Canaco Announces Details of 2012 Exploration and Development Programs at Handeni

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 24, 2012) - Canaco Resources Inc. (TSX VENTURE:CAN) ("Canaco" or the "Company") is pleased to announce plans for 2012 exploration and development activities at its Handeni project in eastern Tanzania. The focus of Canaco's 2012 work will be 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. The Company plans to simultaneously embark on an aggressive diamond drill program on other priority drill targets on the property, with the objective to make a new grass roots discovery in the Handeni region.

Exploration

Canaco is currently drilling 10,000 metres per month at Handeni with nine diamond drill rigs and one reverse circulation (RC) rig. Six of the nine diamond rigs are currently drilling at Magambazi, where delineation drilling associated with an initial resource estimate is expected to be complete by the end of January. This work is expected to include approximately 400 holes totalling up to 110,000 metres of drilling.

On completion of delineation drilling at Magambazi, the focus of the Handeni exploration program will shift toward growth and testing of promising targets peripheral to Magambazi, nearby and along the regional mineralized trend.

Currently, two diamond drill rigs are exploring two high priority targets in the immediate vicinity of Magambazi - Kuta and the Magambazi North Extension - which have been defined by the presence artisanal workings and anomalous geochemical and geophysical responses. Testing of the Magambazi North Extension is immediately north and on strike of the Magambazi mineralized zone.

Further north and northwest, within six kilometres the Magambazi discovery, preliminary exploration work by Canaco, including surface sampling and RC drilling, indicates additional potential for exploration success. One diamond drill rig is already operating at Majiri and in the weeks ahead, diamond drill testing will follow up promising RC results at several high priority regional targets including Kwadijava and Bahati.

The RC rig is presently drilling at Bahati and will continue to test preliminary regional targets. A second RC rig is being sourced to expedite this work.

Development

Concurrent with ongoing exploration at Handeni, assembly and mobilization of project management and technical team members is under way. This team will lead the development of key information during the first quarter and direct the project activities as Canaco moves from the PEA during the second and third quarters of 2012, through subsequent project stages. Key information developed during the first quarter is planned to include completion of the initial mineral resource estimate, comprehensive metallurgical test work, water supply identification, measurement of wet season climatic conditions and assembly of important local/regional information that will serve as input to the PEA. Although establishment and monitoring of environmental and socio-economic baselines is a longer term activity, the knowledge and information gained from these activities begun in January will provide helpful context and understanding for the PEA and subsequent activities. Further, their early commencement, extensive drilling information and the comprehensive nature of the metallurgical program are expected to facilitate advancement of the project to the next stage in a timely manner.

Completion of the initial mineral resource estimate and metallurgical test work are scheduled for the end of the first quarter, after which PEA engineering and estimation will begin. Current planning forecasts completion of the PEA near the end of the third quarter of 2012, subject to staffing of suitable engineering resources.

President and CEO Andrew Lee Smith said: "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. At the same time, we are embarking on a regional diamond drill program aimed at keeping the pipeline full with earlier stage opportunities. We have the financial strength to advance the project for long-term value creation."

Additional information including press releases and public documents about Canaco can be viewed at the Company's website www.canaco.ca or at www.sedar.com.

About Canaco

Canaco is a Vancouver-based mineral exploration company focused on advanced exploration projects in Africa. Built on a foundation of experienced management, the Company is rapidly advancing the Handeni project in Tanzania and is well positioned to build shareholder value through discovery and resource development.

Canaco's shares trade on the TSX Venture Exchange under the symbol CAN.

On behalf of the Board of Directors:

Andrew Lee Smith, P.Geo., President, CEO and Director

Cautionary Statement Regarding Forward-Looking Information

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "anticipate", "believe", "plan", "expect", "intend", "estimate", "forecast", "project", "budget", "schedule", "may", "will", "could", "might", "should" or variations of such words or similar words or expressions. Forward-looking information is based on reasonable assumptions that have been made by the Company as at the date of such information and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: risks associated with mineral exploration and development; metal and mineral prices; availability of capital; accuracy of the Company's projections and estimates; interest and exchange rates; competition; stock price fluctuations; availability of drilling equipment and access; actual results of current exploration activities; government regulation; political or economic developments; environmental risks; insurance risks; capital expenditures; operating or technical difficulties in connection with development activities; personnel relations; the speculative nature of strategic metal exploration and development including the risks of diminishing quantities of grades of reserves; contests over title to properties; and changes in project parameters as plans continue to be refined. Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to the price of gold; the demand for gold; the ability to carry on exploration and development activities; the timely receipt of any required approvals; the ability to obtain qualified personnel, equipment and services in a timely and cost-efficient manner; the ability to operate in a safe, efficient and effective manner; and the regulatory framework regarding environmental matters, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking contained herein, except in accordance with applicable securities laws.