Canaco Drills 17.5 Metres at 7.29 Grams Per Tonne Gold 80 Metres West of Known Mineralization at Magambazi, Including 4.5 Metres at 17.42 Grams Per Tonne Gold

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 5, 2011) - Canaco Resources Inc. (TSX VENTURE:CAN) ("Canaco" or the "Company") is pleased to report new results from five extension and infill diamond drill holes on the Magambazi zone at the Company's Handeni project in Tanzania. Highlights from the new drill results include:

1. Hole MGZD123 was partially reported on February 23, 2011.
2. Mineralized true thicknesses are 60-100% of stated thicknesses. The calculation of drill intercepts employs a 0.3 gram/tonne cut-off and no cutting grade has been applied to high gold values.

Hole MGZD123 is an eastern infill hole drilled at the southern extension of the main Magambazi zone. Hole MGZD127 was collaredon the same section at Magambazi North as hole MGZD117, which intercepted 8.7 metres grading 38.76 grams per tonne gold (see Canaco's news release dated February 23, 2011). This new hole implies a new extension of sub-horizontal mineralization eastward, in the southern area of Magambazi North, with a 20 metre step-out from previous drilling.

Hole MGZD129 was collared on the same section of the main Magambazi zone as hole MGZD001, the discovery hole, which intercepted 59.0 metres at 4.28 grams per tonne gold and 17.0 metres at 10.39 grams per tonne gold (see Canaco's news release dated October 22, 2009). This new hole intersected a substantive extension to known mineralization 80 metres westward and at depth. It forms the most westerly intersection of mineralization drilled to date on this section, and opens up new possibilities to extend the known mineralized zone.

Canaco President and CEO Andrew Lee Smith said: "Hole 129 has identified what looks to be an extension of mineralization to the west of the main Magambazi zone. This is a positive development and the new area will be a key focus for drilling in the coming weeks."

He added: "The backlog of assays is being cleared up and we anticipate additional drill results will be forthcoming at a steady pace over the next several weeks."

Mineralization at Magambazihas now been defined along a 900 metre strike length and remains open to the north, laterally and at depth. Canaco has six rigs on the property and is currently drilling approximately 8,000 metres per month. The Company plans to release an initial NI 43-101 resource estimate on the Magambazi zone by the end of 2011.

A full table of drill results and a map of drill hole locations is available on the Canaco website at www.canaco.ca, and can also be found at the following link: http://media3.marketwire.com/docs/cani505.pdf.

Quality Control

The planning, execution and monitoring of Canaco's quality control programs at the Handeni project are under the supervision Jeff Heidema, P.Geo., Canaco's Vice President Exploration, and Dr. David Groves, Canaco's Director of Project Development. Mr. Heidema and Dr. Groves are Qualified Persons as defined by National Instrument 43-101. Drill samples are prepared and analyzed at the SGS Geochemical Laboratory in Mwanza, Tanzania. Samples are processed by Fire Assay with A.A. finish under the SGS FAA505 protocol. 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, press releases and public documents about Canaco, including a complete list of drill hole intercepts and drill collar maps, can be viewed at the Company's website www.canaco.ca or at www.sedar.com.

About Canaco

Canaco is a Vancouver-based mineral exploration company focused on advanced exploration in Africa. Built on a foundation of experienced management and focused on rapidly advancing exploration projects in Tanzania and Ethiopia, Canaco is well positioned to build shareholder value through discovery and resource development.

Canaco's shares trade on the TSX Venture Exchange under the symbol CAN.

On behalf of the Board of Directors:

Andrew Lee Smith, P.Geo, President, CEO and Director

Cautionary Statement Regarding Forward-Looking Information

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "anticipate", "believe", "plan", "expect", "intend", "estimate", "forecast", "project", "budget", "schedule", "may", "will", "could", "might", "should" or variations of such words or similar words or expressions. Forward-looking information is based on reasonable assumptions that have been made by the Company as at the date of such information and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: risks associated with mineral exploration and development; metal and mineral prices; availability of capital; accuracy of the Company's projections and estimates; interest and exchange rates; competition; stock price fluctuations; availability of drilling equipment and access; actual results of current exploration activities; government regulation; political or economic developments; environmental risks; insurance risks; capital expenditures; operating or technical difficulties in connection with development activities; personnel relations; the speculative nature of strategic metal exploration and development including the risks of diminishing quantities of grades of reserves; contests over title to properties; and changes in project parameters as plans continue to be refined. Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to the price of gold; the demand for gold; the ability to carry on exploration and development activities; the timely receipt of any required approvals; the ability to obtain qualified personnel, equipment and services in a timely and cost-efficient manner; the ability to operate in a safe, efficient and effective manner; and the regulatory framework regarding environmental matters, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking contained herein, except in accordance with applicable securities laws.