Channel Resources Ltd.

Channel Resources Ltd.

June 07, 2005 10:14 ET

Channel Enters Into Option for Joint Venture on Gold Resource Development Property

KELOWNA, BRITISH COLUMBIA--(CCNMatthews - June 7, 2005) - Channel Resources Ltd. (TSX VENTURE:CHU) ("Channel") announces that it has entered into an option with Minera Cachabi C. Ltda. ("Mineca") to acquire a gold resource property for development in Ecuador. Under the option Channel has the right to acquire a 60% interest by delivering a bankable feasibility study and a further 10% interest for a total of 70% by providing production financing for the El Mozo Gold property.

Located in South Central Ecuador the El Mozo property is approximately 40 km south east of IAMGold Corporation's Quimsacocha Project and 60 km south west of Corriente Resources Inc.'s Mirador Project. It covers a surface area of approximately 10 km2 and is situated in the Central Andean Valley near the western foothills of the Cordillera Real, with the dominant topographic feature being Cerro Mozo. Much of the remaining property area consists of a rolling upland surface dissected by westerly and northerly flowing drainages. The climate is semi-arid. There is good access to the property and water is readily available.

The property has an inferred oxide resource of 3,500,000 tonnes grading 2.3 grams gold/tonne representing 250,000 ounces and within this resource 230,000 tonnes at an average grade of 8 grams/tonne exposed at surface with minimum stripping of over burden for mineral extraction. Preliminary metallurgy indicates the oxide resource is amenable to heap leaching.

The gold mineralization is classified as epithermal with the vast majority of the resource in oxide material. The deposit appears to have similar characteristics to the El Indio project in Chile and Yanacocha in Peru.

After spending the past 18 months evaluating gold projects for development, Channel has concluded that, based upon the results of its property examination and due diligence, the El Mozo property meets its project development criteria and appears to have the potential to establish an economically viable oxide heap leach mining operation.

The Company intends to proceed with a comprehensive exploration program to qualify and quantify the existing resource as a reserve, undertake further exploration including drilling to expand the resource and proceed with detailed metallurgical testing. Preparation of a preliminary feasibility study will follow with the objective of defining an operation similar to the Castle Mountain project in the East Mojave Desert of California which produced in excess of 1,250,000 ounces over a twelve year period.

Channel has retained the advisory services of Allen Brown Hidalgo, General Manager of Mineca and will engage Mineca's personnel and utilize its existing infrastructure for its exploration and development work.

Under the option agreement Channel must incur a minimum of US$1,000,000 per year on exploration and development expenditures up to and including the preparation of a bankable feasibility study to earn the 60% interest in the Property. Channel will earn an additional 10% interest by providing project financing within 30 months of delivery of the feasibility study. In the event that Channel elects not to proceed to production and provide project financing the property will revert to Mineca.

Ecuador has adopted a modern competitive mining code with no gross royalty and recent gold discoveries in Peru have focused attention on Ecuador's gold potential within the same Andean Mountain Chain.

This transaction is subject to approval of the regulatory bodies and the filing of a National Instrument 43-101 technical report, currently being prepared by IBM Consulting Services, IBM Canada Ltd.

The technical information contained in this News Release was reviewed by Normand Champigny, P.Eng., who is a qualified person as defined in National Instrument 43-101.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this Release.

Contact Information

  • Channel Resources Ltd.
    The Honourable D. Ross Fitzpatrick
    Chairman, President and Chief Executive Officer
    (250) 764-7090
    (250) 764-7093 (FAX)