Canaco hits more gold in Tanzania

Vancouver – Ongoing drilling at the Magambazi property in Tanzania continues to intercept gold mineralization for Canaco Resources (CAN-V, CANWF-O).

In late September Canaco announced hitting as much as 53 metres grading 4.32 grams gold per tonne in hole 1 at Magambazi, near the town of Handeni.

Now, with two subsequent batches of drillhole results out, Canaco is proving that the project is no one-hit wonder.

Three holes – 4, 5 and 7 – collared on the same section about 100 metres southeast of hole 1 and drilled to intercept increasingly greater depths of the more or less vertically dipping mineralization show consistent grades of gold in the 3-gram-gold range over 30 to 40 metre intercepts.

Starting 110 metres downhole, hole 4 hit 27 metres grading 2.82 grams gold.

Starting 128 metres downhole, hole 5 hit 41 metres grading 3.32 grams gold.

And starting 156 metres downhole, hole 7 hit 40 metres grading 3.56 grams gold.

Hole 6, collared about 75 metres northwest of hole 1, intercepted 1 metre grading 3.02 grams gold.

Capitalizing on a surging shareprice, which has jumped from 5¢ in mid-September to over 50¢ at some points in October, Canaco recently announced a $4 million financing. On a non-brokered basis Canaco wants to sell 11.5 million units at 35¢ a unit with each unit consisting of a share and a half share purchase warrant exercisable at 45¢ during the first year after closing and 75¢ the year after.

The financing makes a striking comparison to a $2 million private placement Canaco announced in early 2009 and completed in June. Then Canaco sold 40 million units at 5¢ for proceeds of $2 million.

A Chinese strategic partner, SinoTech, purchased 32 million of the units, for a 35% stake of the company in terms of outstanding shares. Two executives related to SinoTech, which according to Canaco is 45%-owned by the Chinese government, joined Canaco’s board of directors as a result.

On news of the drillhole results Canaco’s shareprice dropped 3¢ to close at 43¢. Canaco has about 91 million shares outstanding.

Canaco has an option to acquire a 100% interest on the Magambazi property for US$1.8 million. The Magambazi property is a small portion of Canaco’s otherwise 100%-owned Handeni gold project that covers 200-sq.-km area.