Gold Canyon Resources

BEAT THE MARKET INVESTMENT NEWSLETTER Bringing you undervalued, high growth opportunities... Gold Canyon Resources Working on a 10M oz Monster in Red Lake Gold Canyon Resources GCU-V SP Jan. 25, 2011… $2.15 Shares Out… 89M Fully Diluted… 117M Market Cap… $187 million Insiders and Mgmt own 39% Mgmt... 6% Sprott... 20% Pinetree... 13% Initial Coverage Aug ’10 @ $0.41 +$1.74 / 424% GCU is an early stage gold development story at with 10M oz potential at Springpole, Red Lake Gold Canyon Resources is a company that has gone on an incredible run since August after announcing initial results of drilling at The Springpole Lake Project in the Red Lake District, Western Ontario. GCU has continued to deliver impressive results throughout the fall season in their initial attempts to define a very large gold zone called The Portage Zone at The Springpole Project. The market has rewarded Gold Canyon shareholders with a 1000% share price increase from trading in the $0.20 cent range in early August to the $2 range in December after a drill program that exceeded everyone’s expectations. Gold Canyon is quickly going from explorer of a prospective 1.5M oz historical deposit, to an up & coming development story in Red Lake defining a potential 10M ounce gold deposit that has both open pit and underground mine potential at depth. Gold Canyon’s name appropriately describes the subterranean view of the Portage Zone as it is a greater than 1km sheared zone of intrusive alkaline porphyry rocks that dip close to near vertical between 70 and 80 degrees and as of yet has untested depth potential below the 400 meter level due to drill rig limitations. Based on the geology of the deposit and the continuity of the mineralization, this deposit is expected to run at least 500 to 600 meters deep with the potential to have a typical depth of other deposits in the area which could be in excess of 1,000 meters. Springpole was the focus of high grade mineralization typical of Red Lake and past operators outlining a modest high grade historical resource at the north end of the project and the very large Portage Zone to the south. The Main Zone was the focus of drilling last year where GCU outlined 45,000 high grade oz’s M & I and another 197,000 ounces inferred a grade in excess of 4g/t au which was a nice base high grade resource starter pit and work from there. GCU is confident that they can confirm 400,000 ounces of gold in the Main, SPROG and EE zones, in addition to defining the massive Portage Zone that extends underneath Springpole Lake to the southeast from the Main Zone. The majority of the historical resource was in the lower grade Portage Zone at just over 1 g/t so previous operators never gave the Portage Zone more than a passing glance. Drilling at Portage in 2010 outlined some key findings… Grades are consistently higher than historical averages at 1.36 g/t gold. GCU using HQ sized holes which gives a more accurate sample reading with more assay material and is confident testing continuity to surface will yield consistently higher grades than historical averages. The mineralization is rich with silver credits… so far averaging 5.95 g/t silver. Drilling has confirmed that all the zones are related. The alkaline porphyry rocks being the intrusion with the high grade core area being the epithermal blowout event. Considering the upper Portage in the north area pinches near surface it lends credence that this area came under extreme pressure with the Main Zone being the blowout event Recent holes indicate that Portage opens up underneath the main zone from 53 meter width to 250 meter and most likely dips underneath the Main Zone suggesting the zone may be open to the north as well, certainly at depth. What makes Gold Canyon’s Springpole Project even more enticing, aside from the potential of Portage hosting a 10 million ounce deposit, is that Gold Canyon has mapped the rock structure containing the Portage Zone another 5km of strike and are extending the zone a further 500 meters this winter along this highly prospective rock structure. The porphyry structure was thought to veer off underneath the main body of the lake but re-interpretation is putting Portage more at SE heading. In addition to such a long continuous, highly prospective rock structure, these rocks have been map on other parts of the property hitting extensive intervals of low grade gold between 0.2 g/t au and 0.3 g/t au confirming the theory that this is not an isolated geological event giving Gold Canyon’s Springpole a very good chance of hosting another very large ‘Portage-like’ gold bearing structure in the area. Springpole: A Unique Canadian Shield Deposit Springpole is a unique Canadian deposit in the sense its geology is much more similar to a deposit like Anglo Ashanti’s 30M+ Cripple Creek in Colorado or Barrick’s 28 million ounce Porgera in Indonesia being an alkalic type precious metals deposit with mineralization associated with hydrothermal and epithermal activity. Most Canadian Shield deposits are typicalCanadian Archean Greenstone deposit types where mineralization is hosted in quartz-carbonate veins, especially typical of gold deposits found in Red Lake. These deposits are typically very high grade and run deep. The Portage Zone mineralization is hosted in a sheared zone of high level potassic stock in an intrusion of alkaline porphyry rocks. This puts Gold Canyon’s Springpole Project under unique classification for an eastern Canadian gold deposit whose mineralization is typical of some of the largest gold