Canaco Resources Inc.
TSX VENTURE : CAN

Canaco Resources Inc.

January 27, 2010 13:12 ET

Canaco Discovers New Gold Zone at Handeni-Drills 18 Metres Grading 3.3 Grams Gold Per Tonne at Magambazi North

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 27, 2010) - Canaco Resources Inc. (TSX VENTURE:CAN) is pleased to announce a new discovery from surface diamond drilling at Magambazi North, 800 metres northwest from Magambazi, on the 100% owned Kilindi license at the Company's Handeni Gold Project, located in the Handeni region of the United Republic of Tanzania.

Following the successful initial diamond drilling campaign at Magambazi (refer to our press releases dated October 6, 2009, November 3, 2009 and December 16, 2009), with best intersections of 56.2 metres at 6.43 g/t Au in MGZD0012, a diamond drilling program was initiated at Magambazi North, broadly along trend of the mineralized zones at Magambazi. The objective was to test the largest coincident gold and arsenic soil anomaly on the Canaco property.

To date, nine diamond drill holes (MGZD018 to MGZD020 & MGZ023 to MGZ028) totalling 1,325 metres have been drilled to evaluate targets at Magambazi North. Initial results from Hole 19 have indicated the presence of an extensive zone of alteration and gold mineralization, similar in nature to that at Magambazi, but dipping gently southwest, confirming that it is sited within a thrust zone. Subsequent drilling (holes 23 through 28) has continued to intersect broad intervals of strong sulphide mineralization and confirmed the continuity of the mineralized thrust zone at Magambazi North. The mineralized thrust zone has now been traced 140m along strike to the west and 200m down-dip and remains open in both directions. The drill program at Magambazi North is ongoing with assay results pending for drill holes 23 through 28. Holes 21 and 22 were drilled to intersect targets in Magambazi Central and will be reported separately.

TABLE 1 – Magambazi North Initial Drill Results

Drill Hole(3) From To Interval(1) Au Grade(2) Notes Dip/Azimuth
(metres) (metres) (metres) (grams/tonne)
MGZD019 70 88 18 3.30 Mineralized Thrust -50º / 237º
Incl.  70 78 8 5.68 Mineralized Thrust
And 100 103 3 3.04 -
MGZD018 21 24.7 3.7 2.25 Mineralized Thrust -50º / 340º
MGZD020 63 63.7 0.7 4.00 - -90º / 0º
MGZD023 18 32 14 Assays Pending Mineralized Thrust -55º / 237º
And  54 75 21 Assays Pending
MGZD024 64 72 8 Assays Pending Mineralized Thrust -55º / 237º
MGZD025 36 54 18 Assays Pending Mineralized Thrust -55º / 237º
And  75 83 8 Assays Pending
MGZD026 95 105 10 Assays Pending Mineralized Thrust -55º / 237º
MGZD027 101 126 25 Assays Pending Mineralized Thrust -55º / 237º
MGZD028 180 189 9 Assays Pending Mineralized Thrust -55º / 237º
  1. Drill intercept lengths are down-hole lengths reflecting apparent widths of mineralization with true widths ranging between 60% - 100% of the reported down-hole lengths.
  2. The calculation of drill intercept employs a 0.3 gAu/t cut-off and no cutting grade for high gold values
  3. A drill collar location map can be found on the company's website, www.canaco.ca

Bedrock exposure is limited in the Magambazi North area, although an alteration zone in a small pit returned rock chip samples of 5 metres at 4.92 g/t Au (refer to our press release dated November 3, 2009). Importantly, this mineralized zone appeared to be located in a thrust zone that had a gentle (about 30 degree) dip to the southwest on a broadly east-northeast trend, similar to the trends of other structurally-controlled gold deposits further east in the Lake Victoria Goldfields. For example, the majority of the gold in the giant Geita gold deposit is hosted in an east-northeast trending thrust zone.

The Magambazi North prospect was originally defined by geochemical surveying designed to identify the source of large alluvial deposits found in river beds draining the immediate area. The results of the soil sampling program returned 33 samples >100ppb Au with a peak value of 1218ppb Au (1.22g/t Au). The Magambazi North anomaly is 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 includes the Magambazi, Magambazi Central and Magambazi North targets (collectively known as the Magambazi prospects) and represents the southernmost segment of the 11 kilometre Handeni Gold Trend contained within the Company's Handeni property.

Further drill results at Magambazi have confirmed the down dip continuity of the gold mineralized zone. The mineralization remains open along strike and down dip and will be the subject of the second phase of the diamond drilling program scheduled for the first quarter of 2010 and will begin once the phase one drilling at Magambazi North is complete.

TABLE 2 – Magambazi Drill Results to Date – Recent Intercepts

Drill Hole(3) From To Interval(1) Au Grade(2) Notes Dip/Azimuth
(metres) (metres) (metres) (grams/tonne)
MGZD014 41 46 5 1.53 Upper Lode -61.5º / 57º
MGZD015 149 154 5 2.10 Upper Lode -73º / 57º
And     200 210 10 2.76 Lower Lode
MGZD016 135 140 5 5.17 Upper Lode -81º / 57º
And   240.7 246 5.3 2.76 Lower Lode
Incl.   240.7 244.2 3.5 8.30 Lower Lode
MGZD017 94 99 5 3.06 Upper Lode -81º / 57º
  1. Drill intercept lengths are down-hole lengths reflecting apparent widths of mineralization with true widths ranging between 60% - 100% of the reported down-hole lengths.
  2. The calculation of drill intercept employs a 0.3 gAu/t cut-off and no cutting grade for high gold values
  3. A drill collar location map can be found on the company's website, www.canaco.ca

The 2010 exploration program at the Handeni project is ongoing. The program will be multi-phased consisting of geological, geochemical and geophysical surveys combined with RAB, RC and diamond drilling designed to continue the development of the discoveries at Magambazi and Magambazi North and the assessment of priority targets along the 11 kilometre Handeni Gold Trend. An airborne magnetic survey is being initiated that will provide the Company with the ability map the magnetic responses associated with the alteration and mineralization at Magambazi and guide exploration.

The planning, execution and monitoring of quality control programs at the Handeni project are under the supervision of Andrew Lee Smith, P.Geo, Canaco's CEO 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 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 images of 2009 exploration activities, can be viewed at the Company's website www.canaco.ca or at www.sedar.com. Canaco is listed on the TSX Venture Exchange and is engaged in the exploration and development of Tanzanian gold prospects.

Andrew Lee Smith, P.Geo, CEO, Canaco Resources

Dr. Jingbin Wang, Chairman, Canaco Resources

The Company relies on litigation protection for "forward-looking" statements.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the release.

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