Canaco Resources Inc.

Canaco Resources Inc.

December 16, 2009 06:00 ET

Canaco Drills 56.2 Metres of 6.34 Grams Gold Per Tonne at Magambazi

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 16, 2009) - Canaco Resources Inc. (TSX VENTURE:CAN) is excited to announce further high-grade diamond drill intersections from the Magambazi gold prospect at the Company's Handeni Gold Project located in the Handeni region of the United Republic of Tanzania.

On the project to date, MGZD0012 has produced the best diamond drill intercept of 56.2m @ 6.34 g/t Au, topping the previous best intercept in discovery hole MGZD0001 of 59m @ 4.28 g/t Au (refer to our press release dated October 6, 2009). Other significant new results include 23.8m @ 3.86 g/t Au in MGZD0011 and 2.7m @ 10.95 g/t Au in MGZD0009.

New results for MGZD0012 include:

- 18.2m @ 7.98 g/t Au from 170.8m (Upper Lode)

- 30m @ 7.02 g/t Au from 196m (Lower Lode) within the broad mineralized interval of

- 56.2m @ 6.39 g/t Au from 170.8m

The lower lode in MGZD0012 is intersected 130 metres below surface and 55 metres down dip of hole MGZD0011. The results allow interpretation of the plunge of the system and demonstrate a moderate to steep NNW plunge of the high-grade mineralized zone.

Interpretation of the drill hole data to date confirms that the "Magambazi Mineralized Zone" is a broad, intense siliceous alteration zone with sulphide mineralization (pyrrhotite, arsenopyrite, pyrite and chalcopyrite) and frequent occurrences of trace visible gold. Contained within this broad envelope are two geologically and geochemically distinct intervals of moderate to high-grade gold mineralization (the "upper" and "lower" lodes). Mineralization dips 60 to 88 degrees towards the west-southwest.

The Company has continued the Phase 1 diamond drilling at Magambazi for a total of 4,295 metres of diamond drilling completed in 17 holes. High-grade mineralization in the Magambazi Mineralized Zone has been intersected in drill Hole MGZD001, 4, 5, 7, 9, 11 and 12.

Three relatively shallow diamond drill holes (MGZD0018-20), for a total of 425 metres have been drilled at Magambazi North, 800 metres northwest along trend to test beneath a small pit which has returned channel rock chip samples of 5m @ 4.92 g/t Au (refer to our press release dated November 3, 2009).

The Magambazi prospect lies at the southern end of the 11 km Handeni Gold Trend, an area of anomalous gold geochemistry defined by soil sampling surveys and the presence of artisanal mining operations including Canaco's Magambazi, Magambazi North, Semwaliko, Semwaliko North and Majiri Bomba prospects.

TABLE 1 -Magambazi Drill Results to Date - Significant and recent intercepts
Inter- Au
val Grade
East North From To (1) (2)
Drill (met- (met- Azi- (met- (met- (met- (grams/
Hole res) res) muth Dip res) res) res) tonne) Notes
MGZD012 10175 60480 60 -59 170.8 226 56.2 6.39(8) Mineralized Zone
Including 170.8 189 18.2 7.98 Upper Lode
Including 196 226 30 7.02 Lower Lode
MGZD011 10177 60480 60 -48 139 181.1 42.1 2.42(7) Mineralized Zone
Including 139 146 7 1.37 Upper Lode
Including 164 181.1 23.8 3.86 Lower Lode
MGZD009 10243 60320 60 -73 175 177.7 2.7 10.95 Mineralized Zone
MGZD007 10246 60360 60 -79 156 195.6 39.6 3.56(6) Mineralized Zone
Including 156.6 170.1 13.5 4.01 Upper Lode
Including 184 196.2 12.2 6.99 Lower Lode
MGZD006 10153 60520 60 -50 200.7 202 1.3 3.02 Mineralized Zone
MGZD005 10247 60360 60 -65 128 169 41 3.32(5) Mineralized Zone
Including 128 144 16 3.34 Upper Lode
Including 161 169 8 9.95 Lower Lode
MGZD004 10249 60360 60 -50 110 137 27 2.82(4) Mineralized Zone
Including 113 120.5 7.5 2.85 Upper Lode
Including 127 137 10 5.15 Lower Lode
MGZD001 10176 60440 60 -50 148 207 59 4.28(3) Mineralized Zone
Including 154 166 12 4.18 Upper Lode
Including 189 206 17 10.38 Lower Lode
(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) Grade calculation includes 8m internal waste
(4) Grade calculation includes 6m internal waste
(5) Grade calculation includes 18m internal waste
(6) Grade calculation includes 14m internal waste
(7) Grade calculation includes 10m internal waste
(8) Grade calculation includes 5m internal waste

Canaco has the option to earn a 100%, interest in the Magambazi property by making a US$1.8 million cash payment and providing a 2% Net Smelter Royalty ("NSR") to Magambazi Mines Ltd., a Tanzanian company that represents the interests of artisanal miners and local families. Also, the Company owns a 100% interest in the contiguous 200 square kilometre Kilindi Prospecting License ("PL"), which contains the entire strike extent of the Handeni Gold Trend, as it has been defined to date.

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. Core is sawn in half with one half shipped for analysis to SGS Laboratories in Mwanza Tanzania. The remainder of the core is stored and secured for future assay verification. 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, including images of 2009 exploration activities, can be viewed at the Company's website or at Canaco Resources 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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