systems in the world. With mineralization that is very consistent and geology that is similar to that of the biggest systems in the world, having drilled the formation over 1km strike and to a depth of close to 400 meters; Gold Canyon may be sitting on a world class deposit at Springpole Lake that could rival a recent Canadian discovery like Osisko’s Malarctic. When comparing an investment type story, GCU is on target to be the next big mine in Ontario and could follow a similar investment type path as an emerging development story similar to Osisko. Once they have added the ounces at Springpole this spring, the investment community will see this as a legitimate contender to being the next big gold mine in Canada. There are not very many stories that have a chance at defining 10M ounces and more and GCU is one of those stories, although it is still in the early innings of this ball game. Multi-million Ounce World Class Potential Recent drilling at Springpole’s Portage zone has so far exceeded expectations and is pointing to a world class multi-million ounce deposit in Red Lake with mineralization averaging widths of 90 to 150 meters and certain parts of the zone opening up to as wide as 250 meters at depth at the north part of the zone. So far drilling has suggested a depth of more than 370 meters and the gold zone being traced along a strike of up to 950 meters. GCU has suggest a 3 –5 million ounce gold target within the current defined strike to a depth of 300 meters which is more double the depth of the 1.5M oz historical resource. Combined with an increased grade from around 1 g/t to 1.36, additional silver credits and an extension of the strike another 250 meters, it is easy to see where GCU is going to attain such a large initial resource for the Portage Zone. In addition to Portage, GCU estimates 400,000 – 500,000 ounces with inclusion of all the work at the Eastern Extension and Camp Zones into the resource. EE drilling hit decent shallow low grade intercepts of 54 meters @ 0.64 in a hole that had an aggregate of 63.4 gram-meters and hit some decent intervals in the camp zone which is a transition zone from the Main to the Portage of 21.5 meters at 1.31 g/t and 41 meters at 1.08 g/t au. Unlimited depth potential Recently drilling has confirmed the Portage Zone to a depth of 370 meters at the southern extent and to 300 meters at the north end which more than doubles the open pit depth potential. With the depth being tested in excess of 370 meters and it is safe to assume that Portage Zone extends to depth to at least 400 meters, one can infer the Portage Zone 4M to 5.5M ounce resource. In my conversations with Quinton, the demonstrated continuity of the mineralization and geology of the area infer that the Portage Zone runs to depths in excess of 500 to 600 meters which he estimates would be the maximum open pit depth for a project like Springpole. Quinton believes that the depth of the Portage zone porphyry structure could extend well in excess of 1,000 meters. GCU will bring in a rig this summer that is capable of testing the depth beyond 400 meters. Another 200 – 300 meters of depth will double the project from the anticipated spring resource calculation. Virtually Untested Strike The strike of the zone has also been increased with a greater degree of confidence by more than 30% with some of the best intersections to date coming right at the end of the zone at 950 meters. This winter GCU is testing the strike of the Portage Zone to the southeast another 500 meters where they are confident it extends with a good degree of certainty. Historical estimates had put Portage more to the southwest instead of where it is currently projected to lie a bit more to the southeast, because of this, historical testing of the strike of Portage intersected extensive intervals of 0.6 to 0.7 g/t au which is typical of fringe Portage Zone mineralization. Gold Canyon believes that a couple well placed holes should hit the Portage Zone with the same type of continuity that has been defined to the north. The furthest hole south hit 225 meters at 1.48 g/t au, which is one of the project’s best right at the south end of the defined strike including a 47 meter zone averaging 3.47 g/t au. This bodes very well for continued expansion of the Portage Zone along strike this winter with mineralization giving no sign of tailing off. The high grade zone continuing to the end indicates the zone will extend further south for a material distance. The grades in this type of orebody will gradually deplete as opposed to abruptly ending. With the style of mineralization very continuous and likely to give signs that the zone is weakening well in advance with depleting grades, the Portage Zone can conceptually be looked at as being 1,500 meters in strike and persisting to depths of at least 400 meters and beyond. Just by looking at tonnage, it is easy to see how a 1.5M ounce 20Mt – 30Mt project balloons into a massive 8 – 10M ounce 100Mt – 200Mt project at Springpole Lake. Extend the project another 500 meters along strike with comparable grades and widths and the size of GCU’s Portage Zone becomes one of the biggest unmined gold deposits in Ontario. Springpole Project: A Bulk Tonnage Open Pit Mine Springpole Lake is showing potential for both a low cost bulk open pit mine and underground mine potential. If there ever was a guaranteed deposit that will one day become a mine based on geological merits, Springpole is it. It has been thought to have world class potential for decades but because of the atypical style of