Canaco Resources (CAN-V) took a deadly plunge, losing 66% on a maiden resource estimate for the Magambazi area of the Handeni gold project in Tanzania.
The estimate indicates Magambazi contains 721,300 oz. gold in indicated from 15.2 million tonnes grading 1.48 grams gold per tonne, plus another 292,400 oz. gold in inferred from 6.7 million tonnes at 1.36 grams gold.
Clearly some investors were expecting more than a million-oz., open-pit at Magambazi as they battered down the share price with nearly 29 million shares changing hands.
Canaco closed May 15, the day the estimate was announced, at 29.5¢, before touching a new low of 28.5¢. It was only a year ago that the stock peaked at $4.52 on May 25, 2011.
To calculate the estimate, Canaco used data from 400 holes totalling 100,000 metres and applied a cut-off grade of 0.5 gram per tonne and a gold price of US$1,250 per oz.
The company will use the resource estimate to design a mine production schedule, which would be plugged into its upcoming scoping study, expected to be done by year-end to evaluate the project’s economics.
Canaco started drilling Magambazi in October 2009, with discovery hole intersecting 59 metres at 4.28 grams gold. Since then, it has completed more than 440 holes totalling 112,000 metres.
Magambazi is one of the two contiguous claims comprising the 100-sq.-km Handeni project, 173 km northwest of Dar es Salaam.
Magambazi contains at least five distinct lodes, which are open to the west, north and at depth. Mineralization has been traced over a strike of one kilometre.
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