VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 05/31/12 -- Canaco Resources Inc. (TSX VENTURE:CAN) ("Canaco" or the "Company") provides an update on the status of the Magambazi project in Tanzania and corporate activities.
On May 15, 2012, Canaco announced an initial mineral resource estimate on the Magambazi project which included indicated mineral resources of 15.2 million tonnes grading 1.48 grams per tonne gold and containing 721,300 ounces, as well as inferred mineral resources of 6.7 million tonnes grading 1.36 grams per tonne gold and containing 292,400 ounces. (Refer to the Company's news release date May 15, 2012.) Based on this, Canaco is proceeding with a preliminary economic assessment (PEA) at Magambazi, which will use key information collected to date to evaluate the project's economic viability. The PEA is expected to be complete in the fourth quarter of 2012 at a planned cost of approximately $5 million.
President and CEO, Andrew Lee Smith, said: "We believe the Magambazi resource represents an opportunity to add value to the Company and we are therefore continuing with the PEA in order to fully understand the economics of the project. The PEA will analyze and estimate capital and operating costs as well as mine design and a preliminary production schedule. This information will allow us to determine next steps for the project."
Canaco is in a strong financial position, with $95 million cash on hand and no debt. Mr. Smith said: "We believe Canaco's solid cash balance gives the Company a strategic advantage in this market. We have embarked on a comprehensive strategic review of our business and are evaluating a range of acquisition and exploration opportunities to leverage the balance sheet to create value. Throughout this process, while we work to complete the PEA and evaluate corporate development opportunities, preservation of capital will be top priority. Exploration drilling has been put on hold and all other spending has been curtailed, other than first pass ground exploration - including geological mapping, and rock, soil and stream sampling - which continues on our other exploration properties in the Handeni region. Other than the $5 million targeted for the PEA, the Company's planned expenditures over the next six months are expected to be approximately $6 million, subject to approval of fiscal 2013 budgets."