mineralization when compared to a typical Archean Greenstone deposit, especially those in nearby Red Lake, it was often ignored for more pervasive high grade deposits in the area. If this deposit had been in Quebec along the Golden Highway, it would have been developed years ago. Springpole was always a project that had merit at much lower prices in gold, but since gold prices have risen dramatically over the last decade, a project like Springpole becomes very lucrative with the consistent grade and the shear scale of a project. Current drilling has revealed a much higher grade than historical at the current 1.36 g/t au vs. historical 1 g/t estimate. (Some historical estimates actually estimated an even lower grade below 1 gram). The higher grade assays is attributed to the fact that Springpole has never been tested with HQ sized drill holes which allows for a much larger sample base and grades can be estimated with much more confidence. GCU has tested for silver and assays an average of 5.95 g/t which provides another 0.10-0.15 g/t credit to the grade of the project and brings Springpole an inferred average grade of around 1.5 g/t gold eq from current drilling program. In addition to increased grade and silver credits, Springpole’s shear size gives it economies of scale with an eventual +200,000 oz per year producer possible as a future bulk tonnage mine operation with both open pit and underground potential. Even though Portage sits underneath a lake and might be considered more an underground operation like Agnico-Eagle’s Goldex Mine in Quebec, the lake is very shallow at no more than 27 meters depth and narrows at 2 critical points and is not much more than 10 meters deep in these sections. The part of the lake the Portage sits under can easily be dammed and drained into the main body of Springpole Lake further south. Gold Canyon’s Portage Zone already represents a very large open pit project with the current dimensions of a 950 meter strike and a depth of 300 meters. The total dimension of the project to date is 1350 meters with another potential 500 meters making a massive open pit that could easily include 500 – 600 meter depth with a strike of 1850 meters. If the project continues along strike beyond that then Springpole could end up a mega open pit project like Newmont’s Twin Creeks in Nevada which is a series of massive open pits that follows a +5km mineralized strike. Twin Creeks is currently the largest open pit in Nevada. The shear size and grade of the project supports building a mill and on site processing instead of shipping ore to Red Lake which will decrease costs at Springpole and every meter of strike and depth added to the deposit further supports this theory with economies of scale and a long mine life. What is also very good is GCU renegotiated the 5% NSR and had it reduced to 3% which can be further reduced to 1%. With the way the mineralization is situated, any open pit would have a very low strip ratio. Gold Canyon is just in the initial stage of metallurgical testing, but the core is often soft and broken and shows qualities of ore that will be very amenable to conventional milling processes. The upcoming prefeasibility study should be very positive. Initial results at Springpole are very appealing and point to great economics supporting a potential open pit mine with underground development to follow. Current drilling points to a 100,000,000Mt open pit project if conceptualized to a 400 meter deep open pit. The current drill program’s average grade is 1.36 g/t au with additional silver credits averaging 5.95 g/t which indicate $65 to $70 per ton rock at current metal prices which is very nice rock when you have 100Mt’s of it. GCU has also been drilling HQ sized holes which gives plenty of samples for met work which is being completed this year for the prefeasibility study. The continuity of the mineralization is a bonus for mill throughout and with the nature of the mineralization being quite soft and broken, should making milling and recoveries very positive. These are all key points that point to mining at Springpole. Even at much lower prices. Currently Gold Canyon has these targets for Portage… 950m strike * 100-150m width * 300m depth = 3M – 5M oz deposit 1500m strike * 100-150m width * 300m depth – 5M – 6M oz deposit 1500 m strike + Infer depth to 400+ meters… an 8M – >10M oz deposit Gold Canyon will add material ounces to the upcoming NI43-101 resource calculation of at least 3-5M oz’s. Portage looks more and more like a 10M ounce open pit project if the strike is successfully extended. Springpole grows dramatically at that point if they extend depth and could be well in excess of 10M oz’s if the depth is successfully extended a materially distance. The Winter Drill Program Set to Add Material Value For GCU to confidently report a resource for Portage, they need to drill the middle portions of the zone as well as test the zone to surface, which is a major goal for resource definition and a prefeasibility study is soon to follow. GCU will be drilling 10,000 meters this winter and have 3 rigs on the property, 2 rigs are infill drilling the middle portion of Portage and testing the zone to surface while 1 rig tests Portage’s strike up another 500 meters this winter. This program gives GCU a two pronged strategy of growth by developing a very large already identified gold zone as well as stepping out and materially expanding the strike of this zone this winter. When you have a zone that is 400 meter deep, is 100 to 150 meters, every 50 - 100 meters of