GOLD STOCKS NEWS - Gold stocks opened modestly higher Tuesday, as the Market Vectors Gold Miners ETF (GDX) rose $0.14 to $50.85 in morning trading. With today’s gain in gold stocks, the GDX’s month-to-date and year-to-date returns rose to 5.5% and 10.0%, respectively. The S&P/TSX Global Gold Index, a collection of the largest gold stocks traded in Canada, dipped 0.4% to 370.32 - reducing its month and year-to-date gains to 5.4% and 10.5%, respectively.

However, with gold bullion posting a gain of nearly 12% year-to-date, gold stocks as a group have not provided the gold leverage that investors expect. Nonetheless, there are a few noteworthy exceptions, one being Canaco Resources (CAN.TSXV). The Canadian-based gold explorer has vastly outperformed most gold stocks, surging 324% in 2010 as the company is in the process of delineating a substantial gold discovery at its Handeni Gold Project in Tanzania, Africa.

This morning, Canaco Resources announced it will commit C$13.7 million to “accelerated exploration“ at Handeni. The substantial exploration effort will include 28,000 meters of diamond drilling at the company’s Magambazi Prospect, located in the Handeni Gold District, which currently hosts an active artisanal gold mining operation.

Drilling on Canaco’s gold discovery will establish a framework for a resource calculation. Canaco went on to note that the exploration program will “rapidly advance” the definition of the extent of the gold discovery at Magambazi and test proximal targets in the vicinity of the Magambazi Hill. The Canadian-based gold explorer also stated that it will give priority to testing targets, which include “north of the recent high-grade intercept of 37m at 12.45 g/t Au.” Shares of CAN.TSXV were among the gainers in the gold stocks sector Tuesday morning, rising 4.0% to C$2.34.

Commenting on the news, Daniel Earle, metals and minerals analyst at TD Newcrest, stated that “Canaco is well positioned in our view to aggressively ramp-up exploration activity at Magambazi and begin exploring other targets on the company’s large land position.” Earle, who has a $C4.00 price target on the shares of Canaco, expects the company to produce an initial resource estimate for Magambazi in 2011.

Canaco’s latest financial commitment to Handeni, along with recent drill results, suggests an increasing likelihood of the project being host to an economic mine. Given that many of the world’s largest gold producers, including Newmont Mining (NEM) and Barrick Gold (ABX), are continuously looking for deposits to augment their depleting reserves, Canaco Resources is among a group of small-cap gold stocks that could generate increased attention in the months ahead.