Canaco Resources Inc.
TSX VENTURE : CAN

Canaco Resources Inc.

May 19, 2010 06:00 ET

Canaco Announces 94.14% Gold Recovery From Preliminary Metallurgical Test Work at the Magambazi Gold Discovery

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 19, 2010) - Canaco Resources Inc. (TSX VENTURE:CAN) is extremely pleased to announce positive results from preliminary metallurgical test work reporting high gold recoveries from bulk samples collected from the Company's Magambazi gold discovery located in the Handeni region of the United Republic of Tanzania.

Highlights from the metallurgical test work include:

  • Gold recovery of 94.14% is obtained using a combination of gravity separation and cyanidation;
  • The majority of gold is extracted using gravity separation with 72.59% of the gold recoverable as free gold; and,
  • No refractory issues with respect to the ore grade mineralization have been identified.

The preliminary, diagnostic metallurgical test work was completed using a bulk sample of approximately 380kg (including mineralized core samples from four diamond drill holes at Magambazi and samples taken from artisanal hard-rock mines on the Upper and Lower Magambazi Lodes). The sample underwent crushing to a nominal 74μm (200 mesh) and gravity separation was conducted to yield 72.59% recovery, followed by an 8 hour bottle roll leach to extract the majority of the residual gold, leading to a total recovery of 94.14%.

"The high degree of liberation and availability of the gold indicated by these results is very encouraging," said Andrew Lee Smith, Canaco's President and CEO. "While the results of this early work cannot be considered definitive, these tests have demonstrated that the Magambazi ore assessed to date is amenable to producing excellent gold recoveries using standard ore dressing processes."

The preliminary tests will be followed up by detailed metallurgical and mineralogical study to capitalize on the amenability of the Magambazi ore to gravity concentration in the development of an optimized processing flow-sheet. The use of flotation and magnetic separation will also be investigated for potential incorporation into an optimized recovery flow-sheet.

The preliminary metallurgical test is the result of the ongoing exploration and economic assessment of the Magambazi gold discovery. Current exploration is focused on continuing to expand both the Magambazi and Magambazi North Lode systems and additional diamond drill results are expected in the near future. Importantly, the current drill campaign is showing that the lode systems are continuous over significant strike and dip lengths and are geologically predictable.

The preliminary metallurgical test work program was conducted in China at the Northwest Geological Institute for Non-Ferrous Metals under the supervision of Senior Engineer, Dr. Zhengtao Liu. 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, including drill hole intercepts, drill collar maps, and images of 2009 exploration activities, can be viewed at the Company's website www.canaco.ca or at www.sedar.com. Canaco Resources Inc. 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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