successful step holes along strike provides material potential expansion to future calculations to the resource base. In addition to another 500 meters of strike, the long term viability of Portage will be viewed with its depth potential. If Portage keeps continuing to impress at depth, there will be some big buyers who will be very interested and willing to invest in this project having the potential for an extended mine life. If Gold Canyon defines a gold zone at Portage that extends another 500 meters then that will put GCU’s Springpole Project a close rival to Osisko’s Malartic’s at 9M – 10M oz’s of gold. Obviously that is a big if and an initial resource calculation for Portage is needed to provide a base for future development, but considering the nature of the geology, abrupt changes are not expected and chances are that GCU will successfully step out this winter assuring Springpole of a +5M ounce gold deposit. Springpole is the first Canadian Gold company to come along in a long time to have real 10M ounce discovery potential since Osisko!!! In a proven district like Red Lake, GCU just needs to keep defining this monster gold zone and someone will come knocking. Demonstrated Substantial resource expansion The summer and fall drilling programs at Springpole indicating a substantial increase in the resource, much more than historical estimates indicate. Drilling has confirmed historical results, increased the grade, and expanded Portage at depth (double) and along strike (40%) with some of the best holes to date. Some Springpole Facts Highly contiguous throughout the entire zone Consistently higher grades than historical plus silver Extended the strike to 950 meters Confirmed depth to 370 vertical meters Zone width averages 90 – 100 meters North end of the zone opens up to a 250 meter width at 300 meter depth Open pit style to potential scale of Newmont’s Twin Creeks in Nevada Soft and broken nature of mineralization point to good recoveries for milling Continuous mineralization points to very good throughput Deposit style points to low strip ratio. Underground potential similar to that of Agnico Eagle’s low cost Goldex mine in Quebec if mineralization extends to depth. New Resource Calculation and Feasibility Study Reasons to invest… Significant resource increase… 3 to 5M ounces gold upcoming resource calculation Potential for >10M oz gold resource with Red Lake type depth potential. Over million shares of insider buys in November / another 500,000+ by Sheldon Inwantesh in December Winter program will add material value defining and adding ounces New resource calculation after winter drill program Pending prefeasibility study Potential excellent open pit / underground mine potential Deposit shows excellent continuity Increased gold grade at depth + silver credits Geological environment suggests underground depth potential in excess of 500 meters Geological environment suggests world class potential in the scale of Cripple Creek and Porgera. (30M ounce gold deposits) Proven mining district in Red Lake / Safe jurisdiction Project scope suggest dedicated processing facilities Well financed with a strong shareholder base Excellent management track with history of managing shareholder value. Management has a long history with company Insiders own 39% Sprott 20% Pinetree 13% Management 6% GoldCanyonRates High as an Early Stage Development Story When looking at current projects to compare GCU. GCU compares favorably to other early stage development stories including low grade names such as Volta, Trelawney, and even East Asia Minerals when it was still early. Gold Canyon has a chance to rival Osisko’s Malartic in the long run. Gold Canyon has announced some of the best, most continuous results along a 1km strike from surface to depth that rival some of the best early stage low grade development projects in the world and at initial glance looks like it could be a low cost producer from both open pit and underground scenario’s for a years to come. Add the fact that it is in our own backyard in Red Lake, Ontario. This is one of the best development projects to come along in awhile. Springpole shows the best potential for significant multi-million ounce expansion along strike and at depth because of the continuity of the mineralization and the type of geology demonstrated. Springpole so far is remarkably contiguous and will compare very favorably to these projects as a bulk tonnage open pit mining operation and will easily end up being a +100Mt project containing +5M ounces of gold. The big prize is that Gold Canyon may be on a 10M oz deposit at depth which would mean Gold Canyon shareholders are sitting on what may be one of the most coveted prizes in the Canadian gold sector since Osisko and Rainy River. Both companies did it on their own because the majors didn’t believe… Will Gold Canyon be another Canadian in-house success story or will the majors wake up and realize the potential of these massive low grade projects? Either way, Gold Canyon is set to develop one of the biggest gold projects in Canada. Gold Canyon is rated as a strong buy at $2.15 and I am confident they will continue to deliver on their theories and demonstrate that Portage is indeed a World Class Deposit that will rival some of the best producing mines anywhere in Canada one day. Christopher Skidmore Reporter for Beat the Market Stock Picks Unsubscribe stillchillundergroundtriumph@hotmail.com from this list | Forward to a friend | Update your profile Copyright (C) 2011 Beat the Market Stock Picks All rights reserved.

