Kenai Resources Ltd.
TSX VENTURE : KAI

Kenai Resources Ltd.

January 17, 2011 09:00 ET

Kenai Resources Announces Private Placement

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 17, 2011) - Kenai Resources Ltd. (TSX VENTURE:KAI) ("Kenai") announces that it has negotiated, subject to the acceptance of the TSX Venture Exchange, a non-brokered private placement totalling up to $5,000,000. These funds will be raised by Kenai issuing up to 20,000,000 units at a price of $0.25 per unit, each unit consisting of one common share and one-half of one share purchase warrant. Each whole warrant will entitle the holder, on exercise, to purchase one common share at a price of $0.35 for a period of two years from the date of issue. 

Finder's fees may be payable on a portion of the private placement, in accordance with the policies of the TSX Venture Exchange. 

A substantial portion of the net proceeds of the private placement will be used to fund Kenai's acquisition costs and initial exploration and development commitments under its option to purchase up to a 100% interest in the Sao Chico gold project located in Northern Brazil. The balance of the funds will be used for working capital purposes. 

About the Sao Chico project:

The Sao Chico gold project is located along a prominent NW-SE trend which is the most mineralized zone within the Tapajos Mineral Field in central-northern Brazil. The Tapajos field was the site of the biggest gold rush in Brazilian history in the late 1970's and 1980s when approximately 500,000 garimpeiros (artisanal miners) rushed to the area to exploit extensive areas of newly discovered alluvial gold. Approximately 20 to 30 million ounces of gold (unofficial government figures) were produced from these operations before the easily won alluvial gold deposits were largely depleted. The garimpeiros have little expertise in underground mining and environmental considerations and were thus urged by the government to consolidate their small claims and form joint ventures with established mining companies. The area has had little exploration by modern exploration methods compared to other equivalent gold fields in the world.

The GUIA license provides for mining and processing of up to 50,000 tons of gold mineralized rock per year for up to two years. It is anticipated that there is currently sufficient tonnage available to sustain an initial startup operation commencing at a rate of 50 tonnes per day and increasing to 100+ tonnes per day within one month of plant start-up, from veins that vary in thickness from less than one centimetre to three metres. It is estimated from trenching and sampling undertaken since August 2010 that the vein aggregate thickness over the currently identified one kilometre strike length is up to around five metres.

Gold recovery will be undertaken via gravity concentration and a processing plant has been purchased from Gekko Systems in Australia. The new and used plant components have been delivered to site and plant construction is expected to be completed in the next two months. Details of Kenai's investment in the Sao Chico project can be found in its news release dated September 21, 2010.

Recent exploration results to date indicate that structures hosting vertical to sub-vertical veins are consistent over up to 1 kilometre along strike with a large variation in vein width over short distances. Similarly gold grades are variable but can locally reach bonanza grades. Up to ten individual, sub parallel veins between 20 centimetres and 1 metre wide are observed at Sao Chico over a total width of approximately 130 metres.

The next phase of exploration work at Sao Chico is to cover underground sampling of approximately 70 metres of horizontal drives developed along one of the unoxidised quartz/sulphide reef structures, which will be completed later in January and the commencement of an initial 2,500 metre program of core drilling with up to five fence lines of drilling, to help define the non-oxidized mineralization potential below the highly oxidized outcropping material that has been exploited by local artisanal miners and to test the assumed down-dip continuity of the reef structures to a vertical depth of 200 metres. Kenai anticipates this drilling will commence by March 2011. 

About Kenai Resources:

Kenai is a Canadian company focused on precious mineral project exploration and development, towards early significant gold production. In addition to the Sao Chico gold project in Brazil, Kenai is also involved in exploration of the wholly-owned Quartz Mountain and Hope Butte gold epithermal gold projects in South-Eastern Oregon, both located in Malheur County, close to the Oregon border with Idaho. Kenai's current indicated and historical gold resources from the two Oregon projects are summarized as follows:

Project   Tonnes   Grade   Ounces Au       Status/Classification
Quartz Mountain   15,050,200   0.80 g/t Au   352,667       Indicated Resources NI43-101 compliant
Hope Butte   5,000,000   0.91 g/t Au   146,300       Historical, not NI 43-101 compliant

Footnotes: 

  1. For Quartz Mountain, resources above a 0.34 g/t cutoff with silver converted to gold equivalent using a ratio of 49.5:1 silver to gold. Metallurgical recoveries were not considered. Indicated resources are as reported in an independent November 2006 NI 43-101 report, posted on SEDAR at that time.
  2. The Hope Butte resources are considered historic in nature, do not comply with current NI 43-101 standards, have not been verified by the Company and therefore should not be relied upon. It is uncertain if further exploration will result in the discovery of an economic mineral resource.

On behalf of the Board of Directors of Kenai Resources Ltd.

Greg Starr, President and CEO 

Forward-Looking Statements: Statements in this release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed and elsewhere in the company's periodic filings with Canadian securities regulators. The economic viabilities of the resources estimates discussed in the release have not been established and may not be. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The company does not assume the obligation to update any forward-looking statement. 

Kenai's Vice President Technical Services, Neil Cole, is responsible for technical information in this release. Mr Cole has sufficient experience which is relevant to the style of mineralization under consideration and to the activity which is being undertaken and planned to qualify as a Qualified Person under NI 43-101. Mr Cole has verified the technical data disclosed in this release, including references to planned exploration and operational activities, and the sampling of the gold-bearing reef structures. Mr Cole has consented to the inclusion in this release of such technical information in the form and context in which it appears.

Shares Outstanding: 35,906,734

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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