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 Tue Oct 5, 2010
Damara Gold Project, Namibia: Gold Zones Identified By Drilling and Soil Geochemical Surveys confirm potential for Navachab-style Gold Mineralisation

 
October 5, 2010

Helio Resource Corp (TSX-V: HRC) is pleased to provide an update on its 100%-owned [through its wholly owned subsidiary, BAFEX Exploration (Pty.) Ltd.] Damara Gold Project ("DGP"), located in Namibia.

A Joint Venture agreement between Helio and Desert Minerals (UK) Ltd was recently terminated, and the four licences (covering 396,000ha or 3,960km2), namely Etjo South, Okakango, Wilhelmstal and Otjimbojo, that comprise the Damara Gold Project have now reverted to Helio. The licences are shown on the attached Map 1.

The DGP is located between AngloGold Ashanti's (AGA) Navachab Mine to the southwest and Auryx Gold Corp.'s Otjikoto Project to the northeast.

A review of the data generated by Desert, and previously by AngloGold Ashanti, suggests strong potential for Navachab- and / or Otjikoto-style gold mineralisation on the four licences.

Highlights
  • Drill testing of various targets returned intercepts including 3m at 4.7g/t Au, 8m at 3.0 g/t Au, 3.4m at 3.0g/t Au (open), 4m at 6.1g/t Au, 1m at 71g/t Au, 6m at 6.4g/t Au (open), 1m at 10.5g/t Au, 4m at 8.6g/t Au (open), and 34m at 0.9g/t Au.
  • Drill hole OTRC30 (AGA) bottomed in 4m grading 8.6g/t Au, and the last 1m sample of the hole assayed 18.8g/t Au. The nearest drilling on strike from this hole is 250m away.
  • Drill hole OTD 15 (AGA) bottomed in 3.4m grading 3g/t Au. The main area of drilling is over 1,000m away.
  • Rock chip sampling of mineralised outcrop by AGA returned up to 5m grading 11.3g/t Au -- never drill tested;
  • The same geology that hosts the Navachab gold mine and Otjikoto resource;
  • A 7,000m long series of Au As Cu soil anomalies related to folded neo-Proterozoic marbles, similar to the geological setting of the Navachab gold mine;
  • Numerous geochemical soil and bedrock sample anomalies never followed up;
Navachab Gold Mine

The DGP licences are located between 20-100km to the east and northeast of, and in the same geological terrain as AngloGold Ashanti's Navachab mine (see the attached Maps 1 and 2). Navachab has been in production since 1989 and, as of December 2009, has mined over 1 Moz of gold and has a non-NI 43-101 compliant resource of 3.73 Moz grading 1.13g/t Au (source AngloGold Ashanti Mineral Resource and Ore Reserve Report 2009).

The Otjikoto Project

Auryx's Otjikoto Gold Project, located approximately 150km northeast of Helio's licences has a NI 43-101 indicated resource of 28Mt grading 1.34g/t Au and an inferred resource of 17.1Mt grading 1.28g/t Au for total of 1.93 Moz.

Helio's DGP Project

Two of the four DGP licences, Wilhelmstal and Otjimbojo (located 25km east and 30km north-east of the Navachab Gold Mine, respectively) have had significant exploration conducted on them. Gold Kop, the first place where gold was mined in Namibia by German colonialists (who called it Gold Kuppe) in the early 20th century, is located within the Otjimbojo licence.

AngloGold Ashanti (AGA) conducted sporadic exploration on both licences between the 1980s and the mid-2000s since the area was underlain by the same prospective target horizons as Navachab (see Map 2). Work included stream sediment, soil and rock sampling, plus percussion, reverse circulation (RC) and diamond drilling, especially around the old gold workings in the vicinity of Gold Kop.

Results from the main AGA soil-sampling grid (covering 4.1 x 1km at a sample spacing of 20 x 50m) over Gold Kop and adjacent areas outlined a major discontinuous Au ± As ± Cu anomaly over a distance of approximately 7,000m on both limbs of a folded marble unit, which is recognised as the most prospective geological unit in the region (see Map 3). The anomaly is open to the south. The geochemical response is particularly well-developed over secondary fold hinges, which is similar to the structural setting of the Navachab gold deposit.

The host lithology to the Gold Kop target, which is similar to that at the Navachab Mine, can be traced for over 20km along strike. No exploration has been conducted over the strike extents of the target-host outside the 4,100m long soil sampling grid.

Drilling was conducted by AGA sporadically over a 2,500m strike length of the Gold Kop target. This drilling focussed on one of the parasitic fold hinges in the centre of the soil-sampling grid covering 250m of strike. No drilling was conducted over the main fold hinge, possibly because the geochemical response of soils here is relatively low. However, rock grab samples grading >1g/t Au were collected by AGA from the main fold hinge area.

AGA drilled 22 open-hole percussion holes (for 530m), 32 RC holes (for 2,014m) and 21 diamond drill holes (for 1,696m). Resource estimates were made by AGA for the Gold Kop prospect, but these are not NI 43-101 compliant.