Edgewater Exploration: EDW-V

Bringing you undervalued, high growth opportunities...

Edgewater Exploration: Acquiring and Advancing Undervalued Gold Assets

Edgewater Exploration EDW

Share Price… $1.29
Shares Out… 49.5M
Fully Diluted… 65M
Cash… $16 million
Market Cap … $59 million

Retail Float… 16.8M shares


Edgewater Exploration is a gold exploration company that has it all. Top notch quality management headed by George Salamis, an advanced stage 1M oz gold project in Corcoesto Spain, a blue-sky opportunity with 40kms covering the some of the most prospective areas of the Bibiani Shear Zone in Ghana south of Red Back’s 5M oz Chirano Gold Mine and a solid partner in Kinross backing them up. The Enchi Gold Project is considered by many to be one of the better gold exploration projects in Ghana.

When Edgewater announced 12,000 meters of drilling underway in early December at Enchi in Ghana, this is the event that kicks off Edgewater’s plans on materially adding value to their projects in Spain and Ghana over the next couple years. Edgewater has serious potential with targets of +2M oz’s of gold in Spain and eventually +3M oz’s in Ghana in low cost bulk tonnage open pit projects. Edgewater’s current value lies in its 1.2M oz Corcoesto gold project which has significant upside as a development story. The underlying value and growth potential for EDW is outlining a multimillion ounce gold resource on in Ghana. Edgewater is poised to add material value from two projects going forward in 2011.

First they have a low risk 1.2M oz development project in Corcoesto Spain with significant upside. It is open in both directions along strike and at depth and the target stated by management is a global resource of at least 2M oz with the focus on starting an open pit mine and underground development to follow. At the same time Edgewater has a joint venture with Red Back (Kinross) where they are developing an initial resource on what was Red Back’s top exploration property until they found the +5M oz Chirano 70km to the north along the same regional shear zone. If Edgewater can delineate significant resources on their 2 projects over the next couple years that meet or exceed these targets. Edgewater has one of the best low risk growth profiles for a junior gold exploration company on the market.



Edgewater has assembled one of the best teams

When it comes down to investing in exploration companies, a lot of success is dependent on management, especially when it comes down to adding material value and growing the company from a medium cap explorer to mid tier mining company producing 250,000+ oz’s of gold a year. Obviously the merits of the project are what attract any investor to a company, butmanagement is the catalyst to adding value to a company and its portfolio of projects. Edgewater has put together a team of the finest that cover all aspects of a junior exploration company.

The backbone and face of any coherent team in a mining company is the CEO, and Edgewater has one of the finest in George Salamis. Mr. Salamis has held senior management positions at both Placer Dome and Cameco and has formed and managed several successful junior mining companies. Mr. Salami’s key attribute for Edgewater other than extensive experience in both junior mining and top tier mining companies is his experience in advising mergers and acquisitions in the resource industry, a skill that will play an important role in bringing shareholder value to EDW if they deliver on their plans in Spain and Ghana.

EDW has a top exploration manager in Greg Smith who is experienced in the management of work programs that were successful in outlining 10M+ oz gold deposits and has experience in all aspects of exploration from outlining initial targets to delineating material deposits. Edgewater also has a director who has one of the best recent track records in the industry taking Brett Resources from a 1.8M oz gold deposit into the 6.7M oz world class deposit it is today. Having directors with experience in delineating world class gold deposits not only speaks to expertise EDW has on board in its management team and directors, but what management and directors think of EDW’s assets and the chances of being developed into world class gold deposits.

Edgewater has the crews that came with the projects; having experienced crews in both regions that are familiar with the projects cuts down time on working on projects and cuts down the learning curve when it comes to exploration and drilling techniques for a given project. It also leads to less lead time getting crews mobilized and spending extra time and money training new crews in both countries. Edgewater’s management, from exploration managers and the crews working the projects to directors and CEO of the company; possess the skills to outline multimillion ounce deposits and the track record to back it.

Edgewater has the right industry partners when it comes to a solid financial backing commitment in Featherstone Capital including Featherstone members sitting on the board. Featherstone Capital is a solid industry partner to be associated with and have financed many successful junior mining companies and the projects being developed and can also play a role in future key acquisitions for the company.

Edgewater has everything in management that an exploration / development company needs to succeed.

• Experienced country project managers and teams that are familiar with the projects in each country.
• Directors that have access to capital with Featherstone Capital and a solid industry reputation
• An exploration geologist that has experience outlining +10M oz gold deposits
• A director who brought Brett Resources from1.8M oz’s to 6.7M oz
• Management with experience handling corporate acquisitions and takeovers
• A CEO that has held senior positions with some of Canada’s top mining companies

Edgewater has the team in place to take both projects in Spain and Ghana forward and add material value for shareholders and millions of ounces to their inventories.



Corcoesto, Spain(100%)

The Corcoesto Project is an advanced stage project in northwest Spain that lies within the historic Malpica–Tuy Gold Belt which has been exploited since ancient times as long ago as the Romans. The area is one of the most mining friendly regions in Spain and has excellent infrastructure including a power line running across the property. Corcoesto is a series of seven major gold vein systems that trend in a northeasterly direction that are all open along strike and at depth including the 1.2M ounce resource. With high grade being discovered at depth in widely spaced holes, makes Corcoesto an attractive open pit starter mine with high grade underground production potential for years to come if gold prices stay elevated through this decade.

