Canaco Resources (CAN.TSXV) provided an update on the mineral resource estimate and announced the start of a comprehensive metallurgical test work program at the Handeni project in Tanzania. The Canadian-based gold company reported that this work will provide key input information to the upcoming preliminary economic assessment for the Magambazi  prospect, which is scheduled for completion by the end of the third quarter of 2012.

Canaco also announced plans for exploration and development activities in 2012 at Handeni.  The focus of the plans is to advance Magambazi toward development, with completion of an initial resource estimate by the end of the first quarter 2012 and a preliminary economic assessment (PEA) by the end of the third quarter 2012.

Highlights:

* Canaco is currently drilling at a rate of 10,000 meters  (m) per month at Handeni with nine diamond drill rigs and one RC rig active

* Six diamond rigs are completing the last stages of delineation drilling, which is expected to be complete by the end of January ahead of the initial resource in late Q1/12

* The infill program is expected to include approximately 400 holes totaling up to 110,000m of drilling

Andrew Lee Smith, President and CEO:

“With the plans outlined here, we are embarking on the most ambitious growth program in the Company’s history.  As we advance the Magambazi discovery area toward an initial resource estimate and PEA this year, the Company is transforming from grass roots exploration into advanced exploration and development…We have the financial strength to advance the project for long-term value creation.”

Daniel Earle, TD Securities:

“The most important takeaway, in our view, was that the timing of key milestones are unchanged – the initial resource remains on schedule for completion by the end of Q1/12 and the PEA is on track for release by the end of Q3/12.”