| April 24, 2012 |
| Canaco Responds to British Columbia Securities Commission Notice of Hearing; BCSC is Proposing to Rewrite the Rules of Materiality, Creating a Chilling Effect on Junior Mining Companies in BC |
VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 24, 2012) - Canaco Resources Inc. (TSX VENTURE:CAN) ("Canaco" or the "Company") responds to a Notice of Hearing received today from the staff of the British Columbia Securities Commission (BCSC) regarding certain infill drill result disclosures made by Canaco in December 2010.
Canaco expects the hearing will primarily consider whether or not the infill drill results were material. Canaco believes the infill drill results were not material.
"The staff of the BCSC is proposing to rewrite the rules for determining materiality in a way we believe is unfair, contrary to the public interest and damaging for junior mining companies subject to BC jurisdiction," said Andrew Lee Smith, Canaco's President and CEO. "We intend to oppose that effort and defend ourselves vigorously."
Canaco's opinion that the infill results were not material has been validated by independent reviewers, including Micon International Ltd., a highly respected independent mineral industry consultant. Canaco believes it was compliant with regulations in its December 2010 disclosures, all of which were reviewed by highly experienced external legal counsel.
Canaco's position is further set out in a detailed letter sent on April 20, 2012 to Paul Bourque, Executive Director of the BCSC. A copy of Canaco's letter to Mr. Bourque and Micon's report confirming that Canaco's December 2010 infill drill results were not material are available at http://www.canaco.ca/s/RegulatoryHearing.asp.
Canaco expects the hearing will also examine the timing of a grant of Canaco stock options shortly before the disclosure of the infill drill results. BCSC staff takes the position that Canaco should have disclosed the drill results prior to the stock option grants. Canaco believes the stock options were appropriately granted because the infill drill results were not material.
Canaco notes that none of the options were exercised when they were in the money, that no recipient has profited from the options, and that Canaco offered to cancel the options when it first became aware of regulatory concerns. Canaco also notes that BCSC staff declined repeated invitations to interview Mr. Smith, Canaco's CEO and the Qualified Person who signed off on the disclosures.
Consistent with good governance practice, Canaco's Board formed a Special Committee of directors in November 2011 and engaged legal counsel when it was first informed by BCSC staff that it might issue a Notice of Hearing. Since then, Canaco's counsel has conducted discussions with BCSC staff on behalf of the Special Committee.
Canaco originally disclosed in a prospectus dated March 15, 2011 that it had received inquiries from regulators on this issue. Canaco also noted the inquiries in its Management's Discussion and Analysis dated February 29, 2012, as part of a discussion of legal expenses for the first half of fiscal 2012. Directors of Canaco have been under a trading blackout since November 13, 2011 due to ongoing discussions with BCSC staff.
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 Canaco 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 Canaco to be materially different from those expressed or implied by such forward-looking information, including but not limited to: risks associated with the BCSC hearing and how it unfolds, including potential penalties imposed upon Canaco and its directors; mineral exploration and development; metal and mineral prices; availability of capital; accuracy of Canaco'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 Canaco 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 information contained herein, except in accordance with applicable securities laws.
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. | |