Channel deals Burkina Faso options

Channel Resources (CHU-T) has granted Axmin, a privately held exploration company, an exclusive 90-day option to acquire an interest in the Bouroum permit about 180 km northeast of Ouagadougou, the capital of Burkina Faso, West Africa.

During the option period, Axmin will review Channels data for the permit and be able to carry out exploration to help plan for subsequent exploration programs should it elect to exercise the option. Axmin must spend at least US$250,000 on exploration across the Licence.

In return, Axmin will make a $20,000 option payment. If Axmin decides to go ahead with the option, it will pay Channel $55,000 on signing a heads of agreement plus an additional $75,000 by the six month anniversary of the first payment.

Axmin can earn a 65% interest in the licence by carrying Channel through to a bankable feasibility study. Once a feasibility study is complete, Axmin will buy out the pro rata interest of Channel in the study’s independently audited proven and probable reserves at a price per ounce ranging from US$10, at a spot gold price of US$299.99 per oz., to US$15 at US$400 per oz.

The 468-sq.-km Bouroum permit contains an estimated resource totalling 12.4 million tonnes grading 1.3 grams gold per tonne. The resource is located in three different zones (F-12, Welcome Stranger and Bissinga). Included are 2.79 million tonnes running 2.32 grams gold (at a 0.8 gram cut-off) possibly amenable to open pit mining. A higher grade resource totalling 147,000 ounces of gold at 6.96 grams, using a 2 gram cut-off, has also been estimated.

Bouroum’s three zones are controlled by a major north-northwest trending deformation corridor The zones are characterized by strong silicification and quartz veins with limited sulphides in sheared and altered diorite and mafic metavolcanics.

Heading South, Channel and Solomon Resources (SRB-V) have granted Axmin a similar option on the Bombore permit, 80 km east of Ouagadougou.

Under the deal, Axmin will make option payments of $5,500 to Channel and $4,500 to Solomon. If it elects to exercise its option, Axmin will pay Generale de Mines et de Carrieres $40,000. Axmin can earn a 65% stake in the permit by completing a bankable feasibility study.

Once the study is completed, Axmin will buy out the pro rata interest of Channel and Solomon in the study’s independently audited proven and probable reserves at the same price outlined in the Bouroum deal. Axmin is committed to spending at least US$750,000 on exploration and completing a feasibility study on the permit over three years, at least US$150,000 must be spent during the first year.

The deal is subject to the approval of at least three quarters of the votes cast by eligible shareholders at Channel’s annual general meeting slated for March 22, 2002.

To date, in addition to airborne geophysics, and soil geochemistry surveying, Bombore has been tested by a total of 1,443 holes for 58,788 metres. Most of the drilling focussed on the Bombore First Target (BFT) deposit. Limited, follow-up drilling led to an update (in early 1999) of the resource estimated at 22.2 million tonnes running 1.5 grams gold, using a 0.7 gram cut-off. Included are 9.76 million tonnes of 1.5 grams in the indicated category, plus 12.4 million tonnes of 1.46 grams classified as inferred. At a cut-off grade of 0.5 gram gold, total oxide resources are pegged at 37 million tonnes running 1.1 grams gold.

The BFT Deposit is controlled by a major shear zone and is hosted mainly by metagabbro, mafic to intermediate metavolcanics and sericitic schists. Gold mineralization is disseminated and associated with large zones of quartz veinlets with 1% to 5% sulphides (pyrite, pyrrhotite). Preliminary metallurgical tests (bottle roll tests) on coarse RAB samples indicate recoveries averaging 85%. Mineralogical work on diamond drill core by Lakefield Research indicates that gold in the oxidized material should be amenable to heap leaching.

Elsewhere on the permit, rotary air blast drilling on the Mankarga area returned up to 12.7 grams gold over 8 metres. The permit also host the Meguet and BFT SW target areas.