Canico Resource Corp.

Canico Resource Corp.

February 28, 2005 09:00 ET

Canico Resource Corp.: Updated Mineral Resources for the Onca-Puma Nickel Project


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: CANICO RESOURCE CORP.

TSX SYMBOL: CNI

FEBRUARY 28, 2005 - 09:00 ET

Canico Resource Corp.: Updated Mineral Resources for
the Onca-Puma Nickel Project

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Feb. 28, 2005) - Canico
Resource Corp. is pleased to announce the receipt of updated mineral
resource estimates for the Onca-Puma nickel laterite project in Para
State, Brazil.

The estimates, at a number of cut-off grades, are presented on Canico's
website, www.canico.com. A summary of the Onca-Puma mineral resource
estimates are attached to this news release. Highlights of these
estimates include:



Onca-Puma Measured and Indicated Mineral Resources

------------------------------------------------
Cut-Off Tonnes Ni Fe SiO2/
Ni (%) (x10(6)) (%) (%) MgO
------------------------------------------------
------------------------------------------------
1.00 98.6 1.70 18.0 1.79
------------------------------------------------
1.50 58.0 2.02 16.5 1.66
------------------------------------------------
2.50 6.8 2.80 14.4 1.55
------------------------------------------------

Onca-Puma Inferred Mineral Resources

------------------------------------------------
Cut-Off Tonnes Ni Fe SiO2/
Ni (%) (x10(6)) (%) (%) MgO
------------------------------------------------
------------------------------------------------
1.00 137.2 1.48 23.7 2.14
------------------------------------------------
1.50 55.7 1.86 20.0 1.85
------------------------------------------------
2.50 2.7 2.76 17.4 1.81
------------------------------------------------


These estimates must be read in conjunction with the description of the
estimating method, the key assumptions and parameters, and other
discussion set out in the cautionary notices to this news release and
repeated in the notes to the tables on Canico's website.

The Puma deposit has been drilled at close spacing, with the result that
almost all of the Inferred mineral resources previously announced for
Puma have been converted to Measured and Indicated mineral resources at
similar grades and tonnages (see Canico website). While there are now
substantial Measured and Indicated mineral resources estimated for the
Onca deposit, drilling at Onca is less advanced, and accordingly a
significant portion of the mineral resources are still in the Inferred
category. Reclassification of a large proportion of these Inferred
mineral resources to the Measured and Indicated categories is expected
to continue with the incorporation of the results of some 1,700
additional drill holes already completed (for which assay data is
awaited) and as the ongoing in-fill drilling proceeds over the coming
months.

The new mineral resource estimates continue to support the presence of a
substantial tonnage of laterite above a cut-off grade of 2.5% nickel.
This material will be targeted for initial mine production to maximize
project cash flows during early years of operation. There are also
substantial tonnages
at a 1.0% nickel cut-off grade with a silica to magnesia ratio below
2.0. This creates opportunities for a much longer mine life than was
estimated in the November, 2003, Scoping Study, (posted on www.sedar.com
and on the Canico website).

Diamond drilling continues at Onca to better define the higher grade
areas and to upgrade the inferred mineral resources to the measured and
indicated categories. A feasibility study is underway to assess the
construction of a large scale ferronickel production facility at
Onca-Puma. The study is scheduled to be completed early in the second
quarter of 2005.

"The new mineral resources include substantial tonnages at a higher
confidence level than in earlier estimates, especially at Puma where
closely spaced drilling has achieved very high conversion to the
measured and indicated categories," said Michael Kenyon, President and
CEO. "Similarly, I anticipate significantly improved conversion rates at
Onca as the in-fill drilling continues over the next several months. The
continuing confirmation of tonnage at higher grades is especially
encouraging and sustains our belief that we will be able to optimize
both production and cash flow in early operating years. Prospects for a
very long mine life, or production enhancements also continue to
improve. The Onca-Puma project is developing rapidly and may well become
one of the world's better ferronickel producers."

CANICO RESOURCE CORP.

