MINING IN AFRICA SPECIAL — Canyon turns attention to

Denver-based Canyon Resources (NASDAQ) is best known for its gold mining projects and industrial minerals operation in the western U.S. But in the past several years, with new mining opportunities opening up in many parts of the world, the company has taken on new projects much farther afield.

Early this year, the company announced that its 90%-owned subsidiary, Canyon Resources Africa, had been awarded two exploration areas comprising 205 sq. km in the Adola gold belt of Ethiopia.

One area, Megado Serdo, was awarded in a competitive tender process solicited by the government of Ethiopia, while the other, Meleka Abeba, was secured by application under Ethiopia’s new mining law. Both are considered to be in the “advanced stage of exploration,” based on work carried out by the government in the region during the past 20 years.

The company was among 13 other international mining groups that bid on previously explored areas in which the Ethiopian government was seeking foreign participation. Like most of the other groups that recently secured ground in Ethiopia (including TSE-listed Golden Star Resources), Canyon is interested in the underexplored country’s potential to host sizable gold deposits.

“We’ve had teams on the ground in the country intermittently for close to a year, and we liked what we saw,” Canyon President Richard De Voto tells The Northern Miner. “The recent changes in the country’s mining law have made exploration and development by foreign companies more attractive.” Both of Canyon’s exploration areas are within the Adola greenstone belt of southern Ethiopia, which contains the multi-million-ounce Lega Dembi gold deposit recently developed by the government as a 100,000-oz.-per-year mine. This open-pit mine and processing plant (incorporating gravity extraction and carbon-in-pulp leaching) is the first primary gold mine in Ethiopia. The gold at Lega Dembi is found predominantly in quartz veins and veinlet swarms, and as lower-grade disseminations in the adjoining schist. The average grade of the ore being mined is about 4.5 grams gold per tonne. Drilling is testing for extensions of known mineralization at depth in an effort aimed at providing information for the development of an underground mine.

The Adola belt also contains numerous areas of placer and lode gold occurrences which have undergone historic, small-scale mining. Canyon is in negotiations with the Ethiopian government to secure mineral exploration licences covering the two project areas. The country’s mining law provides for exploration licences which are convertible to mining licences. Work will begin as soon as these contracts are completed.

Canyon’s Megado Serdo exploration area includes 97 sq. km immediately south of, and adjoining, the Lega Dembi mine area, and it is believed that several gold-bearing horizons at Lega Dembi extend on to the Megado Serdo area. Work by the Ethiopian government includes stream-sediment and soil geochemistry, regional and detailed geophysics, pitting, trenching and limited core drilling.

One prospective area at Megado Serdo has been extensively trenched and sampled, yielding an average of 2.5 grams within a quartzite horizon over a strike length of 800 metres and an average thickness of 10-30 metres. Visible gold was found in trenches in other parts of the exploration area. The Meleka Abeba exploration area includes 180 sq. km, with several favorable gold-bearing horizons north of the Lega Dembi mine within the Adola gold belt. This area was also previously explored by the government. Canyon’s analysis of the geochemical and geophysical surveys of the area indicates “excellent potential for the discovery of minable gold deposits.”