Edgewater boosts Corcoesto gold count

VANCOUVER — When Edgewater Exploration (EDW-V) took over a Lundin Mining (LUN-T) subsidiary to gets its hands on the Malpica-Tuy gold project in Spain, it knew the project came with a small resource plus a whack of recent drill results. Now Edgewater has used those results to update the resource and, without any exploration work of its own, has more than tripled the project’s gold count.

The Malpica-Tuy project is in northwest Spain, roughly 36 km southwest of the port city of La Coruna. Rio Narcea, a Lundin subsidiary, acquired the project in 1996 and completed an extensive program of soil sampling, trenching and diamond drilling.

The results were promising enough to entice Kinbauri Gold, now part of Orvana Minerals (ORV-T), to option the property and from 2005 to 2008 Kinbauri continued exploring the project’s deposit, known as Corcoesto. In 2006, Kinbauri updated the Corcoesto resource, bringing it to 350,000 oz. gold.

Kinbauri completed another 57 diamond drill holes prior to letting the option lapse. The holes were focused on infill and step-out drilling on the three southern vein systems, exploration drilling on the four northern vein systems, and drilling to determine the potential to establish higher-grade resources at depth.

Now new owner Edgewater has used those drill results to update the Corcoesto resource and the results have boosted the gold count considerably. Measured and indicated resources now stand at 5.66 million tonnes of 1.73 grams gold per tonne; inferred resources add 16.5 million tonnes averaging 1.66 grams gold.

Combined, the resources contain more than 1.2 million oz. gold.

The inferred resource includes a higher-grade resource below 200 metres depth, comprising 1.86 million tonnes grading 3.27 grams gold based on a cutoff grade of 2 grams gold.

George Salamis, Edgewater’s president and CEO, says the company is very pleased with the substantial resource increase and is ready to start exploration work. The deposit remains open along strike and at depth, so Edgewater is planning a program of step-out, infill, and deep drilling on the seven quartz vein and quartz breccia systems.

Edgewater got the Malpica-Tuy project when it inked a deal with Lundin to acquire the major’s Rio Narcea subsidiary. Edgewater will spend a total of $8 million over a year to complete the acquisition. Lundin will also retain a 1.5% net smelter return royalty on future production from the property; Edgewater can repurchase 1% of that royalty for US$1.5 million.

The project enjoys good access to infrastructure, with access via paved roads and a 22-kilovolt power line crossing the property.

Malpica-Tuy is not Edgewater’s only new project. In May, the company signed another significant deal, this one with Red Back Mining (RBI-T). The deal allows Edgewater to earn 51% of Red Back’s stake in the Enchi gold project in Ghana. Red Back holds 90% of the project, with the Ghanaian government holding the remainder. Once Edgewater completes its earn-in, the junior will hold 45.9% of Enchi and Red Back will own the rest.

Enchi, in southwest Ghana, covers a 40-km segment of the Bibiani shear zone, a major geologic feature that hosts several major gold mines including Red Back’s Chirano mine, 70 km to the northeast. Previous explorers have already identified 16 separate zones on the 568-sq.-km project with signs of epigenetic mesothermal quartz-vein gold mineralization. This style of mineralization is the most common and important in West Africa and is known as Ashanti-type gold.

The four best defined zones to date at Enchi are Boin, Nyamebekyere, Sewum Village and Eradi. At Boin, gold mineralization has been traced along 10 km of strike, on a structure parallel to the Bibiani shear zone. Disseminated quartz pyrite and gold in ankerite zones characterized by intense quartz veining are in places 20 to 30 metres wide. Red Back trenched and drilled the area, returning such drill hits as 21 metres of 2.56 grams gold, 8 metres of 4.61 grams gold, and 13 metres of 4.11 grams gold.

At Nyamebekyere, a 1,600-metre-long zone of gold mineralization has been probed with reverse circulation drilling to 80 metres depth. The best results include 11 metres of 3.6 grams gold, 9 metres of 3.07 grams gold, and 4 metres of 5.19 grams gold.

The Sewum Village prospect covers several quartz vein targets that coincide with a geophysical anomaly. Red Back trenched one of the targets and returned a best hit of 24.2 metres of 1.14 grams gold.

And the Eradi prospect was revealed through an extensive soil sampling program covering the northern part of the Enchi property. The program generated three parallel gold-in-soil anomalies, the largest of which strikes for more than 3 km. Red Back dug two trenches on the Central Eradi zone, one of which returned 36.9 metres of 1.47 grams gold.

To earn its stake, Edgewater is required to spend $5 million on exploration within 26 months, with a firm commitment to spend $2 million in the first 14 months. Edgewater will be the project operator during its earn-in and for as long as it holds the largest stake. The company will also issue Red Back 2.5 million warrants exercisable at 50¢ and another 2.5 million warrants exercisable at $1, but the warrants can only be exercised if Edgewater is able to delineate at least 3 million measured and indicated oz. gold at the Enchi site.

To finance its Enchi exploration Edgewater completed a private placement, selling 6 million units at 50¢ apiece to raise $3 million. Red Back purchased 2 million of those units, giving itself an 8% interest in Edgewater. Each unit comprised a share and half a warrant exercisable at 76¢ for one year.

Edgewater gained 8¢ in two days following news of the new Corcoesto resource to reach a new high of $1.18, after gaining 22¢ in the week leading up to the news release. The company’s shares have traded as low as 6¢ in the last 52-weeks. Edgewater has 26.6 million shares outstanding.