Canaco drills further spectacular intercepts with 53.2 metres at 9.51 grams gold per tonne at Magambazi

Canaco Resources is pleased to announce further drill results from the Company's Magambazi gold discovery located in the Handeni region of the United Republic of Tanzania. Drilling continues to delineate the Magambazi Main Lode, including the high-grade shoot component to the gold lode and up- and down-dip mineralization. New high-grade results received include:

• 53.2 metres at 9.51 grams gold per tonne (MGZD098) including 23.8metres at 15.08 grams gold per tonne.
• 17.4 metres at 6.1 grams gold per tonne (MGZD099) including 6.3metres at 14.35 grams gold per tonne.

Canaco's President, Andrew Lee Smith, states "It has been an incredible year of exploration and definition drilling at Magambazi. I thought that our original best intercepts drilled in 2009 of 59 metres at 4.28 grams per tonne gold in hole 1 and 56 metres at 6.39 grams per tonne gold in hole 12 were as good as it could get. The Magambazi system has outperformed my best expectations in 2010, with recent intercepts of 48.6 metres at 14.81 grams per tonne gold and 53.2 metres at 9.5 grams per tonne gold. Linking the Magambazi Main Lode with Magambazi Central and Magambazi North has also been an important development of 2010, showing continuity of mineralization over almost 1 kilometre of strike. I would personally like to thank all of the Canaco Staff for their efforts during 2010 and the unrelenting support of the shareholders".

Table 1 - Significant drill results (note hole 94 and 95 results are still pending)

1. Drill intercept lengths are down-hole lengths reflecting apparent widths of mineralization with true widths ranging between 60% - 80% of the reported down-hole lengths.
2. The calculation of drill intercept employs a 0.3g Au/t cut-off and no cutting grade has been applied to high gold values.
3. A location map can be found on the Company's website, www.canaco.ca.

The Magambazi and Magambazi North prospects are part of a 1.4 kilometre long trend of gold mineralization now defined by high-grade drill results, artisanal mine workings and soil geochemical anomalies. This 1.4 kilometre trend represents a segment of a 17 kilometre trend of gold mineralization known as the Handeni Gold Trend contained within the Company's Handeni Gold Project.

The planning, execution and monitoring of quality control programs at the Handeni project are under the supervision of Andrew Lee Smith, P.Geo, Canaco's CEO and Dr. David Groves, Canaco's Director of Project Development, Tanzania. Mr. Smith and Dr. Groves are qualified persons as defined by National Instrument 43-101. Canaco utilizes an industry standard QA/QC protocol with respect to sampling procedures. Blanks, and certified reference standards are inserted into the sample stream to monitor laboratory performance and duplicates of pulps and bulk rejects are also used to monitor laboratory performance.

Additional information and public documents about Canaco, including technical memoranda, drill hole intercepts, drill collar maps, and images of exploration activities, can be viewed at the Company's website www.canaco.ca or at www.sedar.com.

On behalf of the Board of Directors:

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

For further information contact:
Meghan Brown, Director, Investor Relations
Telephone: 604-488-0822 or 1-866-488-0822
Visit our website: www.canaco.ca
Email: investors@canaco.ca

About Canaco

Canaco is a Vancouver-based mineral exploration company focused on advanced exploration in the Handeni region of east Tanzania. The Handeni region consists of numerous gold discoveries along a strike length of over 100 kilometres, suggesting evidence of a highly prospective emerging gold district. Canaco has established a large land position covering 100 square kilometres in this highly prospective district. The Company's activities are highlighted by the Magambazi prospect, where the Company has drilled over 110 holes and is host to active artisanal gold mining operations.

Built on a foundation of experienced management and focused on rapidly advancing exploration projects in Tanzania and throughout Africa, Canaco 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.

The Company relies on litigation protection for "forward-looking" statements. This press release contains forward-looking statements that are based on the Company's current expectations and estimates. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other similar words or statements that certain events or conditions "may" or "will" occur, and include, without limitation, statements regarding the Company's plans with respect to the exploration and development of its projects. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. No independent consultant has rendered an expert opinion on the property.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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