Canaco Resources Inc.

Canaco Resources Inc.

July 12, 2010 06:00 ET

Canaco Intersects 37m at 12.45 Grams Per Tonne Gold at Magambazi Including 23m at 19.14 Grams Per Tonne Gold-More Results to Come

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 12, 2010) - Canaco Resources Inc. (TSX VENTURE:CAN) is pleased to announce new gold results of 37 metres at 12.45 g/t Au, including 23m at 19.14 g/t Au (MGZD066), from Magambazi, at the Company's Handeni Gold Project in the Handeni region of the United Republic of Tanzania.

This compelling high-grade intercept with an approximate true width of 30 metres in MGZD066, confirms the presence of a core of thick, high-grade gold mineralization as a component of Magambazi Main Lodes. Further drilling will now be prioritized to test the northern extension of this high-grade core, between Magambazi and Magambazi Central.

Results from drilling have also confirmed that a significant volume of near-surface gold mineralization and two distinct lode positions occur at Magambazi North: a steep east-dipping eastern lode, interpreted to be the northern strike extension of the Magambazi Main Lodes (i.e. MGZD048 – 60m at 1.67 g/t Au, including 23.5m at 2.86 g/t Au – refer to our Press Release dated May 27th, 2010), and the flat-dipping south-plunging western lodes which are lower grade but near surface, representing a large volume of gold mineralization with potential for open-pit mining.

"Canaco's technical team considers these results highly significant" said Andrew Lee Smith, Canaco's President and CEO. "The confirmation of continuity in structure and grade of a high-grade core and the recognition of the Magambazi Main Lodes and Magambazi North as separate parallel zones of near-surface gold mineralization has a dramatic, positive impact on the overall potential of the Handeni Project."

MGZD066 was targeted on the northernmost section drilled at Magambazi to determine if the very high-grade core, intersected in diamond drill holes MGZD001 (59m at 4.28 g/t Au), MGZD012 (56m at 6.39 g/t Au), MGZD035 (16m at 5.45 g/t Au) and MGZD045 (22m at 6.79g/t) (refer to our press releases dated October 06th 2009, Dec 16th 2009, March 8 2010 and May 3, 2010), continued on the most northern section drilled at Magambazi.

Other diamond drilling over the last eight weeks has been focused on delineating the near-surface extent of the lower-grade Magambazi North area and understanding the structural setting of the mineralization, with numerous (15) short holes drilled. Significant results returned from the Magambazi North area include:

  • 30.2m at 1.64 g/t Au (MGZD063 from 119.0m);
  • 22.0m at 1.22 g/t Au and 12.4m at 1.19g/t Au (MGZD055 from 47.0 and 21.7m, respectively);
  • 15m at 1.29 g/t Au (MGZD054 from 50m);
  • 10.3m at 1.99 g/t Au (MGZD052 from 39.7m);
  • 10.4m at 1.18 g/t Au (MGZD051 from 14m); and
  • 22.4m at 0.99g/t Au (MGZD062 from 100m).
  • 3.0 m at 9.44 g/t Au (MGZD059 from 129m)

Additional drill results from Magambazi and Magambazi North are pending and will be announced as soon as possible.

The Magambazi and Magambazi North prospects are part of a 1.4 kilometre long trend of gold mineralization now defined by high-grade drill results, artisanal mine workings and soil geochemical anomalies. This 1.4 kilometre trend represents the southernmost segment of the 11 kilometre Handeni Gold Trend contained within the Company's Handeni Gold Project.

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. 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 technical memoranda, detailed information for drill hole intercepts, drill collar maps, and images of 2009 exploration activities, can be viewed at the Company's website or at Canaco Resources Inc. 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

Canaco Resources Inc.

Dr. Jingbin Wang, Chairman

Canaco Resources Inc.

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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