$treet,
here is an article which came out a few days ago which may explain some of the rekindled interest in this beaten down old explorer...
hsb
Canaco set to drill new gem targets
2008-03-04 15:11 ET - Street Wire
by Will Purcell
Andrew Smith's slumping gold and diamond hunter, Canaco Resources Inc., will drill up to 60 holes into four potential kimberlites on its Magembe diamond project in Tanzania. The untested targets lie in the shadow cast by one of the world's most prolific diamond mines over the past 70 years. Proximity to the old Williamson mine makes the story promotable, but it still has been a tough sell for the past year. Canaco's stock chart resembles a downhill ski slope since its shares touched the $1 mark in the fall of 2006. The slide is leveling off near the 20-cent mark, leaving grumpy investors anxious for some good news.
The plan
Mr. Smith said that Canaco would drill its holes using a rotary air blast rig. The equipment is comparable with the reverse circulation drills often used in Canada to test kimberlite targets, but does not employ water to flush the material to the surface. A percussion drill bit pulverizes the rock and the resulting chips ride the air blast to a collection area above ground. That suggests a frightening ride for the diamonds, which are hard but will easily shatter into minuscule shards.
Cost is the main reason Canaco chose the air blast drill as the operating cost of the equipment is just $15 per metre. Mr. Smith said the total cost of drilling 60 holes to an average depth of 70 metres would likely be no more than a few hundred thousand dollars. Should the tests hit kimberlite with diamonds and indicators comparable with the Williamson mine, Canaco will drill a series of more reliable, and more expensive core holes.
The drilling will likely start in earnest once the rainy season ends in the Shinyanga district of Tanzania. The showers typically start late in March and wind up early in May. The rainfall is hardly a monsoon on the Serengeti plains, averaging about 20 centimetres during the wet period. Mr. Smith said the rains were a problem mainly in remote and hilly areas to the northeast. Fortunately, the area surrounding Canaco's property is quite flat. Nevertheless, Canaco would prefer to wait for the dry season to start before getting busy.
The encouragement
Canaco is still unsure its targets are kimberlites, leaving it to tout the Williamson mine as the main encouragement. The old De Beers dig also goes by the less pronounceable name of Mwadui. A Canadian geologist, Dr. John Williamson, founded the mine in 1940 and he called the area Mwadui, after a local tribal chief. After nearly 70 years, the two names are now interchangeable.
Canaco's kimberlite targets went untested because of a strange Tanzanian rule. In the 1940s, the government granted De Beers a buffer property surrounding its mine. The zone allowed De Beers room to keep illegal miners at bay, but the company did not have the right to work the buffer claims. As a result, its diamond potential sat in exploration limbo for many years.
Tanzania changed its mining act several years ago, outlawing buffer properties. Local groups grabbed the northern and southern halves of the buffer claims and one dealt off the northern portion to Douglas Lake Minerals Inc. Canaco is now earning a 70-per-cent interest in that ground.
The Williamson mine ran at an average of about 0.3 carat per tonne during its first few decades, but it now averages less than 0.1 carat per tonne. The mine produced some exceptional pink diamonds over the years, including a flawless stone given to Princess Elizabeth and Prince Philip when they married in 1947. As a result, the diamond value is higher than average, at more than $100 (U.S.) per carat. As a result, even a modest smattering of diamonds from the planned test would warrant further core drilling.
Canaco closed up four cents to 25 cents Monday on 163,500 shares.
