NI 43-101 Technical Report on the Handeni Property centred at 39.97°E, 5.753°S Tanga Province, Kilindi District Tanzania For Canaco Resources Inc 500-602 West Hasting Street Vancouver, BC V6B 1P2 Canada By EurGeol Dr. S. M. Archibald, PGeo Aurum Exploration Services March 1st 2011 Aurum Exploration Services TABLE OF CONTENTS 1. EXECUTIVE SUMMARY..................................................................................................................... 7 1. EXECUTIVE SUMMARY..................................................................................................................... 7 2. INTRODUCTION AND TERMS OF REFERENCE.................................................................................. 11 3. RELIANCE ON OTHER EXPERTS....................................................................................................... 12 4. PROPERTY DESCRIPTION AND LOCATION ...................................................................................... 13 TENURE RIGHTS (HANDENI PROPERTY) ...........................................................................................................13 TENURE RIGHTS (GENERAL) ..........................................................................................................................16 5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY.................. 20 ACCESSIBILITY .............................................................................................................................................20 CLIMATE ....................................................................................................................................................21 LOCAL RESOURCES.......................................................................................................................................21 Tanzania..............................................................................................................................................21 Tanga Region ......................................................................................................................................23 INFRASTRUCTURE ........................................................................................................................................24 PHYSIOGRAPHY ...........................................................................................................................................27 6. HISTORY......................................................................................................................................... 28 PROPERTY HISTORY......................................................................................................................................28 7. GEOLOGICAL SETTING .................................................................................................................... 32 REGIONAL GEOLOGY ....................................................................................................................................32 PROPERTY GEOLOGY ....................................................................................................................................34 8. DEPOSIT TYPES............................................................................................................................... 40 9. MINERALIZATION........................................................................................................................... 42 10. EXPLORATION .............................................................................................................................. 47 HISTORICAL ................................................................................................................................................47 SOIL SAMPLING ...........................................................................................................................................48 NITON WORK ON SOILS................................................................................................................................49 CHIP SAMPLING...........................................................................................................................................52 AIRBORNE GEOPHYSICS ................................................................................................................................52 11. DRILLING...................................................................................................................................... 54 REVERSE CIRCULATION DRILLING....................................................................................................................54 RAB DRILLING ............................................................................................................................................56 Canaco Resources Inc. ‐ Handeni Property Page 1 Technical Report NI 43‐101 – March 1, 2011 Aurum Exploration Services DIAMOND DRILLING.....................................................................................................................................59 MAGAMBAZI ..............................................................................................................................................60 MAGAMBAZI NORTH....................................................................................................................................65 MAGAMBAZI CENTRAL .................................................................................................................................67 12. SAMPLING METHOD AND APPROACH .......................................................................................... 69 SOIL SAMPLING ...........................................................................................................................................69 ROCK SAMPLING .........................................................................................................................................70 REVERSE CIRCULATION DRILL SAMPLING .........................................................................................................71 ROTARY AIR BLAST DRILL SAMPLING...............................................................................................................72 DIAMOND DRILL SAMPLING ..........................................................................................................................72 13. SAMPLE PREPARATION AND ANALYSIS AND SECURITY................................................................. 80 GENERAL....................................................................................................................................................80 SOIL SAMPLES.............................................................................................................................................80 ROCK SAMPLES (GRAB, CHIP, CORE) ..............................................................................................................82 QAQC.......................................................................................................................................................83 Soil Samples ........................................................................................................................................83 Niton Samples .....................................................................................................................................83 Channel/Chip Samples ........................................................................................................................ 83 Diamond Drill Samples........................................................................................................................ 83 ASSESSMENT ..............................................................................................................................................84 Soil Sampling.......................................................................................................................................84 Diamond Drill Samples........................................................................................................................ 84 14. DATA VERIFICATION..................................................................................................................... 88 SOIL SURVEYING..........................................................................................................................................88 NITON SAMPLE WORK .................................................................................................................................91 GRAB/CHANNEL/CHIP SAMPLES ....................................................................................................................91 DIAMOND DRILLING.....................................................................................................................................91 DATA COLLECTION VERIFICATION ...................................................................................................................97 PERSONAL DATA VERIFICATION......................................................................................................................97 15. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATION.......................................................... 98 16. MINERAL PROCESSING AND METALLURGICAL TESTING ................................................................ 98 17. ADJACENT PROPERTIES ...............................................................................................................