Canaco Resources Inc.

Canaco Resources Inc.

August 26, 2011 06:00 ET

Canaco Identifies New Mineralization at Magambazi and Extends Western Lodes Along Strike and at Depth-Drill Results Include 30.0 Metres at 2.83 g/t Au and 28.7 Metres at 2.72 g/t Au

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 26, 2011) - Canaco Resources Inc. (TSX VENTURE:CAN) ("Canaco" or the "Company") is pleased to announce new assay results from diamond drilling at the Magambazi gold discovery on the Company's Handeni Project in the United Republic of Tanzania.

Seven diamond drill rigs continue drilling at Magambazi, where the recent focus is on delineation and extension of known mineralization at the Main, Western, Cave and Southern Gneiss lodes. Results have been received for 13 drill holes, six of which encountered significant mineralization. Highlights include:

Magambazi South

  • 14.3 metres at 4.46 grams per tonne gold in hole MGZD201, including 3.5 metres at 15.79 grams per tonne gold. This infill hole intersection is consistent with the discovery of a new shoot of mineralization within the core area of Magambazi ('Central Contact Lode'), down dip from the Magambazi Main Lode, but spatially situated between the Southern Gneiss Lodes and the Magambazi Main Lode above the Western Lodes. This mineralization is interpreted to correlate with an intersection drilled in hole MGZD041 of 7.0 metres at 4.71 grams per tonne gold (see Canaco's news release dated June 8, 2011) and highlights the importance of the infill program to identify additional mineralized shoots. This new shoot is termed the Central Contact Lode on the accompanying plan of ore shoot projections.
  • 34.0 metres at 1.88 grams per tonne gold in hole MGZD232, including 7.4 metres at 5.87 grams per tonne gold in the Western Lodes, indicating this system remains open westward on this section.
  • 47.0 metres at 1.8 grams per tonne gold in hole MGZD197 in the Western Lodes, including 6.3 metres at 4.41 grams per tonne gold. This infill hole intersection is located 20 metres from hole MGZD129 (see Canaco's news release dated May 5, 2011) and confirms continuity of mineralization in the Western Lodes.
  • 30.0 metres at 2.83 grams per tonne gold in hole MGZD224, including 6.5 metres at 9.71 grams per tonne gold and 25.1 metres at 2.31 grams per tonne gold. Both intersections confirm the strong continuity of gold mineralization 20 metres west and 40 metres north of previously reported intersections of the Western Lodes mineralized system.
  • 14.0 metres at 2.06 grams per tonne gold in hole MGZD198, including 5.6 metres at 4.21 grams per tonne gold in the southeastern section of Magambazi South. Results from bordering holes in the fan section and the adjacent section remain pending. This mineralization is interpreted to be the continuation of the Magambazi Main Lode where mineralization narrows to the south.

Magambazi Central

  • 28.7 metres at 2.72 grams per tonne gold in hole MGZD218, including 9.1 metres of 7.62 grams per tonne gold from the deepest analyzed samples received to date on this section, which is the interpreted extension of the upper Magambazi Main Lode. These intervals suggest that mineralization is increasing in grade and thickness to depth.

"These recent results at Magambazi confirm the continuity and extensions of mineralization in the Central, South and West lodes," said Canaco President and CEO Andrew Lee Smith. "The delineation drill program has produced significant data, continuing to identify new zones of mineralization and extending known lodes to depth and along strike within the broader structural framework that controls mineralization, further enhancing the potential of the Magambazi prospect as a mining target."

Recent Magambazi Drill Results
Hole(1)(2) From (m) To (m) Interval (m) Au (g/t) Lode(s)
MGZD197 247.1 294.1 47.0 1.80 Upper and
Lower Western
including 247.1 249.2 2.1 15.10
and 287.8 294.1 6.3 4.41
MGZD198 136.0 150.0 14.0 2.06 Magambazi Main
including 138.8 144.4 5.6 4.21
MGZD201 183.7 198.0 14.3 4.46 Central Contact
including 190.7 194.2 3.5 15.79
MGZD218 162.4 167.30 4.9 1.27 Magambazi Main
179.7 208.40 28.7 2.72
including 179.7 188.80 9.1 7.62
227.0 231.10 4.1 3.62
MGZD224 195.0 225.0 30.0 2.83 Upper Western
including 213.0 219.5 6.5 9.71
253.0 278.1 25.1 2.31 Lower Western
MGZD232 194.0 213.4 19.4 1.12 Upper Western
including 205.7 208.0 2.3 5.14
253.0 287.0 34.0 1.88 Lower Western
including 253.0 260.4 7.4 5.87
(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.
(2) Not all drill holes identified in this release have had a full sample submission completed as planned, as a prioritized system of sample submission has been introduced due to the previously identified sample backlog. Additional significant results will be released and posted as received.

Click for a plan view map and complete list of drill hole intercepts.

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, 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. Diamond drill samples are prepared and analyzed at the SGS Geochemical Laboratory in Mwanza, Tanzania. RC drill samples are prepared at the ALS Chemex Laboratories in Mwanza, Tanzania and analyzed at their facilities in Johannesburg, South Africa. Samples are processed by Fire Assay with A.A. finish under the SGS FAA505 and ALS Au-AA24 protocols. 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 including press releases and public documents about Canaco can be viewed at the Company's website or at

About Canaco

Canaco is a Vancouver-based mineral exploration company focused on advanced exploration projects in Africa. Built on a foundation of experienced management, the Company is rapidly advancing the Handeni project in Tanzania and 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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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