Canaco Enters Agreement for Development of Magambazi

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 2, 2012) - Canaco Resources Inc. (TSX VENTURE:CAN) ("Canaco" or the "Company") is pleased to announce it has entered into a memorandum of understanding (MOU) with an arm's length third party, a Chinese gold producer, to create a joint venture to develop Canaco's Magambazi project in Tanzania.

Under the terms of the MOU, Canaco and the Chinese gold company will form a joint venture to develop and explore the Handeni project. Canaco's initial contribution to the joint venture will be the Handeni property, including the Magambazi project and all rights and obligations within the Handeni property. The value of Canaco's initial contribution will be determined by an independent valuation firm retained by both parties. The Chinese gold company may earn up to a 55% interest in the joint venture by funding 100% of the costs of the ongoing operations of the joint venture until the earn-in is complete.

Canaco President and CEO Andrew Lee Smith said, "We are very pleased to enter into this agreement for development of Magambazi. We believe this MOU will lead to a long and beneficial partnership with a Chinese gold producer. Their technical excellence and experience in mine development is expected to facilitate the advancement of the project, and we expect their financial contributions to the project will allow Canaco to focus on additional opportunities to create value for our shareholders in these challenging market conditions."

The MOU is non-binding and subject to certain conditions including, but not limited to, the completion of due diligence, a positive economic evaluation, the entering into a definitive agreement, receipt of a mining license for the Magambazi project, and regulatory approval, including acceptance by the TSX Venture Exchange.

About Canaco

Canaco is a Vancouver-based mineral exploration company focused on advanced exploration projects in Africa. The Company has $95 million cash and no debt. 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 information contained herein, except in accordance with applicable securities laws.