Canaco Resources: Gold Discovery in Tanzania

By James West
MidasLetter.com
Monday, November 9, 2009

Drill results released by Canaco Resources Inc. (TSX.V:CAN) have at long last proven the theory, put forth by renowned Economic Geologist Dr. David Groves, who is Emeritus Professor at the University of Western Australia’s Center for Global Metallogeny, that Tanzania is host to a new large gold mineralized system. Assaying an impressive 41 metres at 3.32 grams per tonne gold, this first hole from the long-awaited drill program on Canaco’s Mogambazi prospect in Tanzania represents the discovery of a new gold-bearing geologic structure.

The Mogambazi prospect lies within the company’s 200 square kilometer Handeni project, which consists of two contiguous mining claims, both controlled 100% by Canaco.

According to Canaco CEO Andrew Lee Smith, this is the first in a 2,000 metre program of 12 drill holes.

“It’s a hole that we spotted in the field 18 months ago so we’ve been waiting quite a while to drill it,” said Smith. “We’ve always thought it was one of the better potential targets in our Handeni project in a newer region in Tanzania that has seen very little exploration by the major mining companies or by the government for that matter.”

Despite the fact that AngloGold Ashanti (NYSE:AU), Barrick Gold/Placer Dome (NYSE:ABX) and Resolute (ASX:RSG), among others, have established major operations in the country, this region of the country remained relatively unexplored, mostly because the region was considered geologically incapable of hosting any major gold systems.

That mistaken assumption provided the opportunity for Canaco to snag the property.

“We picked up the project a couple of years ago and we acquired it based on some local discoveries being made by artisanal miners in the area and what we’ve been doing since then is building a land position that now covers about 200 square kilometers that covers a geochemical signature that is approximately 11 kilometres long,” said Smith. “And it is characterized not only by strong soil geochemistry but also by a series of about 5 artisanal showings.”

“Mogambazi which is what we’re drilling now is the southernmost of those prospects scattered along the 11 kilometre trend and is the only bedrock exposure of high grade veins and sulphide alteration zones that carry gold. So drill hole number one was collared at Mogambazi with the idea that it would provide us to get some geological information on this mineralizing system and apply that knowledge to the exploration over the next couple of years to the exploration of what is a very large gold system that has been defined over this 11 kilometre trend.

We’re expecting to get the result soon for holes 2, 3, 4 and 5, and we’ve just finished drilling hole number 8 and we’re now drilling hole number 9. So there’s another 3 on the way or in the lab, and another being drilled. We announced the 2,000 metre drill program for about 10 or 12 holes and we’re about there now, but based on the results we’ve seen we’re discussing expanding and accelerating the program now.”

The success of the current drill program can be directly attribute to the theories put forth by Dr. Groves, according Andrew Lee Smith.

“The theory of Dr. Groves has been completely validated,” he said. “His idea was that the host rocks of the area, which had been dismissed by previous explorers as being too young to host gold mineralization, were actually much older, and graduate level research that he conducted demonstrated that that was indeed the case. Not only are they older, but they are an extension of the prolific Archean gold belt that hosts about 90% of the known gold reserves in Tanzania. He basically redrew the entire geological map of Tanzania and in so doing predicted that this region would be capable of hosting some significant gold mineralizing system, and think hole 1 demonstrates that beyond any doubt.”

Tanzania is the third-largest gold producer in Africa behind South Africa and Ghana, and ranks among the top producers of diamonds in the world.

The gold mining industry in Tanzania has benefited from reforms to mining laws introduced since 1997. The findings of the study uncovered that the most significant contribution that gold mining provides to Tanzania’s economy is its effect on foreign direct investment (FDI). In the early 1990’s, prior to large-scale gold mining, Tanzania would have appeared near the bottom of rankings of African countries as a destination for FDI. Today however, the country is now in the upper-middle rankings, with over US$2 billion (nearly two thirds) of the surge in FDI after 1998 shown to have come from the five gold mines surveyed in a Life Cycle Assessment study conducted by the World Gold Council in Tanzania this year.

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

SOURCE: http://www.midasletter.com/news/09110901_Canaco-resources-gold-discovery-in-tanzania.php