Canaco's drilling to date at the Handeni Project has focused primarily on the gold discovery at Magambazi, where 41,000 metres of Diamond drilling has been completed. An additional 29,000 metres of drilling is planned and scheduled for completion by the end of September 2011. This drilling will provide sufficient data for the Company to develop an initial resource estimate for Magambazi by the end of 2011.

Since the beginning of 2011, Canaco has doubled the number of drill rigs at Magambazi from three to six, giving the Company a nominal drill capacity of 8,000 metres per month. Additional drill rigs are available and will be commissioned as needed and as weather permits. The Company has also doubled its technical staff in Tanzania to manage the increased drill capacity.

Canaco President and CEO Andrew Lee Smith said: "With the successful completion of our $130 million financing last month, we are in the enviable position of being able to add rigs and considerably increase the pace of drilling at Handeni. We have embarked on the largest, most aggressive drill program to date on the project. We are on track to deliver our initial NI 43-101 mineral resource estimate by the end of 2011, which we believe will be an important milestone in the development of the Handeni project."

Smith added: "While the drilling operation is running smoothly, the rainy season and unexpected delays with supplies critical to the QAQC process created temporary delays in the processing of drill samples, and there is now a back-log of drill core awaiting assay at the lab. The situation has been addressed, and we anticipate the release of assay results from completed Diamond drilling is imminent."

RC drilling is recommencing to test advanced targets along the MK trend, where four targets have been prioritized for 10,000 metres of drilling in 2011. Initial drilling of 6,000 metres has partially tested three of these targets – Kwadijava, Majiri and Majiri Bomba. At Kwadijava, 6.25 kilometres northwest of Magambazi, near-surface gold mineralization has been identified over a 240-metre strike length, with up to 37 metres at 1.02 grams per tonne gold (refer to Canaco's press release dated March 28, 2011). Canaco plans to follow up successful RC drilling with Diamond drilling on the MK trend as soon as this is practical and weather permits.

In addition to the accelerated drilling, a technical program is being planned to support the development of a preliminary economic assessment (PEA). This program will include comprehensive metallurgical test work and bulk sampling, environmental baseline studies, socio-economic assessment, mining and processing options, preliminary capital and operating cost estimates, and site development. On completion of the program, this information will be integrated with the initial resource estimate into a PEA.

Quality Control

The planning, execution and monitoring of Canaco's quality control programs at the Handeni project are under the supervision of Jeff Heidema, P.Geo., Canaco's Vice President 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. Drill samples are prepared and analyzed at the SGS Geochemical Laboratory in Mwanza, Tanzania. Samples are processed by Fire Assay with A.A. finish under the SGS FAA505 protocol. 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, press releases 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 Ethiopia, 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.