"J. Michael Kenyon"

J. Michael Kenyon

President & CEO

Cautionary Notices

This News Release includes certain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 of
the United States. Other than statements of historical fact, all
statements in this release, including, without limitation, statements
regarding potential mineralization and resources, estimated or potential
future production, potential ranking amongst nickel producers, and
future plans and objectives of the Company, are forward-looking
statements that involve various known and unknown risks, uncertainties
and other factors. There can be no assurance that such statements will
prove to be accurate. Actual results and future events could differ
materially from those anticipated in such statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date of this announcement.
Important factors that could cause actual results to differ materially
from the Company's expectations include, among others, the ongoing
results of current exploration activities, conclusions of any scoping
studies, pre-feasibility or feasibility studies, changes in project
parameters, and future metal prices, as well as those factors discussed
under the heading "Risk Factors" and elsewhere in the Company's
documents filed from time to time with the Toronto Stock Exchange, the
TSX Venture Exchange, Canadian securities regulators and other
regulatory authorities. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf
are expressly qualified in their entirety by this notice.

The new mineral resource estimates were completed with an effective date
of February 21, 2005, according to the requirements of National
Instrument 43-101, and for the Onca deposit under the supervision of
Hatch Associates Ltd., Consulting Geologists and Engineers, of
Vancouver, B.C. and for the Puma West deposit under the supervision of
GRD Minproc Limited of Perth, Australia, both of whom are independent of
Canico. Details of the estimates, a description of Canico's assaying and
analytical techniques and methodology and particulars of historical
mineral resource estimates, may all be found on Canico's website. The
quality of the information, conclusions and estimates contained herein
are consistent with the intended level of accuracy as well as the
circumstances and constraints under which the mandates were performed.
The estimates were based on some information generated or provided by
other outside sources. Neither Hatch nor Minproc warrant the accuracy or
completeness of data supplied by outside sources. The standards employed
by Hatch and Minproc, respectively, in estimating these mineral
resources differ significantly from the requirements of the United
States Securities and Exchange Commission and the mineral resource
information reported may not be comparable to similar information
reported by United States companies. The term "resources" does not
equate to "reserves" and normally may not be included in documents filed
with the United States Securities and Exchange Commission. "Resources"
are sometimes referred to as "mineralization" or "mineral deposits."

Key Assumptions, Parameters, Estimate Methods and Other Discussion

1. The Onca estimate was completed by Hatch using 2,435 HQ diamond drill
holes, totaling 51,452m, completed by Canico between August 20, 2002 and
December 1, 2004. All holes were assayed as set out in Canico's news
release dated October 17, 2002, and the results were verified by Hatch.

2. The Onca mineral resource was estimated using the geological model
provided by Canico. The Hatch Qualified Person (QP) has visited the Onca
site and has reviewed and accepted the geological interpretation
methodology and procedures applied by Canico.

3. The Onca mineral resource was estimated by Hatch using ordinary
kriging techniques. The drillhole spacing was close enough to obtain
meaningful variography to determine orientation of mineralization, and
validation of the model with exploration data verified the modeling
process.

4. Classification of the Onca mineral resource into Measured, Indicated
and Inferred categories was based on a combination of drillhole spacing,
continuity of mineralization, kriging variance, search distances and the
robustness of variography.

5. Manager of Geology and Mining, Callum Grant, a full time employee of
Hatch, is the Qualified Person as defined under NI 43-101 for the Onca
mineral resource estimate as well as the Onca and Puma drillhole
databases.

6. The Puma West estimate was completed by GRD Minproc using a data base
compiled from 2,132 diamond drill holes, totaling 47,852m, completed by
Canico between August 20, 2002 and December 1, 2004. All holes were
assayed as set out in Canico's news release dated October 17, 2002, and
the results were verified by Hatch. GRD Minproc has carried out a
procedural review of the Hatch validation process and confirmed that it
meets normal industry standards. GRD Minproc has not performed any
independent quality control investigations on the data supplied.

7. The Puma West mineral resource was estimated by GRD Minproc using the
geological model provided by Canico. The GRD Minproc Qualified Person
(QP) has visited the Puma site and has reviewed and accepted the
geological interpretation methodology and procedures applied by Canico.

