Canaco Reports Preliminary Indications of 90-98% Metallurgical Recovery of Gold at Handeni

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 29, 2012) - Canaco Resources Inc. (TSX VENTURE:CAN) ("Canaco" or the "Company") is pleased to provide an update on the comprehensive metallurgical test work program for its Handeni project in Tanzania. This work will provide key input information to the upcoming Magambazi preliminary economic assessment, planned for completion by the end of the third quarter of 2012.

G&T Metallurgical Services continue to execute the ongoing metallurgical test program under the direction of Dr. Jim King, Canaco's qualified person for metallurgy and process design. The goal of this program is to determine the effect of mineralization, lithology and grade variation on metallurgical recovery, grind size, leach residence time, work index and abrasion characteristics. To this end, the mineralized area of Magambazi was divided into four sectors covering the length of the mineralization. Initial survey tests were conducted on high- and low-grade composites for each sector.

Preliminary results from this test work indicate the metallurgical response is relatively uniform across the mineralization. The combined gravity and leach metallurgical recoveries of gold, measured to date, have ranged between approximately 90% and 98%. Work planned for March includes tests for grind size optimization, evaluation of leach residence time and optimization of cyanide consumption. Thereafter, further testing will determine the relationship between feed head grade and metallurgical gold recovery.

Canaco discovered gold mineralization at Handeni in eastern Tanzania in 2009. Since that time the Company has drilled more than 400 holes along the Magambazi ridge, a 1.4-kilometre outcrop where mineralization was first encountered.

Additional information including press releases and public documents about Canaco 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 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 information contained herein, except in accordance with applicable securities laws.