Canaco Announces Initial Mineral Resource Estimate for Magambazi
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 05/15/12 -- Canaco Resources Inc. (TSX VENTURE: CAN) ("Canaco" or the "Company") reports an initial mineral resource estimate for the Magambazi area of its Handeni project in Tanzania. Using a cut-off grade of 0.5 grams per tonne gold, Magambazi is estimated to contain an indicated mineral resource of 15.2 million tonnes grading 1.48 grams per tonne gold and containing 721,300 ounces, as well as an inferred mineral resource estimate of 6.7 million tonnes grading 1.36 grams per tonne gold and containing 292,400 ounces.
Table 1 below summarizes the classification of mineral resources within the mineral resource block model.
Table 1 - Initial Magambazi Mineral Resource Estimate Summary - May 2012
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Category Estimated Quantities
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Tonnes Average grade Contained gold
(000s) (grams/tonne gold) (ounces)
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Indicated 15,186 1.48 721,300
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Inferred 6,683 1.36 292,400
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Note: Quantities are estimated using a cut-off grade of 0.5 grams per tonne
gold, a gold price of US$1,250 per ounce, and data from 102,600 metres of
diamond drilling in 397 holes.
Mineral Resource Estimation Methodology and Data Validation
The mineral resource estimate was prepared in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Mineral Reserves, adopted by CIM Council, as amended. The mineral resource estimate was prepared by independent qualified person, Mr. James N. Gray, P.Geo., of Advantage Geoservices Ltd. In support of this work, drilling data validation and historical context was provided by independent qualified persons Mr. Ian Farrelly, P.Geo. and Dr. Sandy Archibald, P.Geo. of Aurum Exploration Services. Mr. Gray, Mr. Farrelly and Dr. Archibald are each independent of Canaco and are Qualified Persons as defined by National Instrument 43-101. Each have reviewed, validated and approved publication of the technical information contained in this release.
Gold grades were estimated by inverse distance cubed interpolation within two grade domains. Low-grade and potentially mineralized domains were derived by ordinary kriging of a 0.2 gram per tonne indicator applied to five metre composite data. Composite grades were capped in the two domains at 2.5 and 15 grams per tonne respectively. The interpolation of indicators and of grade was carried out with a search oriented parallel to one of five interpreted structural trends. Rock densities were based on averages derived from more than 50,000 measurements. Resource classification was based on geometric parameters associated with sample location and drill density.
Measures were taken to validate that the mineral resource meets the condition of "reasonable prospects of economic extraction" as suggested under National Instrument 43-101. To this end, a pit shell was generated using a gold price of US$1,250 per ounce and an overall pit slope of 40 degrees for the purpose of resource tabulation. Only blocks within the pit volume were included in this resource estimate and Table 2 presents a summary of the estimated mineral resource for a range of cut-off grades. The cut-off grade of 0.5 grams per tonne was selected as the resource base case considering extraction by conventional surface mining and mineral processing methods.
Table 2 - Cut-off Grade Sensitivities
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Indicated Inferred
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Cut-off Average Average
grade grade Contained grade Contained
(grams/ Tonnes (grams/ gold Tonnes (grams/ gold
tonne gold) (000s) tonne gold) (ounces) (000s) tonne gold) (ounces)
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0.3 19,685 1.23 777,500 9,256 1.09 324,500
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0.4 17,218 1.36 750,300 7,831 1.23 308,800
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0.5 15,186 1.48 721,300 6,683 1.36 292,400
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0.6 13,392 1.60 689,900 5,593 1.52 273,400
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0.7 11,884 1.72 658,700 4,791 1.67 256,800
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1.0 8,593 2.07 570,600 3,058 2.14 210,700
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Quality control data generated during the various drill programs conducted at Magambazi, and the project drilling database, were independently verified by Mr. Farrelly, as part of the project review.
The planning, execution and monitoring of Canaco's drilling and quality control programs at the Handeni project have been conducted under the supervision of Jeff Heidema, P.Geo., Canaco's Vice President Exploration, and Andrew Lee Smith, P.Geo., President and CEO. Mr. Heidema and Mr. Smith are Qualified Persons as defined by National Instrument 43-101. Diamond drilling at Magambazi was coordinated by Canaco geologists who also conducted and managed the preparation, logging and sampling of core, in addition to carrying out bulk density measurements. During sampling, quality control standards and blanks were inserted at pre-determined intervals to monitor laboratory performance. The progressive introduction of revised QA/QC procedures at Magambazi included the implementation of Canaco field, reject and pulp duplicates, as well as specific programmes of re-assaying and umpire laboratory assaying; all consistent with industry best practice.