8. The Puma West mineral resource was estimated by GRD Minproc using
ordinary kriging techniques. The drillhole spacing was close enough to
obtain meaningful variography to determine orientation of
mineralization, and validation of the model with exploration data
verified the modeling process.

9. Classification of the Puma West mineral resource by GRD Minproc into
Measured, Indicated and Inferred categories was based on a combination
of drillhole spacing, continuity of mineralization, kriging variance,
search distances and the robustness of variography.

10. Principal Resource Analyst, Annick Manfrino, a full time employee of
GRD Minproc, is the Qualified Person as defined under NI 43-101 for the
Puma West resource estimate.



CANICO RESOURCE CORP.
Mineral Resource Estimate
February, 2005

Total Onca-Puma Measured Mineral Resources
-------------------------------------------------------------
Cut-Off Tonnes Ni Fe SiO2/ Fe/
Ni (%) (x10(6)) (%) (%) MgO Ni
-------------------------------------------------------------
1.00 47.5 1.90 16.3 1.73 8.6
1.25 42.2 2.00 16.0 1.68 8.0
1.50 35.6 2.11 15.5 1.64 7.3
1.75 28.1 2.25 15.1 1.61 6.7
2.00 19.8 2.40 14.8 1.58 6.2
2.25 11.8 2.60 14.5 1.56 5.6
2.50 6.0 2.81 14.3 1.55 5.1
2.75 2.8 3.05 14.1 1.54 4.6
-------------------------------------------------------------

Total Onca-Puma Indicated Mineral Resources
-------------------------------------------------------------
Cut-Off Tonnes Ni Fe SiO2/ Fe/
Ni (%) (x10(6)) (%) (%) MgO Ni
-------------------------------------------------------------
1.00 51.1 1.51 19.5 1.84 12.9
1.25 35.5 1.68 19.0 1.79 11.3
1.50 22.4 1.86 18.1 1.70 9.7
1.75 12.2 2.07 16.9 1.64 8.2
2.00 6.2 2.26 16.2 1.58 7.1
2.25 2.6 2.46 15.7 1.57 6.4
2.50 0.7 2.73 15.2 1.63 5.6
2.75 0.2 3.01 16.5 1.77 5.5
-------------------------------------------------------------

Total Onca-Puma Measured + Indicated Mineral Resources
-------------------------------------------------------------
Cut-Off Tonnes Ni Fe SiO2/ Fe/
Ni (%) (x10(6)) (%) (%) MgO Ni
-------------------------------------------------------------
1.00 98.6 1.70 18.0 1.79 10.6
1.25 77.7 1.86 17.4 1.73 9.4
1.50 58.0 2.02 16.5 1.66 8.2
1.75 40.3 2.19 15.6 1.62 7.1
2.00 26.0 2.37 15.1 1.58 6.4
2.25 14.3 2.57 14.7 1.56 5.7
2.50 6.8 2.80 14.4 1.55 5.1
2.75 3.0 3.04 14.3 1.56 4.7
-------------------------------------------------------------

Total Onca-Puma Inferred Mineral Resources
-------------------------------------------------------------
Cut-Off Tonnes Ni Fe SiO2/ Fe/
Ni (%) (x10(6)) (%) (%) MgO Ni
-------------------------------------------------------------
1.00 137.2 1.48 23.7 2.14 16.0
1.25 91.2 1.67 22.1 1.95 13.3
1.50 55.7 1.86 20.0 1.85 10.7
1.75 29.4 2.07 18.5 1.81 9.0
2.00 14.1 2.30 17.6 1.80 7.6
2.25 6.4 2.53 17.3 1.80 6.8
2.50 2.7 2.76 17.4 1.81 6.3
2.75 1.0 3.02 17.7 1.92 5.9
-------------------------------------------------------------


These estimates must be read in conjunction with the description of the
estimating method, the key assumptions and parameters, and other
discussion set out in the cautionary notes to this news release and
repeated in the notes to the tables on Canico's website.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Canico Resource Corp.
    J. Michael Kenyon
    President & CEO
    1 (604) 669-9446
    1 (604) 669-9447 (FAX)
    www.canico.com
    The Toronto Stock Exchange does not accept responsibility for the
    adequacy or accuracy of this release.