Results have been received for the recent reverse circulation ("RC") drilling program at the Semwaliko North Prospect. Ten drill holes for 1,027 m of shallow RC drilling was conducted at the Semwaliko North Prospect to test an area of artisanal workings over 400m strike. Five drill holes for a total of 780m were also drilled to the south, to test a weak soil geochemical anomaly (40ppb Au). Peak gold results included 12m @ 1.04g/t including 1m @ 6.5 g/t and several greater than 1g/t intercepts over narrow widths. Drill hole MGZC007 was abandoned in 2.85g/t Au in a vertical fault zone and remains open at depth. The peak intercepts are shown in Table 1. -------------------------------------------------------- Hole________ From (m)____To (m)__Interval (m)____ Au g/t -------------------------------------------------------- MGZC001__________ 25________37____________12________1.04 including________25________26____________ 1________6.47 MGZC007__________ 86________90____________ 4________0.86 including________89________90____________ 1________2.81 MGZC009____________0________13____________13________0.49 including________12________13____________ 1________4.08 MGZC012__________ 66________69____________ 3________0.90 --------------------------------------------------------

The interpretation of data returned from the RC program indicates the geology of the Semwaliko prospect is structurally complex. Anomalous gold mineralization was intersected over broad widths from metamorphosed amphibolite. Additional targeting of exploration drilling at Semwaliko will require further detailed mapping of the surface geology and compilation of the results of the RC program and recent soil geochemistry.

The reconnaissance drilling at Semwaliko is phase 1 of a 3 phase exploration drilling program planned to test the down dip extensions of surface mineralization identified by artisanal mining operations on the Handeni Gold Property. The next phase of drilling will consist of systematic diamond drilling of the Magambazi prospect where artisanal, bedrock mining operations have exposed surface gold mineralization over a strike length of 350m within a 1.3 km long trend of strongly anomalous gold geochemistry in soils.

The planning, execution and quality control programs at the Handeni Project are under the supervision of Andrew Lee Smith, P.Geo. and Dr. David Groves, Canaco's Director of Project Development, Tanzania. Mr. Smith and Dr.