Canaco drills 21.7 m of 6.79 g/t Au at Handeni

2010-05-03 06:38 ET - News Release

Dr. Jingbin Wang reports

CANACO DRILLS 21.7M GRADING 6.79 GRAMS GOLD PER TONNE AND 21.2M GRADING 4.80 GRAMS GOLD PER TONNE AT MAGAMBAZI CENTRAL, EXTENDING THE MAGAMBAZI GOLD ZONE OVER 200M TO THE NORTH

Canaco Resources Inc. has released results from intercepts at Magambazi Central and Magambazi, located at the company's Handeni gold project in the Handeni region of the United Republic of Tanzania. Extensional drilling 240 metres north of previously reported drilling conducted at Magambazi (refer to Stockwatch news dated March 8, 2010) has intersected high gold grades over large widths, including:

• 21.7 metres at 6.79 grams per tonne gold, including 9.5 m at 12.75 g/t Au (MGZD0045);
• 21.2 m at 4.8 g/t Au, including 11 m at 7.9 g/t Au (MGZD0043).

Other significant intercepts have been returned for extensional and infill drilling at Magambazi, including:

• Eight m at 3.8 g/t Au, 7.7 m at 5.42 g/t Au and 4.2 m at 5.87 g/t Au (MGZD0042);
• 11.5m at 3.16 g/t Au (MGZD0044);
• 3.8 m at 19.83 g/t Au and 3.5 m at 7.71 g/t Au (MGZD0040).

The Magambazi lodes, containing high-grade gold intercepts on every section drilled to date, are now defined over a 440 m strike (from 60320N to 60760N local grid), and the system remains open downdip, downplunge and along strike to the north. New lodes have also recently been identified to the west of the main Magambazi upper and lower lodes, with intercepts of 34.6 m at 1.36 g/t Au (MGZD0040) from 102 m (including 12 m at 2.83 g/t Au).

                   MAGAMBAZI DRILL RESULTS

Local
azimuth/
drill    Local  Local     Program       Dip                From        To
hole         N      E        type  (degrees)            (metres)  (metres)

Additional
MGZD014  10244  60320      Assays    90/-62               160.0     161.0
MGZD038  10203  60400      Infill    90/-65               219.7     235.0
                                              including   219.7     226.4
                                                    and
                                              including   229.9     232.0
MGZD039  10200  60400      Infill    90/-71               199.0     202.5
                                                    and   233.3     249.2
                                              including   233.3     238.0
                                                    and
                                              including   245.0     249.2
MGZD040  10243  60400      Infill    90/-90               102.0     136.6
                                              including   106.0     109.5
                                              including   103.0     115.0
                                                    and   211.0     214.8
MGZD041  10200  60400      Infill    98/-79               228.4     233.7
                                                    and   278.0     280.1
40 m
MGZD042  10129  60560   Extension    90/-58               178.7     186.7
                                                    and   198.0     205.7
                                                    and   226.0     242.4
                                              including   226.0     230.2
200 m
MGZD043  10134  60760   Extension   101/-75               149.7     159.9
                                                    and   224.0     227.8
                                                    and   247.0     268.2
                                              including   247.0     258.0
40 m
MGZD044  10128  60560   Extension    90/-68               261.4     281.0
                                              including   261.4     272.9
200 m
MGZD045  10133  60760   Extension    90/-82               246.0     267.7
                                              including   246.0     255.5

Drill               Interval       Au grade
hole                 (metres)  (grams/tonne)

MGZD014                  1.0           7.55
MGZD038                 15.3           1.87
         including       6.7           2.64
               and
         including       2.1           4.07
MGZD039                  3.5           1.69
               and      15.9           2.00
         including       4.7           3.47
               and
         including       4.2           3.11
MGZD040                 34.6           1.36
         including       3.5           7.71
         including      12.0           2.83
               and       3.8          19.83
MGZD041                  5.3           1.74
               and       2.1           2.85
MGZD042                  8.0           3.80
               and       7.7           5.42
               and      16.4           2.03
         including       4.2           5.87
MGZD043                 10.2           2.87
               and       3.8           3.36
               and      21.2           4.80
         including      11.0           7.90
MGZD044                 19.6           2.32
         including      11.5           3.16
MGZD045                 21.7           6.79
         including       9.5          12.75

The Magambazi, Magambazi Central and Magambazi North prospects are part of a 1.4-kilometre-long trend of gold mineralization, defined by bedrock gold occurrences, artisanal mine workings and soil geochemical anomalies. This 1.4-kilometre trend represents the southernmost segment of the 11-kilometre Handeni gold trend contained within the company's Handeni gold project. The diamond drilling operation is progressing, with the objective of extending the mineralization at Magambazi North to the north, south and downdip, and at the Magambazi downdip and along strike.

Preliminary metallurgical testwork is reaching completion, and the results are expected to be announced in the near future. Canaco is gearing up toward increasing its diamond drill capacity with a second rig, and is currently finalizing plans for rotary air blast (RAB) and reverse circulation (RC) drilling, as well as a detailed aeromagnetic survey across the project area.

Harvest acquisition update:

Further to Canaco's proposed acquisition of a 70-per-cent equity interest in Harvest PLC, a private Ethiopian company with exploration assets in the Tigray region of northeast Ethiopia (see Stockwatch news dated Jan. 21, 2010), legal and technical due diligence remains continuing, and the closing date of the proposed transaction has been extended to June 30, 2010.

The planning, execution and monitoring of quality control programs at the Handeni project are under the supervision of Andrew Lee Smith, PGeo, Canaco's chief executive officer, and Dr. David Groves, Canaco's director of project development, Tanzania. Mr. Smith and Dr. Groves are qualified persons as defined by National Instrument 43-101. Canaco utilizes an industry standard quality-assurance/quality-control (QA/QC) protocol with respect to sampling procedures. Blanks and certified reference standards are inserted into the sample stream to monitor laboratory performance, and duplicates of pulps and bulk rejects are also used to monitor laboratory performance.

Additional information and public documents about Canaco Resources, including drill hole intercepts, drill collar maps and images of 2009 exploration activities, can be viewed at the company's website or on SEDAR's website.

We seek Safe Harbor.