Canaco Resources Inc.

Yesterday, Canaco released additional drill results from the Magambazi and

Magambazi North zones, which together represent the southernmost 1.4 km

of an 11 km long trend of anomalous gold-in-soil geochemistry and artisanal

mining on its Handeni Gold Project (100%) in eastern Tanzania. The results

included an interval of 37m grading 12.5 g/t in Hole 66 from Magambazi,

which we regard as the best intersection reported from it to date.

In the same release, the company announced a reinterpretation of the

geometry of the deposit that in our view dramatically increases its potential

tonnage. The Magambazi and Magambazi North zones are now seen by the

company as separate parallel zones of near-surface gold mineralization – the

Magambazi North lodes being the western limb, and the Magambazi lodes

being the eastern limb, of a single synclinal fold.

The intersection reported in Hole 66 (37m grading 12.5 g/t) is interpreted by

us to occur at the axis of this fold, approximately 200m below surface.

Because, in our view, this setting has not been tested by prior drilling to the

north or south, it is possible that this tenor of mineralization could be present

over the entire 1.4 km strike extent of Magambazi. We would expect future

drilling to target potential strike extensions to this compelling new target.

Impact - POSITIVE