The El Oro Mines have collectively been described as some of the most significant high-grade, gold-silver producers in the history of Mexican mining, with past production of approximately 20 million gold equivalent ounces. The town of El Oro hosts the largest known vein systems in the region with past production from veins varying between 1 and 70 metres in width. One vein alone, Veta San Rafael, produced in excess of 5 million gold equivalent ounces during a mine-life of 45 years. Veta San Rafael's average grade of production was 10 grams gold per tonne and 120 grams silver per tonne, over an average width of 10 metres; to a vertical depth of 250 metres and over a strike length approaching 3.5 kilometres.
The El Oro claims host a large under explored area with excellent potential for the discovery of new (blind) veins. Most of the gold and silver production to date from the El Oro veins has been from a 4 kilometre wide structural corridor, which becomes buried under younger volcanic cover to the east-northeast of the San Rafael Mine. Recent geochemical data has indicated potential for the discovery of additional veins below these younger volcanic rocks. In addition many gold-silver bearing veins mined in the western part of the district remain open at depth and along strike. These targets will be the initial focus of Candente-Canaco's upcoming exploration program.
A historic in-situ resource of approximately 1.7 million ounces of gold and 34 million ounces of silver (17 M tonnes @ 3.67 g/t Au plus 69.43 g/t Ag) has been estimated from the San Rafael Mine by Luismin and published in company reports in 1972 and 1992. This resource estimate is considered historic in nature, and it is unknown if it complies with current NI 43-101 standards. Furthermore, this estimate has not been verified by Candente and Canaco and therefore should not be relied upon.
Diamond drilling is planned to commence during the fourth quarter of 2006. Prior to drilling, exploration will focus on a thorough compilation of all historical data as well as intensive field work to delineate drill targets.
The Option agreement, entered into jointly (50/50) by Canaco and Candente, gives the combined companies the right to earn up to a seventy percent (70%) interest in all of the 24 El Oro exploration and mining concessions (14,950 hectares), held by Luismin.
The terms of the Agreement are as follows:
1. Earn a 50% interest by expending US$5,000,000 on exploration and issuing 250,000 common shares in each of Canaco Resources Inc and Candente Resource Corp over a three year period and;
2. Earn an additional 20% interest by expending an additional US$5,000,000 (US$10,000,000 total for 70% total interest) on exploration and development over an additional two (2) years.
3. Goldcorp retains the right to earn-back in to a 70% interest by spending US $25,000,000 within four years on additional exploration and development.
4. Goldcorp has the right to participate in future equity financings by each company, up to the greater of: their current percentage interest held in each company or 10% of the financing.
Additional information on the companies and the El Oro property is available on both companies' websites at www.candente.com and www.canaco.ca.
Candente and Canaco have chosen to jointly explore at El Oro to take advantage of the companies combined abilities and successful track records in exploration, discovery, project development and mining operations. The companies have formed a Mexican subsidiary named Minera CCM SA de CV to operate this joint venture.
Joanne C. Freeze, P.Geo. President and CEO, Candente and Andrew Lee Smith, P.Geo. Chairman and CEO, Canaco, are the Qualified Persons as defined by NI 43-101 for the project discussed above and they have read and approved the contents of this release.
Joanne C. Freeze, P.Geo.
President and CEO, Candente
Andrew Lee Smith, P.Geo.
Chairman and CEO, Canaco
For further information please contact:
Kelly J. Gray or Evelyn Cox at Candente:
(604) 689-1957 or toll free 1-877-689-1964;
Email: info@candente.com
Nick Watters, Investor Relations at Canaco
Telephone: 604-687-8055 or 1-866-488-0822
Email: investor@canaco.ca
Release No. 166
This News Release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The companies rely upon litigation protection for forward-looking statements. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the release.