Canaco Initiates Phase 1 Drill Program on the Handeni Gold Trend in Tanzania

Canaco Resources Inc. (TSX VENTURE:CAN) is pleased to report that reverse
circulation (RC) drilling has commenced on its 100%-owned Kilindi licence on the
Handeni project in Tanzania. A total of 10,000 metres of drilling is planned for
the four key target areas of Kwadijava, Kwadijava South, Majiri and Majiri
Bomba. Infill and extension drilling has also recommenced on the Magambazi zone
with three rigs, and an additional fourth rig is scheduled to start in February
to accelerate Magambazi definition drilling. 


Three high-priority targets are defined along the Majiri-Semwaliko-Kwadijava
(MSK) trend, supported by artisanal workings including bedrock and alluvial
operations, soil geochemical anomalies, and magnetic and IP targets/trends.
These targets will be the principal focus of the RC drill campaign.


The Handeni gold trend is now recognized as consisting of two parallel gold
trends with a combined strike length of over 15 kilometres. All of Canaco's
diamond drilling to date, which comprises more than 100 holes totalling 30,000
metres, has been along the Magambazi trend. The MSK trend has not been drill
tested. The MSK trend is a sequence of metamorphosed mafic rocks (amphibolites)
inter-bedded with sedimentary rocks (shales and siltstones - now kyanite-bearing
gneiss), directly above a major geological boundary (basement granitic gneiss). 


Quality Control 

The planning, execution and monitoring of Canaco's quality control programs at
the Harvest project are under the supervision Jeff Heidema, P.Geo, Canaco's VP
Exploration, and Dr. David Groves, Canaco's Director of Project Development. Mr.
Heidema 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 a complete
list of drill hole intercepts and drill collar maps, 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 in Africa. 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.

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.