Sample preparation and assaying was undertaken primarily at SGS laboratories in Tanzania. Additional core samples were prepared at ALS Chemex Laboratories Mwanza and Acme Labs Ankara, with subsequent assay at their Johannesburg and Vancouver facilities, respectively. All samples were assayed using appropriate gold fire assay techniques (SGS FAA505; ALS Au-AA24; and Acme G601 + G610 protocols).
Information recorded from diamond drill core logging and assaying was integrated using industry standard data management software (Maxwell DataShed). The resultant data was reviewed, including validation of a random selection of data against the source information, and is considered acceptable for the estimate.
A technical report supporting the mineral resource estimate for Magambazi will be filed within 45 days of this news release.
Canaco President and CEO Andrew Lee Smith said: "With completion of the mineral resource estimate, the Magambazi resource presents an opportunity to add value to the Company. Canaco is now well positioned to execute its plans for project development in a stepwise manner, beginning with a preliminary economic assessment of the mineral resource. This resource is located in a mining friendly jurisdiction and is characterized by favourable metallurgical recoveries, gentle topography, proximity to existing sea ports, access roads, power transmission and skilled labour."
Path Forward
Exploration
Delineation drilling at Magambazi is now complete. First phase reverse circulation and diamond drilling at all priority targets on the Handeni project is also complete, including Kwadijava, which is undergoing further assessment.
Outside of the Handeni project area, Canaco controls an additional 1,300 square kilometres of mineral concessions in the region. These land holdings are highlighted by the presence of artisanal gold workings within prospective geology on the Manga and Boma properties. Surface sampling and mapping is complete on the Manga property and is under way at Boma. Canaco's exploration team will conduct generative exploration across the remaining concession area once the rainy season has ended.
Development
Having completed the initial mineral resource estimation, the Company is beginning mobilization of a preliminary economic assessment (PEA) related to extraction of the Magambazi mineral resource. This next step in the project's development will use key information collected to date to evaluate the project's economic viability. In particular, supporting metallurgical test work is essentially complete and will be used to develop the process flow sheet while the mineral resource estimate will be used to develop a mine production schedule. Information gathered through ongoing environmental and socio-economic baseline work will be used to understand the project setting and how it interacts with local and national communities. PEA completion is currently forecast in Q4 2012 and this timing will be updated as the study begins to unfold.
About Canaco
Canaco is a Vancouver-based mineral exploration company focused on advanced exploration projects in Africa. Built on a foundation of experienced management, the Company is rapidly advancing the Handeni project in Tanzania and is well positioned to build shareholder value through discovery and resource development.
Additional information including press releases and public documents about Canaco can be viewed at the Company's website www.canaco.ca or at www.sedar.com.
Canaco's shares trade on the TSX Venture Exchange under the symbol CAN.
On behalf of the Board of Directors:
Andrew Lee Smith, P.Geo., President, CEO and Director
Cautionary Statement Regarding Forward-Looking Information
This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "anticipate", "believe", "plan", "expect", "intend", "estimate", "forecast", "project", "budget", "schedule", "may", "will", "could", "might", "should" or variations of such words or similar words or expressions. Forward-looking information is based on reasonable assumptions that have been made by the Company as at the date of such information and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: risks associated with mineral exploration and development; metal and mineral prices; availability of capital; accuracy of the Company's projections and estimates; realization of mineral resource estimates, interest and exchange rates; competition; stock price fluctuations; availability of drilling equipment and access; actual results of current exploration activities; government regulation; political or economic developments; environmental risks; insurance risks; capital expenditures; operating or technical difficulties in connection with development activities; personnel relations; the speculative nature of strategic metal exploration and development including the risks of diminishing quantities of grades of reserves; contests over title to properties; and changes in project parameters as plans continue to be refined.
The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues. The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred mineral resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category. Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to the price of gold; the demand for gold; the ability to carry on exploration and development activities; the timely receipt of any required approvals; the ability to obtain qualified personnel, equipment and services in a timely and cost-efficient manner; the ability to operate in a safe, efficient and effective manner; and the regulatory framework regarding environmental matters, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information contained herein, except in accordance with applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts:
Canaco Resources Inc.
Meghan Brown
Director Investor Relations
(604) 488-2557 or 1-866-488-0822
investors@canaco.ca
www.canaco.ca