Gold Canyon’s new approach at Springpole

VANCOUVER — Gold Canyon Resources (GCU-V) has hit healthy gold intercepts in a new drill program at the company’s 100%-owned Springpole project in northwestern Ontario’s Red Lake gold district.

The project has seen extensive exploration since the 1980s by Gold Fields (GFI-N, GFI-J), Noranda and Santa Fe Pacific Gold. It has, however, eluded development in part because of the property’s unusual geology.

Last fall Gold Canyon initiated an extensive review of the project to better focus exploration. The company re-logged and re-sampled drill cores to re-evaluate the geology.

It was a shift for a company that has controlled the 80-sq.-km property since 1996, and had been involved with it for several years before that.

“For a small company, all we could do was raise money and drill,” says Akiko Levinson, president of Gold Canyon. “We didn’t have the luxury to sit back and study the whole plan, until last year.”

After a new financing, Levinson brought on Evolving Gold’s (EVGV) EVGV) president Quinton Hennigh as a technical advisor to help with the review. Hennigh had becoming interested in Springpole after reviewing it when he worked for Newmont Mining (NMC-T, NEM-N) several years ago.

The company concluded that the mineralization at Springpole is associated with an alkaline igneous complex consisting of shallow intrusions and associated diatreme breccias. This differed from the more common metamorphic-based deposits of the Canadian Shield that occur at deeper levels.

“Most geologists who have worked on the project have treated it like a typical Canadian deposit,” says Hennigh in a phone interview. “A kind of shear-zone-hosted deposit with limited size potential, and it really has done a disservice. . . Springpole’s a gold system associated with an alkaline porphyry.”

Hennigh was quick to credit geologist Keith Barron with originally identifying Springpole as an alkaline gold system. Barron, who went on to help Aurelian Resources discover the Fruta del Norte gold deposit in Ecuador, did his dissertation on the alkaline gold workings at Springpole after working there as a consulting geologist in 1986-’87.

“It’s important because it says Springpole is associated with a very large intrusive hydrothermal driver,” says Hennigh. “It’s not just a small mesothermal gold system, it could be quite large.”

Another key finding in the review was that the Main, Camp and Portage zones are likely part of the same 1,200-metre-long, 300-metre-wide northwest trending body of mineralization.

Based on the review, the company launched a three-phase drill program to fill the gaps between the zones. The first stage targeted gaps in the Portage zone, which is under Springpole Lake, and the Camp zone, on-shore northwest of Portage.

“So far, the results that we’ve seen say there’s significant gold where the past drill campaigns had not seen gold, so we’re quite encouraged with things,” says Hennigh.

The company has assayed one of three drill holes from the Portage zone. Hole 2 hit 64 metres grading 3.3 grams gold per tonne and 16.59 grams silver per tonne starting at 247 metres.

From the Camp zone, hole 1 hit several gold intersections, including 21.5 metres averaging 1.31 grams gold starting at 12.5 metres, 8 metres carrying 1.9 grams gold at 50 metres and 9 metres of 1.84 grams gold from 118 metres. Hole 4, also from the Camp zone, cut 41 metres averaging 1.08 grams gold starting at 31 metres.

The company had planned to carry out up to 6,000 metres of drilling but an early spring thaw cut the program short and only 1,778 metres were cut.

The next drilling phase is planned to start in June, when the company expects to drill 10,000 metres. Henningh says the total drill program should be about 18,000 metres and should fill in the gaps enough to move towards a prefeasibility study.

Gold Canyon has already established a resource estimate for the East zone of the project. The 2006 resource had both open-pit and underground estimates, which totaled a combined 249,000 measured and indicated tonnes grading 5.66 grams gold and 1.35 million inferred tonnes grading 4.53 grams gold, all using a 1 gram per tonne cutoff.

Past drill intercepts in the East zone by Gold Canyon included 27.4 metres of 14.96 grams gold, 24.6 metres at 18.63 grams gold and 16.4 metres of 67.46 grams gold.

“It is a very exciting old project, but with fresh life,” says Levinson. “I’ve been personally with this project since 1989. If you stay with something that long, something good will happen.”

Gold Canyon’s share price shot up 17¢ to close at 45¢ in early April after the result from the Portage zone was released, but dropped 5.5¢ to close at 34¢ when the latest results from the Camp zone were announced. The company has 66 million shares outstanding.