Canico takes hold in Brazil

Vancouver — Canico Resource (CNI-V) has raised enough funds to acquire Inco‘s (N-T) Onca-Puma nickel laterite project in Para State, Brazil.

Recent financings have allowed the junior fulfilled its requirement under a deal with the major to raise US$22.5 million by Jan, 31, 2003. At the end of the day, Inco will receive no cash payments but hold an 18% stake in the junior as well as a number of warrants. The warrants are designed so that Inco can purchase shares to maintain its 18% stake in Canico.

"Our exploration efforts to date have yielded excellent results, and the supply-demand picture for nickel couldn’t be better," says Canico President, Michael Kenyon. "We have all the money we need to complete a feasibility study by late 2004 and to finish assembling the team we need to manage the tasks ahead."

Situated in Para state, the Puma deposit lies on the 400-sq.-km Ona-Puma property, which hosts a near-surface inferred resource of 50 million tonnes grading 2.3% nickel and 0.09% cobalt using a 1.5% nickel cutoff grade.

The resource consists of three separate targets. The Ona target covers an 18-by-1-km area, with the mineralized laterite having an average thickness of 4.1 metres. Moving 10 km northeast, the Puma West target extends for 10 km along strike and is also about 1 km wide. The mineralization is slightly lower grade but has an average thickness of 5.1 metres. Between the two deposits lies an iron formation. Another 3 km to the northeast is the smallest zone, called the Puma East area, which measures 7 km long by 500 metres wide.

Half of the Puma West and all of the Puma East deposits lie within an indigenous reserve and not available for development. Even when the 10-11 million tonnes of ore-grade material that occur on the native lands are excluded, the project economics appear robust and Canico sees potential upside by increasing the tonnage of the deposits.

The junior aims to drill more than 400 drill holes in its current program. The initial results from an on going drill program have boosted the resources at the Puma West target. At a 1.5% nickel cut-off grade, the Puma West inferred resources now come in at 33.8 million tonnes grading 2.21% nickel. Using a 1% nickel cut-off grade, the inferred resources hit 54.2 million tonnes grading 1.84% nickel.