Kenai Resources Ltd.

Kenai Resources Ltd.

January 12, 2011 19:39 ET

Kenai Resources Ltd.: Encouraging Electromagnetic Anomalies Located at Sao Chico Gold Project, Brazil

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 12, 2011) - Kenai Resources Ltd. ("Kenai") (TSX VENTURE:KAI) is pleased to announce encouraging exploration results from the Sao Chico Gold Project in Brazil from an initial horizontal loop electromagnetic survey (HLEM) over the main vein zone at Sao Chico. Initial geophysical surveying of the main vein area at the Sao Chico Gold Project has revealed the presence of two large anomalous conductive zones. Persistence of the anomalism throughout all frequencies indicates significant depth extent. The anomalous zones are most likely associated with pyritic mineralised zones in the basement granite.

Two composite rock grab samples of pyritic granite from a nearby mine shaft returned encouraging assay results of 1.61 and 36.0 g/t gold and as previously reported, similar pyritic samples from the nearby Sao Chico Vein No.1 returned an average assay result of 15.0 g/t gold. A recent trench in the anomalous area intersected old garimpeiro workings and a 4.45m zone of stockwork veining. Follow-up induced polarisation (IP) geophysical traversing has been undertaken and is currently being interpreted. The results will be used to select targets for further trenching and drill testing.

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The HELM survey was undertaken along a series of 50 metre spaced N-S orientated lines over the main Sao Chico gold vein area. Several regional traverse lines were also surveyed and were randomly selected within the AP to the east (1.0km, 1.5km and 4.5km) of the main prospect area. The larger of the two conductive anomalies was delineated immediately south of the main vein along which a drive was developed from the Waldimiro shaft at Sao Chico Vein No. 1.

Further south into the anomalous zone, a recent trench (21) area intersected old garimpeiro workings and a 4.45m zone of stockwork veining. Three channel samples from within this zone returned assays of 1.02 g/t gold, 2.89 g/t gold and 11.34 g/t gold. A large conductive anomaly was also delineated some 100 metres to the east of the main zone (where veins are known) and discrete conductive anomalies were also detected on the two traverse lines 1.0 and 1.5 km to the east. The latter two areas require follow-up as there are no veins known in these areas.

Follow-up induced polarisation (IP) surveying has been undertaken and the data is currently being interpreted to further define the conductivity anomalies and to select priority targets for drill testing early in 2011.

As a result of the encouraging exploration results at Sao Chico, Kenai has decided to cease further exploration at its Albisu project in Northern Nevada. While the Albisu project showed promise, the potential shown at Sao Chico combined with growing environmental issues at Albisu led to this decision.

About Sao Chico:

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 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 after two months of plant start-up, from veins that vary in thickness from less than one centimetre to three metres. It is estimated from Gold Aura Brasil's trenching and sampling that the vein aggregate thickness over the currently identified one km 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. This plant has now arrived in Brazil. The new plant components have been delivered to site and the used components are now Details of Kenai's investment in the Sao Chico project can be found in its release dated 21 September, 2010.

Kenai announces that it has engaged Seahawk Capital Corp. ("Seahawk"), of Vancouver, BC, to provide investor relations services. Kenai has agreed to pay Seahawk $3,000 per month for an initial term of 12 months. The principal of Seahawk is Saf Dhillon. The agreement is subject to the approval of the TSX Venture Exchange.

Kenai also announces that Mr. John Watt has been appointed as CFO to replace Mr. Paul Larkin. Mr. Watt is a Chartered Accountant with over 37 years of business experience. He serves as Chief Financial Officer for two other Canadian public junior mining companies with exploration programs in Latin America. Mr. Watt has provided financial and tax consulting services to both public and private companies, and has consulted to foreign filers with the US Securities and Exchange Commission on Sarbanes-Oxley Act compliance. Mr. Watt earned a B.A. with a Major in Economics. Mr. Larkin will remain as Corporate Secretary and a director of Kenai.

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


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

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 Service, Neil Cole, as the company's Qualified Person has declared in writing that scientific or technical information in this release has been prepared under the supervision of Mr Ken Chapple, Executive Director of Gold Anomaly Limited. Mr Chapple has sufficient experience which is relevant to the style of mineralization under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code and to qualify as a "Qualified Person" under NI 43-101. Mr Chapple has verified the data disclosed in this release, including sampling, analytical and test data underlying the information or opinions contained in this release. Mr Chapple consents to the inclusion in this release of the matters based on his information in the form and context in which it appears.

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