Edgewater has initiated 12,000 meters of drilling in Q4 of 2010 which will lead to a new resource calculation in the first half of 2011 and a scoping study to follow by the end of the year. EDW has an aggressive goal of upgrading the quality of the resource from inferred to indicated and an overall goal of adding another 800,000 ounces to the global resource at Corcoesto. 1.2M oz to 2M oz is a material increase and Corcoesto has already demonstrated a solid growth profile from a modest 320,000 ounce deposit when Edgewater acquired it to the robust 1.2M oz deposit it is today.

EDW is confident that they can continue to increase this resource to a 2M oz deposit with a good portion of it being amenable to bulk tonnage open pit recovery. At this point in time it is too early to say how much of the resource would be in the open pit outline, although Corcoesto is a high potential shallow open pit mine with nearly 700,000 oz’s of the 1.2 M ounces so far delineated lying above the 200 meter level indicating that the majority of the 1M once resource can be extracted by open pit mining methods.

The Corcoesto Gold Deposit

• Measured & Indicated of 315,000 oz’s @ 1.73 g/t au
• Inferred resource of 885,000 oz’s of gold at 1.66 g/t au.

The quality and consistency of the resource is very good. If you increase the cut-off of 0.65 g/t to 1 g/t the M & I still comes out at 262,000 oz’s of gold. Corcoesto only loses 16% of the resource when increasing the cut-off grade by 54% which indicates a very high quality resource with continuous and consistent mineralization. The Corcoesto grade lies in the sweet spot of leveraged gold plays grading between 1 g/t and 2 g/t gold. At well over 1.5 g/t project, at $1500 gold the ore is worth $75 a ton which indicates very good economics for an open pit project.

What makes Corcoesto such an attractive project?

• Favorable open pit grade at +1.5 g/t gold
• Low strip ratio
• Amenable to conventional milling and cyanide leaching with 90% recoveries
• Situated in a pro mining region
• Located 35km from a deep water port
• Excellent infrastructure including roads and power
• Workforce readily available from the Port City of La Coruna
• High grade underground potential

The Corcoesto Project and its growth potential justify Edgewater’s market cap alone and is a very attractive project going forward with open pit production potential in a mining friendly jurisdiction. With Corcoesto being valued at $50 per ounce, it represents a good value buy with a great growth profile going forward and a project that has early indications of great economics with high leverage to current gold prices.

Edgewater will have a very good news flow for the first half of 2011 with 3 dill rigs on the project drilling through 12,000 meters of earth. With a steady stream of news flow coming from Spain, EDW share price should do rise on positive results as well as anticipation of a new resource calculation and a positive scoping study in Q3. The scoping study will give initial indications of the project economics at Corcoesto.

Edgewater is worth its price on its Spain project alone.



The Enchi Project, Ghana (45.9% Edgewater / 44.1% Kinross/ 10% Ghana)


The blue-sky potential for Edgewater Exploration lies in the Enchi project in Ghana. Currently there is no resource on the project but over 180 drill holes have been drilled on the project in a scatter-gun type approach in widely spaced holes to get an idea of the extent of the mineralization. One prospect has returned 80 of 112 holes with significant intercepts grading better than 1 g/t. Edgewater announced 12,000 meters of combined RC and diamond drilling to work towards an initial resource target of 1 million ounces between the 2 drilled prospects.

Some background on Enchi

Enchi was Red Back’s top exploration property in Ghana before they made their discovery at Chirano 70km to the north. The Enchi Project is in the same geological setting as the 5M oz Chirano and has 16 separate gold mineralized zones that represent several shallow open pit targets and when added together has the potential to outline several million ounces with near term production potential. Both Enchi and Chirano are located along the Obuasi-Enchi lineament which is a major east-west crustal scale deformation zone which hosts Anglo Gold Ashanti’s 40M oz Obuasi mine.
Currently Chirano is producing close to 250,000 oz’s per year which makes an ideal model to follow for eventual production at Enchi. Enchi is a district scale project in Ghana covering 40km of prime exploration land in the southern part of the Bibiani Shear Zone. Known geochemical anomalies cover the entire 40km length of the shear zone. Edgewater is at the early stages of defining of what could be a very large gold resource along the entire belt of its property.

