Friday, March 9, 2007 12:54 PM
Canaco Resources Inc. (TSX VENTURE:CAN) is pleased to announce the Company has reached an agreement with Douglas Lake Minerals to acquire 75% of Douglas Lake’s interest in the 46 square kilometre Magmebe diamond prospect in the Shinyanga District of Tanzania.
The Magembe diamond property consists of a number of prospecting licenses comprising a total area of 46 square kilometres that are directly adjacent to the eastern, northern and western boundaries of the Williamson Mine, one of Africa’s most significant diamond producers.
Canaco’s Tanzanian exploration personnel are on site and have engaged an initial exploration program to assess the property’s potential to host alluvial and hard rock diamond deposits. This initial phase of exploration will focus on the mapping of geology and the distribution of alluvial mining activity proximal to the Magembe property and detailed ground magnetic surveying to identify kimberlite targets.
The Magembe property is part of a two kilometre buffer zone created to surround the Williamson (Mwadui) Mine as part of the original mine development in the 1940’s and 50’s. This buffer zone was formed with the intention of ensuring that the mining operations could proceed in a safe and orderly manner through the prohibition of the mining of surficial diamond deposits in the area immediately adjacent to the mining operation. Elsewhere outside the buffer zone, artisanal mining of surficial diamonds is widespread and ongoing. The Shinyanga District is renowned for its diamond production from both the Williamson (Mwadui) mine and artisanal mining operations. Changes to the Tanzanian Mining Act in 2003 outlawed the existence of buffer zones and the mineral rights were acquired by Atlas Africa, a private Tanzanian company. Douglas Lake acquired the gemstone rights from Atlas Africa in December 2006.
The Williamson Mine is currently owned 75% by De Beers and 25% by the Government of Tanzania, and has a production history that spans six decades. The Williamson pipe covers 360 acres and, at the time of its discovery in 1940, was considered the largest economically exploitable pipe in the world. The large open pit mine is currently about 90 meters (300 ft) deep.
Production in the 1950s and 1960s was between 500,000 and 750,000 carats (100 and 150 kg) per year; the peak year of production was 1966, when 924,984 carats (185 kg) were produced. Today, the production level for all Williamson mine diamond recovery activities is about 300,000 carats (60 kg) per year. Notable stones produced at the Williamson mine include a 54 carat (10.8 g) flawless pink diamond (presented to then Princess Elizabeth and Prince Philip upon their wedding in 1947), and a 388 carat (77.6 g) diamond found in 1990. Since 1994, De Beers has improved the performance of the Williamson diamond mine by making needed capital investments in equipment, and bringing in expertise in technology, technique, and exploration. De Beers has identified several possible avenues for development that would keep the mine operating well into the future (Note: Source for Williamson Mine data contained in this release is www.wikipedia.org).
According the terms of the option agreement, Canaco’s obligations to earn 75% of Douglas Lake’s interest in the property are to pay US$100,000 on signing and commit to $250,000 in exploration expenditures prior to the first anniversary of the agreement; pay US$100,000 the first anniversary and commit to US$500,000 in exploration expenditures prior to the second anniversary of the agreement; issue 250,000 shares to Douglas Lake on the second anniversary and commit to US$750,000 in exploration expenditures prior to the third anniversary and issue 500,000 shares to Douglas Lake on the third anniversary and commit to US$1,000,000 in exploration expenditures prior to the fourth anniversary.
This agreement is conditional to approval by the TSX-V and technical and legal due diligence to be completed within 60 days.
Douglas Lake currently holds a 100% interest in the Magembe Prospecting license. Under certain circumstances, the Tanzanian Mining Act calls for a 25% ownership in gemstone mining licenses to be held by Tanzanian citizens or a corporation owned by Tanzanian citizens. In this situation, if Canaco meets its obligations under Option Agreement, Canaco’s interest in the mining property would be 56.25% and Douglas Lake would hold an 18.75% interest.
Additional information on the Magembe property and other public documents are available on SEDAR at www.sedar.com or from the company’s website at www.canaco.ca.
Canaco Resources is an emerging junior exploration company trading on the TSX Venture Exchange. The company is actively engaged in the acquisition of mineral exploration and development projects.
The Company relies on litigation protection for “forward-looking” statements.
SOURCE: Canaco Resources Inc.
Canaco Resources Inc. Andrew Lee Smith Chairman and CEO (604) 488-0822 or 1-866-488-0822 Canaco Resources Inc. Nick Watters Investor Relations (604) 488-0822 or 1-866-488-0822 Email: [email protected] Website: www.canaco.ca