Desert drilled 18 RC holes (for 1,485m) and three BQ-sized diamond drill holes (for 530m). Holes were drilled close to the main focus of the AGA drilling. All holes were focussed on the near-surface mineralisation. Results obtained from the AGA and Desert drilling include the following intercepts:

Hole Comment Source From (m) Length (m) Grade (Au g/t)
OTD4   AGA  50 1 6.6
OTD4   AGA  52 1 2.8
OTD5   AGA  19 20 0.4
and   AGA  47 1 2.1
OTD6   AGA  26 3 4.7
OTD7   AGA  24 21 0.5
and   AGA  57 1 7.5
and   AGA  66 8 3
OTD8   AGA  3 27 0.3
OTD13   AGA  44 1 5.3
OTD15 OPEN AGA  72 3.4 3.0
OTD22   DESERT  38.2 4 6.1
OTD23   DESERT  62.6 12.9 0.6
OTP16   AGA 3 1 71.0
OTRC8   AGA  5 1 2.6
OTRC9   AGA  6 3 2.1
OTRC13 OPEN AGA  58 4 1.2
OTRC16   AGA  13 1 4.8
OTRC18 OPEN AGA 54 6 6.4
OTRC20   AGA  8 1 10.5
OTRC27   AGA  19 1 3.4
and   AGA  5 1 3.9
and   AGA 42 5 1.5
OTRC28   AGA  44 1 6.1
OTRC29   AGA 16 3 1.5
OTRC30 OPEN AGA 56 4 8.6
including OPEN AGA  59 1 18.8
OTRC45 OPEN DESERT  40 43 0.2
OTRC46 OPEN DESERT  0 13 0.5
OTRC47   DESERT  7 25 0.4
and   DESERT  53 12 0.5
OTRC48   DESERT 1 2 3.3
and   DESERT 46 34 0.9

Results demonstrate the potential for both high-grade and bulk-tonnage gold targets at Gold Kop. Mineralised zones are open in both strike directions and to depth. Numerous geochemical and structural anomalies remain to be drill-tested.

Please note that these drill results are not NI 43-101 compliant, due to the analytical laboratories used (Navachab Gold Mine lab in the case of the majority of the AGA holes). Eleven of Desert's RC holes were not assayed, and Helio anticipates that it will submit samples from the Desert drilling to an accredited laboratory in the near future.

Gold mineralisation occurs with massive and disseminated sulphides (pyrite, pyrrhotite, chalcopyrite) with or without quartz veins, together with pervasive and vein-type tremolite alteration. In these respects, mineralisation is similar to that found at and around the Navachab mine. The Company believes that the potential for discovering a Navachab-style deposit at Otjimbojo is good.

At Wilhelmstal, the prospective marble units occur in a large synform and can also be traced for over 20km along strike. Geochemical soil sampling by AGA over a 3 x 2.5km area on a 100m by 50m grid identified six discrete gold-in-soil anomalies 35km from the Navachab Mine. Two of these, approximately 2,500m apart (E-W) were drill tested by open-hole percussion drilling. The best holes in the western area included 1m grading 4.6g/t Au and 3m grading 3.2g/t Au. Intersections from the eastern area include 7m grading 2.2g/t Au and 1m grading 4.5g/t Au. No follow up work has been conducted, and the anomalies remain open in all directions.

Outside of the main gridded area, AGA conducted rock sampling on an anomaly 5.5km east of the easternmost drill holes. Grab samples up to 20.7g/t Au and channel samples of 5m grading 11.3g/t Au were reported. No follow-up work was done here.

The other licences comprising the Damara Gold Project, Okakango and Etjo South, both contain soil and stream sediment anomalies similar to those on Wilhelmstal and Otjimbojo, together with the same prospective rock units. A regional prospectivity analysis is ongoing, in order to develop targets for further work.

The projects are favourably located, within 30km of the main paved road and railway, with the main Ruacana-Windhoek power line crossing both the Otjimbojo and Wilhelmstal licences. Both areas are also located close to a major (seasonal) river, and have higher rainfall than is found at Navachab.

The Damara project licences form an excellent addition to Helio's portfolio, complementing the forthcoming NI 43-101-compliant resource on Helio's SMP Project in Tanzania, which is anticipated within this month (Company Press Release dated 29th September 2010).

Chris MacKenzie, M.Sc., C.Geol., Helio's COO and a Qualified Person as designated by NI 43-101, supervises the exploration at the Damara Gold Project, including the sampling and quality assurance / quality control programmes, and has reviewed the contents of this news release.

For additional information, please contact Richard Williams or Irene Dorsman at +1 604 638 8007 or by e-mail to richard@helioresource.com or irene@helioresource.com.

ON BEHALF OF THE BOARD OF DIRECTORS

"Richard D. Williams"
Richard D. Williams, P.Geo
CEO
"Chris MacKenzie"
Christopher J. MacKenzie, C.Geol.
COO


Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


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