Canaco Resources (CAN.TSXV) provided an update on the comprehensive metallurgical test work program for its Handeni project in Tanzania, Africa. This work will provide key input information to the upcoming Magambazi preliminary economic assessment, planned for completion by the end of the third quarter of 2012.

Highlights:

* Preliminary results from this test work indicate the metallurgical response is relatively uniform across the mineralization

* The combined gravity and leach metallurgical recoveries of gold, measured to date, have ranged between approximately 90% and 98%

* Canaco Resources discovered gold mineralization at Handeni in eastern Tanzania in 2009

* Since 2009, the Company has drilled more than 400 holes along the Magambazi ridge, a 1.4-kilometer outcrop where mineralization was first encountered

Andrew Lee Smith, President & CEO:

“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.”