Canaco Resources Inc.

Canaco Resources Inc.

September 28, 2009 09:27 ET

Canaco Announces Preliminary Results From Magambazi Drilling

53 Metres at 4.32 Grams Gold Per Tonne

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 28, 2009) - Canaco Resources Inc. (TSX VENTURE:CAN) is pleased to announce preliminary assay results from the first drill hole of the Company's current diamond drilling program at the Magambazi gold prospect located in the Handeni region of the United Republic of Tanzania.

MGZD001 is the first drill hole in a 2000 metre drilling program at Magambazi, which began in early September (refer to our press release dated September 8, 2009) and marks the first diamond drilling campaign ever to be conducted on the property. The 293 metre drill hole (MGZD 001) has intersected a broad, intense alteration zone and sulphide mineralization (pyrrhotite, arsenopyrite, pyrite and chalcopyrite) with trace amounts of visible gold in eight separate metre intervals. This zone of alteration and mineralization intersected the target at approximately 70 metres below surface and has returned an overall gold grade of 4.32 grams gold per tonne over 53 metres. High grade gold mineralization occurs in three intervals within the broader alteration envelope.

To date, assays have been received for 73 metres of sampled drill core including results for two of these three intervals. The overall width of the reported intercept is expected to increase to 58 metres on return of pending assay results.

These results are:

Drill Hole From To Interval(1) Au Grade(2)
Number (metres) (metres) (metres) (grams/tonne)
MGZD001 148 201 53 4.32(3)
including 154 166 12 4.18
including 189 200 11 13.93
MGZD001 203 206 3 Assays pending
(1) Drill intercept lengths are down-hole lengths reflecting apparent
widths of mineralization with true widths ranging between
80% - 100% of the reported down-hole lengths
(2) Drill intercepts are based on a 0.3 gram/tonne gold cut-off with
no upper cut
(3) Grade calculation includes up to 6 metres of internal dilution

Additional results from MGZD001 are pending and will be made available once the assaying of all core samples from this drill hole has been completed.

The Magambazi prospect lies at the southern end of the 10 kilometer Handeni Gold Trend. This area of anomalous gold geochemistry is defined by soil sampling surveys and the presence of artisanal mining operations including the Company's Magambazi, Magambazi North, Semwaliko, Semwaliko North and Majiri Bomba prospects.

The Company has the option to earn a 100% interest in the Magambazi property by making a US$1,800,000 cash payment to Magambazi Mines Ltd., a Tanzanian company that represents the interests of artisanal miners and local families, which will be subject to a 2% Net Smelter Royalty ("NSR").

Also, the Company owns a 100% interest in the contiguous 200 square kilometre Kilindi Prospecting License, 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 the 2009 exploration activities can be viewed at the Company's website or at 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

Dr. Jingbin Wang, Chairman

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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