The southern part of the Bibiani Shear Zone has many localized faults that splay off secondary faults which cut off the Bibiani Shear where gold deposits along these faults are found in a favorable environment for deposition. The amount of shearing that runs through Enchi indicates widespread gold across the entire property representing numerous gold zones prospective for gold mineralization. 2 regional targets Edgewater is delineating a resource lie along the Bibiani Shear (The Boin Gold Zone) and the Nyamebekyere Shear (The Nyamebekyere Gold Zone) which run parallel each other almost the entire length of the property. The Enchi Gold Project has huge exploration upside with over 45 drill holes and trenches with widths over 10 meters and greater than 1 g/t gold have never been followed up on.
The Nyamebekyere and Boin Gold Zones

Edgewater is focusing its initial resource delineation efforts on 2 gold zones with past drilling in widely spaced holes from 150 to 500 meters apart on both the Boin and Nyamebekyere Gold Zones returning encouraging results with 183 RC drill holes totaling almost 18,000 meters have been completed on the property which gives Edgewater a great base to delineate an initial resource by summer / fall of 2011. Edgewater has 2 diamond rigs arriving this quarter with a 3^rdon the way so there will be lots of news coming from Ghana this year.

Nyamebekyere Gold Zone

Nyam is a 1600 meter gold zone that is part of a 15km strike of continuous gold prospects. Shallow RC drilling has been conducted over the entire strike length of this project to depths of only 80 meters hitting mineralization across the extent of the property. Nyam has had 71 holes drilled to date totaling 4,658 meters with drilling encountering economic widths of 10 -20 meters with consistent grades between 1 and 3 g/t gold. The property has 12 known gold deposits. Nyamebekyere has over 1 km of continuous mineralization drilled with no 43-101 resource which will be the focus of an initial resource calculation for this large and extensive gold zone.

Drilling highlights include…

• 11 meters at 3.60 g/t au
• 16 meters at 1.83 g/t au
• 16 meters at 1.66 g/t au
• 9 meters at 3.07 g/t au
• 9 meters at 2.77 g/t au

Boin Gold Zone


Is a 4.5 km gold in soil anomaly zone with drilling to date intersecting mineralization over a 3.6km strike length and has identified 2 sub parallel zones with intercepts up to 15 meters at 3 g/t au and 12 meters of 1.6 g/t au. The Boin Gold Zone mineralization has been documented over 10km associated with the Bibiani Shear. 13,000 meters of RC drilling has been completed on the Zone in 112 holes with 80 grading better than 1 g/t gold. With a major resource planned for 2011.

Drilling highlights include…

• 33 meters at 2.1 g/t au
• 30 meters at 1.92 g/t au
• 21 meters at 2.56 g/t au
• 13 meters at 4.11 g/t au
• 20 meters at 1.57 g/t au

Both the Boin and Nyamebekyere Gold Zones have received extensive drilling in widely spaced holes and provide Edgewater a great base to develop an initial resource after drilling 12,000 – 15,000 meters in 2011. Edgewater’s initial goal for a resource base in Ghana is 1 million ounces which is realistic given all the historical data and past drilling to go on and the very large and extensive mineralized systems on the property. EDW also has other highly prospective targets that were the focus of this summer’s exploration plans including a major anomaly in along the West Sewum Shear and the Eradi prospect.


The next Obuasi?

The Eradi Prospect is made of 3 parallel gold in soil anomalies with an approximate strike length of 3 km. Eradi covers the Enchi – Obuasi Lineament at the northern part of the property. The Enchi – Obuasi Lineament is associated with Anglo Gold Ashanti’s 40 M oz Obuasi gold mine 100km to the east. Only 2 trenches have been dug on the property with the Eradi central trench assaying 37m at 1.47 g/t au. The Eradi prospect represents on of the best undrilled projects on the property and could be the best location to find Obuasi style mineralization on the property. Trenching and drilling are planned for 2011.

The Enchi Project is littered with gold from one end of the 40km property to the other and is one of the most extensive mineralized properties in Ghana. The market is currently giving little or no value to Enchi, but literally has multimillion ounce potential across the entire property. EDW will be locating the best zones and defining initial resources for several shallow open pit mines in similar nature to the Chirano operation with plenty of potential of finding the ‘big one’ in a World Class Obuasi style deposit.


Some benefits to success at Enchi

Edgewater is earning an interest in Enchi from Red Back by spending $5.0M in exploration expenditures within 26 months of the deal. Once Edgewater has earned in, the project will be carried forward on a joint venture basis with additional expenditures made on a pro-rata basis. What makes this deal so enticing is that Edgewater has one of the best partners in the business in what is now Kinross and upon delineation of a 3M oz resource in the measured and indicated category, Red Back has the option to exercise 5M worth of options in Edgewater at 0.50 and a $1. This would increase Kinross holdings in Edgewater to more than 10% of the company if the share structure remains the same. With Kinross owning half the project and 10% of EDW, it would put Enchi very high on K’s list of projects in the pipeline of exploration projects.

If the kind of success EDW has demonstrated at Corcoesto is any indication of what Edgewater is going to do in Ghana, I am confident that Edgewater will meet, if not exceed their initial resource target of 1 million ounces in Ghana.



