DAILY NEWS May 3, 2010 6:01 PM - 0 comments

More gold hits expand Canaco's Handeni potential

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Vancouver - The Kilindi claim at Canaco Resources' (CAN-V, HJ6-F) Handeni gold project in eastern Tanzania spans 199 of the project's 200 sq. km, but it is the claim covering the other small bit of land that currently has the company's attention.

Since the fall, Canaco has been pulling long and high-grade gold intercepts from the Magambazi claim that sits adjacent to the Kilindi claim and makes up a scant 0.34 sq. km of the Handeni project.

The company is currently working through a 10,000-metre drill program to better define the Magambazi mineralization, which continues into the Kilindi claim. The company has identified three sections in the area referred to collectively as the Magambazi prospects: Magambazi, Magambazi Central, and Magambazi North.

The prospects lie along a 1.4-km long trend of gold mineralization indicated by bedrock gold, artisanal mine workings and soil geochemical anomalies.

The company's latest drilling efforts, 240 metres north of other high-grade hits at Magambazi, have increased the defined strike in the area to 440 metres. The system is still open down dip, down plunge and along strike to the north.

The latest results from Magambazi include hole 45, a 200-metre step out to the north that hit 21.7 metres grading 6.79 grams gold per tonne starting at 246 metres, and hole 43, another 200-metre step out that cut 21.2 metres grading 4.8 grams gold starting at 247 metres.

New infill drilling at Magambazi yielded 3.8 metres averaging 19.83 grams gold, 15.9 metres carrying 2 grams gold and 15.3 metres returning 1.87 grams gold.

Mineralization at Magambazi was first established with hole 1, which cut 59 metres grading 4.28 grams gold and was followed by hole 5 that hit 41 metres carrying 3.32 grams gold and hole 7 carrying 40 metres that returned 3.56 grams gold.

At Magambazi North, 800 metres northwest of Magambazi, the company has hit several near surface gold intercepts. Hole 19 cut 18 metres averaging 3.3 grams gold starting at 70 metres, hole 23 returned 30.3 metres grading 3.46 grams gold from 55 metres downhole, and hole 27 intersected 27.7 metres grading 2.18 grams gold from 99 metres. Magambazi North is part of the Kilindi claim.

Mineralization in the area occurs in quartz-arsenopyrite-pyrrhotite veined silica-garnet alteration zones in high-grade metamorphic rocks.

The Handeni project is located next to the town of the same name. The area has road access but no mining infrastructure since gold was only discovered in the area in 2003 and has so far only been subject to artisanal mining.

Canaco has an option to buy a 100% interest in the Magambazi prospects from Magambazi Mines, which represents artisanal miners in the area, for US$1.8 million plus a 2% net smelter return royalty. Canaco owns 100% of the Kilindi property.

The company secured financial backing from SinoTech in a private placement last year. The China-based company, through several levels of ownership, is controlled by the State-Owned Assets Supervision and Administration Commission of China. SinoTech bought 32 million shares at 5¢ per unit and now owns 28% of Canaco. The company was subsequently able to appoint two directors to Canaco's board.

Canaco's share price was down 4¢ on the day to close at 65¢. The company has a 52-week share price ranging between 6¢ and 75¢ and 118 million shares outstanding.