Replies to post #6354 on TSX Venture

[howestreetbull]

CAN.v Cannacord Maintains Spec Buy - $5.00 Target
CAN... Daily Letter Summary January 25..2012

Canaco Resources Inc. | Nicholas Campbell, 1.604.643.7027

CAN : TSX-V : C$1.24 | C$279.2M | Speculative Buy , Target C$5.00

• Handeni: 2012 exploration and development program; maintaining SPEC BUY

rating and C$5.00 target

Investment recommendation

We are maintaining our SPECULATIVE BUY recommendation on Canaco

Resources with a 12-month target price of C$5.00.

Investment highlights

• Canaco has approved a US$35-40 million 2012 exploration budget, and is currently drilling 10,000 metres per month at Handeni with nine diamond drill rigs and one RC rig.

• Six of the drill rigs are focused on delineating the Magambazi resource in preparation for the initial resources estimate. Two diamond drill rigs are focused on the Kuta and the Magambazi North Extension targets. The remaining diamond drill rig is operating on the Majiri target, where previous surface sampling and RC drilling indicate a gold anomaly. The RC drill rig iscurrently operating on the Bahati target to test preliminary regional targets.

• We are expecting an initial resource and metallurgical test results in Q1/12, and a PEA in Q3/12. We are expecting an initial resource of 2.3 million ounces of gold at a grade of 3+ g/t gold. Previous metallurgical testing indicates recoveries of 90+% using a conventional CIL process.

Valuation

With US$110 million in cash, we believe the company is in a strong position to continue to derisk and advance the Handeni project. Our peak gold price estimate of NAVPS (10%, US$1,750/oz) remains unchanged at $7.50. We continue to value Canaco based on a 0.65x multiple to our peak
gold price estimate of NAVPS.