Edgewater fits the profile of an eventual takeover target

Gold may eventually end up in a supply demand crunch like other commodities. Governments continue to increase the pace of acquisition of the precious metal as a strategic hedge against US monetary policy. This type of action to hoard gold could lead to supply problems of the yellow metal over the short term with senior producers scrambling to ramp up production. With the current elevated prices in gold making low grade bulk tonnage targets lucrative mining operations and prices set to continue to rise over the coming years, a possible demand crunch could appear as governments continue taking physical delivery of the yellow metal. Producers will be in a need to ramp up supply over the short term and the best projects that have the most leverage are these types of projects that Edgewater is developing.

The best projects to deliver fast track production capability are the open pit projects. They are low cost and low risk as a mining operations and a million ounce open pit deposit has the potential to be at least a 100,000 – 200,000 oz per year producer over 5 – 8 years and has a low time to production timeframe once the development is initiated. The deposits that are seen to have the greatest value and leverage to current prices are the 1 g/t to 2g/t open pit operations. At $1500 gold these type of projects value per ton is between $50 and $100, which is an extremely lucrative mining operation for an open pit scenario.



Edgewater Economics

Currently EDW has 1.2M ounces and valued at $60M market cap which is a good value for a million ounce better than 1 g/t au deposit that has open pit potential. This currently gives EDW an in-situ value of $50 per ounce. The underlying value for Edgewater is seeing forward a couple years when EDW delivers on their plans for both Corcoesto and Enchi. If they come close to their initial targets for 2011 of a 1M oz resource for Enchi and a possible 2M oz’s and a scoping study for Corcoesto. You are paying $20 per oz looking forward to late 2011 early 2012. Both Enchi and Corcoesto grade well above the 1 g/t mark, which makes them that much more attractive as open pit projects amenable to conventional mining processes. The multimillion ounce open pit potential of Edgewater’s projects makes them some of the best on the market when looking at current value and future growth. If EDW comes close to delivering on their targets this year and remain consistently valued per at $50 an ounce then you can expect a share price in excess of $3.

With 2 projects that have significant potential for expansion, Edgewater is now poised to capitalize adding material value to their inventory of resources and being an attractive takeover target with 2 projects that have open pit potential. They have experienced teams working on both projects in mining friendly countries and Mr Salamis experience will help bring material shareholder value to Edgewater in the scenario that they become a takeover target by a producer that wants to add some quick production ounces. With a near term open pit mine capable of better than 100,000 oz ‘s plus a multi million ounce resource Ghana that has Chirano style potential, Edgewater will be an attractive target for any gold company wants to add both inventory and near term production potential.



Multi million ounces mines in Ghana are worth BILLIONS!!!

Ghana and other West African countries are top gold countries because they are thought to make up part of the same greenstone belts that run across the northern part of South America which are host to several rich gold deposits. Geologically these deposits make up the same belt and host World Class Deposits on either side of the Atlantic and are some of the most prospective places in the world to explore for gold. Ghana is Africa’s second leading gold producer with 2.9M oz’s produced annually and is taking up the continued slack from declining South African production. Being in a politically safe place to invest and a top African producer, a multimillion ounce gold project in Ghana will command a premium as proven by the takeover of Red Back by Kinross.

Multi million ounce mines Ghana are worth billions and Edgewater has the best district scale project in Ghana. The $7.2 billion Kinross paid for Red Back Mining which represents 500,000 ounces of production is a very steep price although it does not represent true ounces in the ground. Red Back has 2 producing mines in the Chirano Mine in Ghana and the Tasiast Gold Mine in Mauritania. Neither mine is in full production yet but both are expected to produce around 250,000 ounces a year each at $335/oz cost for Tasiast and a $475/oz cost for Chirano in 2011. One can infer at least a $2.2B - $3.2B price for Chirano which leaves a potential takeover price for EDW in the billions if they delineate a multimillion ounce resource at Enchi.

Top producing companies who want to fast track their production profile look to Ghana as proven by how fast Chirano has gone into production. Kinross looking to ramp up production in Ghana will look to EDW first, now that they have the Chirano mine, economies of scale would make a great fit to ramp up production once all the bugs have been worked out of Chirano. If Edgewater can prove up a multimillion resource at Enchi, then the project in Ghana alone will justify a hefty market cap with the other multi million ounce advanced stage project in Spain, a sweetener to any potential deal for a producer looking to add ‘fast ounces.’

Edgewater Exploration is rated as a strong buy going forward with solid low risk growth projects that will add material value to EDW going forward in 2011. They have the financial wherewithal to see the projects through, a solid partner in Kinross and are exploring and delineating a multimillion ounce resource in Ghana which will command a premium at market. Edgewater also has the key ingredient management and expertise to see this vision through which is 2 multi million ounce resources with open pit economics in their inventory.


Christophe Skidmore


Reporter for Beat the Market Stock Picks