Canaco Resources drills 37 m of 12.45 g/t at Magambazi

2010-07-16 17:28 ET - News Release

Dr. Jingbin Wang reports

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

Canaco Resources Inc. is releasing new gold results of 37 metres at 12.45 grams per tonne Au, including 23 metres 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 (that is, MGZD048 -- 60 m at 1.67 g/t Au, including 23.5 m at 2.86 g/t Au; refer to Canaco's news in Stockwatch on May 27, 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 chief executive officer. "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 (59 m at 4.28 g/t Au), MGZD012 (56 m at 6.39 g/t Au), MGZD035 (16 m at 5.45 g/t Au) and MGZD045 (22 m at 6.79 g/t) (refer to Canaco's news in Stockwatch from Oct. 6, 2009, Dec 16, 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:

• 30.2 m at 1.64 g/t Au (MGZD063 from 119.0 m);

• 22.0 m at 1.22 g/t Au and 12.4 m at 1.19 g/t Au (MGZD055 from 47.0 and 21.7 m, respectively);

• 15 m at 1.29 g/t Au (MGZD054 from 50 m);

• 10.3 m at 1.99 g/t Au (MGZD052 from 39.7 millimetres);

• 10.4 m at 1.18 g/t Au (MGZD051 from 14 m);

• 22.4 m at 0.99 g/t Au (MGZD062 from 100 m);

• 3.0 m at 9.44 g/t Au (MGZD059 from 129 m).

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 Mr. Smith, PGeo, 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.

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