Edgewater exploration: bases loaded for a home run

“We have had three rigs working at Corcoesto in Spain for the last 6 months, and the results have been excellent, with grades of 10.72 g/t Au over 17.0m encountered at depth 100 m away from its nearest neighbor – this was, in fact, the best grade x thickness intersection ever encountered on the project. In addition, we recently announced anear-surface 13.3 metre intersection grading 2.66 grams per tonne gold on a shallow step-out hole 150 metres further out than previous drilling, and also we hit 2.7 grams per tonne gold over an 8.5 metre intersection, also near surface in a previously untested area, demonstrating the structure remains open along strike. We’ve expanded the size of the deposit on-strike and at-depth– no question,

“So that’s the end of the first 6,000 metre program and right now, we’re drilling a second 6,000 metre program that is mostly infill drilling designed to put inferred resources in the measured and indicated category, as well as to take the number of ounces up in the whole deposit. The outcome of this program will be part of a resource estimate that we think will be published by the end of June this year, which we’ll follow up with a Preliminary Economic Assessment (PEA).

The conceptual goal is 70,000 to 80,000 ounces of gold per year-type mining operation from a 4,000 tonne per day mill, but of course we’ll have to see what the PEA determines before we can state that and be 43-101 compliant.

We’ve got three zones we’re developing there, and two collectively measure over a kilometer in strike and remain open to the northeast and at depth, and the third zone measures 650 metres so far and remains open to the northeast.

I think Spain will surprise shareholders on the upside, as the cost of acquisition of this project is already less than $8 an ounce and we contionue to add ounces in a cost effective manner, which is a real coup for our shareholders. And since Spain is regarded as a little bit difficult on the permitting side, we’ve already begun that process with the Gallician (provincial) government, who operates independently of the Federal jurisdiction in mining and environmental matters. So, armed with a recently granted 90 year mining lease at Corcoesto, we’re well ahead of the curve on permitting already. The Department of Mines in Galicia have been highly cooperative and their latest approval of a 90 year mining lease is a clear sign of the their support for the Corcoesto Gold Project and mining in general.

Enchi is for Elephants
It hasn’t even been a year since Kinross paid $7.1 billion for Red Back Mining. Edgewater’s Enchi project was optioned from Red Back before the transaction, and Red Back had completed major systematic trenching and drilling programs on Enchi’s 16 gold bearing prospects, over 10’s of kilomteres of strike length.

Edgewater announced that it was expanding the drill program, which got underway in January this year, from the originally planned 12,500 metres to 35,000 metres for 2011.With such a massive drill program expansion, they must like what they see out there. The Company currently has 2 rigs in operation focused on resource delineation and 2 additional drill rigs will begin testing the consistently mineralized 4 kilometres of strike on areas like the Sewum prospect, where trenching by Red Back returned outstanding results such as 10.5 metres grading 2 grams per tonne gold, 24 metres at 1.14 grams per tonne gold, 221 metres grading 0.7 grams per tonne gold, and 78 metres at 1.48 grams per tonne gold. Most of these structures, in the Sewum area in particular, have never been drill tested.

Nor has the Eradi zone to the north been tested and it was here that some of the highest grade from trenching were obtained by Red Back’s exploration. It has the highest geochemical signature across 2 kilometres, and one trench yielded 37 metres grading 1.5 grams per tonne of gold.

As Mr Salamis said in his interview: “We keep hitting gold consistently, section after section, on zones like Boin and Nyamebekeyere.. So its not a question of “if” gold resources will be identified – the zones were are drilling are hanging together quite well – it’s a question of how large they will be. Also bear in mind that we’ve been only drilling down to an average vertical depth of 50 m. The potential is wide open for resource delineation at Enchi, on all zones. Enchi, in general, is looking a lot like what Kinross’ Chrirano mine looked like in its infancy. Same consistency of low grade mineralization in the saporite over several kilomterest of strike length, similar geology and structure, etc”

Enchi straddles the Bibiani Shear Zone which is known to host significantly large lode-gold deposits, such as the multi-million ounce Bibiani and Chiranomines. This highly prospective, first order tectonic feature trends northeast southwest and juxtaposes Birimian mafics of the Sefwi Belt to the northwest against Birimian sediments and volcaniclastics of the Kumasi Basin to the southeast. The Bibiani Shear Zone hosts world-class gold mineralized systems including the Bibiani gold deposit (+5 Million oz) and Red Back Mining’s Chirano gold mine (5 million oz) to the northeast, and the Anuri Afema deposit (1.5 Million oz) in Cote D’Ivoire to the southwest.

The Obuasi-Enchi lineament, a major east-west crustal scale deformation zone, deflects the Bibiani Shear Zone between the Chirano and Enchi project areas. This lineament is associated with the world renowned Obuasi Mine (+40 Million oz) and Akyem (+10 Million oz) deposits in the Ashanti Belt, 100-200 kilometers to the east.

So, with the potential for near term production on a minimum 1.5 million ounce advanced project in Spain, and a very likely shot at a multi-million ounce discovery in Ghana’s elephant country, and with a market cap of just over CA$40 million and $9 million cash in the bank, you could say the bases are fully loaded, and the batter is up. Might be a good time to grab a glove and get in the game.

DISCLOSURE: We own the stock at $1.05 a share.

By James West