of several hundred metres, demonstrates the prospects high economic potential. The host rocks and alteration zones are high-grade metamorphic rocks with both silicate and sulphide minerals having granulite textures and, as such, represents an unconventional geological environment for the development of gold deposits.

However, the absence of strong foliation, suggests a high-grade metamorphic overprint of an originally lower metamorphic-grade orogenic gold deposit. Magambazi thus demonstrates the potential for discovery of world-class, overprinted, Archaean orogenic gold deposits in non-traditional exploration terrenes in Tanzania.

September Changed Everything

Canaco’s first significant discovery on Magambazi came in September 2009. Smith takes us through the findings; “The discovery hole was the first hole drilled at Magambazi and intersected 59 meters of 4.32 grams per ton. We subsequently drilled our best hole – hole 12 was 56 meters of 6.5 grams. These are world class drill hole results. We have been told that there is a major mining company that tracks gold discoveries from around the world. They compile drill intersections from these discoveries in a data base. have apparently ranked Canaco’s discovery hole at Magambazi as the 3rd most significant drill hole intersection in the world in the last 3 years.

And hole 12 was 50% better than hole 1! While this is anecdotal evidence, it nonetheless indicates significance of the drill results that from this new discovery in a unexplored area of Tanzania.”

One of the factors that enabled the company to move forward so successfully was a private placement completed by a Chinese group called SinoTech, with a 30% stake in Canaco. “SinoTech is a very significant Chinese exploration company; they have 3 producing mines in China, 80 exploration projects and they’re active in 10 countries internationally. Their investment in Canaco and their partnership with us has been very beneficial in terms of the support they bring, the technical resources they have, and a compatible game plan with Canaco with respect to the development of projects in East Africa.”

From Then Until Now

Since the groundbreaking results back in September, Canaco have continued drilling and have been releasing results on a regular basis. “The ore body is growing as we drill it, we’ve had tremendous success with our drilling and we’re intersecting significant mineralization in almost every hole. So, we see in front of us a multi-million dollar target that we’re going to be working to develop from an exploration point of view over the next 18 months. And I think that we’ve got a world class deposit emerging in this district.”

Canaco’s news flow since the beginning of the year has been amazing. January 21st saw Canaco signing a Letter Of Intent to acquire copper-gold exploration assets in Ethiopia. On January 27th we learned of a new gold zone at Handeni, with drilling to 18 meters grading 3.3 grams of gold per tonne at Magambazi North. By March 8th the company announces additional diamond drill results of 16 meters grading 5.45 grams of gold per tonne and 48 meters grading 2.71 grams per tonne.

Looking Forward

Most recently, on March 23rd, Canaco announced plans to commence a 10,000 meter drill program at Handeni. According to the press release:

“Exploration currently underway includes a 10,000m+ diamond drilling program at Magambazi and Magambazi North, preliminary metallurgical test work on the Magambazi mineralized zone, approximately 1000m of trenching at the Majiri Bomba Prospect and infill and more regional soil sampling across the region. Exploration planned to commence mid-year includes extensive RC drilling and regional RAB drilling of the multiple targets already defined and new targets located during reconnaissance soil sampling. A close- spaced aeromagnetic survey will also be flown across the entire Project area, to aid in targeting, interpretation of the structure and mineralization controls of the district, and may be utilized in direct targeting of the pyrrhotite rich (magnetic) ore systems.

"Canaco is gearing up to test the multiple targets defined with an aggressive but systematic exploration campaign over the coming year" said Andrew Lee Smith, Canaco's C.E.O. "The exciting results to date, with numerous thick zones of high grade gold mineralization from Magambazi and Magambazi North are very encouraging and the exploration program is performing beyond Canaco's expectations".”

Canaco seem to have gotten their hooks into a very significant project and since September ’09 interest in the company has soared. Andrew Smith sums up where he feels the company is at right now. “With the growing project at Handeni and the possibility of another significant acquisition in Ethiopia, we really feel that the company is now poised for some significant growth over the medium term.”

Follow Canaco’s progress at the company’s web site at www.canaco.ca.

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SOURCE: http://www.midasletter.com/news/10041201_Canaco-ramps-up-drilling-in-tanzania.php