Canaco Drills 40.0 Metres at 2.93 Grams Per Tonne Gold, Expands Delineation Program and Increases Drill Capacity at Magambazi

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 20, 2011) - Canaco Resources Inc. (TSX VENTURE:CAN) ("Canaco" or the "Company") is pleased to announce assay results from new diamond drill holes at Magambazi and Magambazi Central at the Company's Handeni project in Tanzania.

These results continue to highlight the continuity of thick intercepts of mineralization on strike and up dip of the discovery hole MGZD001.

Highlights include:

• 40.0 metres at 2.93 grams per tonne gold in hole MGZD172, including 7.7 metres at 4.89 grams per tonne gold at Magambazi;
• 17.0 metres at 2.9 grams per tonne gold in hole MGZD162, including 2.8 metres at 9.89 grams per tonne gold at Magambazi Central, highlighting continuity and westward extension to the Keel Zone mineralization near Magambazi North; and
• 6.2 metres at 3.93 grams per tonne gold in hole MGZD131, including 2.8 metres at 7.32 grams per tonne gold, highlighting a 50 metre westward extension to the newly defined Western Lode.

Magambazi

Drill hole MGZD172 was drilled on a section 40 m north of the discovery hole section, where a recently reported intersection of 57.0 metres at 3.02 grams per tonne gold from MGZD152 (see press release dated June 8, 2011) indicated strong near surface mineralization and confirmed the continuity of grade and structure on that section.

MGZD131 intersected the Western Lode in a 50 metre westward step-out from previously defined mineralization, further expanding this recently discovered zone.

Magambazi Central

Drill hole MGZD162 intersected the Main Lode mineralization in the interpreted Keel Zone position 50 metres down dip from an intercept in MGZD147 of 19.0 metres at 3.02 grams per tonne gold (refer to Canaco's press release dated June 8, 2011).

1. 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.

Expanded delineation drill program

Due to the recent intersection of new mineralized structures at Magambazi (see press release dated May 24, 2011), Canaco's technical management has advised that additional delineation drilling will be required to accommodate proper assessment. In response, a seventh diamond drill has been added to increase the capacity of the Magambazi drill campaign, bringing the total number of drill rigs operating on the project to eight.

Quality Control

The planning, execution and monitoring of Canaco's quality control programs at the Handeni project are under the supervision of Jeff Heidema, P.Geo., Canaco's Vice President Exploration. Mr. Heidema is a Qualified Person 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. Mineralized true thicknesses are 60-100% of stated thicknesses throughout this release.

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.