RE: EvaluationSell-off In Share Price ExcessiveDespite our decreased expectations for resource size at Magambazi, we believe the drop in share price that has occurred over the last six months for CAN has been exaggerated. We believe the lack of consistent news flow from the project has compounded concerns surrounding ore continuity, metallurgy and regional potential for new discovery. The company currently has approximately $100million in cash, which represents approximately
.55/share, and is sufficiently financed to continue advanced exploration for several years. We also expect there is still significant upside with respect to resource expansion beyond Magambazi.Canaco recently reported results from metallurgical testing with gold recoveries ranging between 90-98%. Test work is ongoing and a full dataset will be available in an upcoming PEA for the project anticipated in H2/2012. The upcoming compliant resource estimate should provide the market with some clarity on the potential size of the Magambazi project but at this stage we believe it will be of greater importance for Canaco to begin providing results from regional drilling to show what potential the property has to yield further discovery.There are currently 4 drills, 3 diamond and 1 Reverse Circulation (RC) being mobilized to test regional targets within the land package. We expect the first targets tested will be the northwest extension of Magambazi, Majiri, Bahati and Kwadijava, which have been previously determined from regional soil sampling and limited drilling. Drilling will continue at Magambazi as well with 4-6 diamond drills on the ridge to continue infill drilling to increase resource confidence and to test the potential of the Magambazi Deep target.