Kenai Resources Ltd.
TSX VENTURE : KAI

Kenai Resources Ltd.

December 16, 2010 11:50 ET

Kenai Resources Ltd.: Encouraging Results From Sao Chico Gold Project New Gold Bearing Veins Discovered

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 16, 2010) - Kenai Resources Ltd. (TSX VENTURE:KAI) ("Kenai") is pleased to announce results of an ongoing trench sampling program established to define ore feed material, in advance of the commissioning of a 200 tonne per day capacity test mining plant at the Sao Chico gold project in the Tapajos Mineral Field, in central-northern Brazil. The gravity concentrate plant is currently being installed and is expected to be commissioned in the first quarter of 2011. Sao Chico is an early stage gold exploration concession with a significant number of exposed high grade gold veins and areas of past small scale mining by local miners. Kenai is currently planning a 5,000 metre drilling program.

To date a total of 21 trenches have been excavated for a total length of 644 metres covering an east-west strike length of 450 metres and a north-south distance of 300 metres. Individual trenches vary in length from two metres to 116 metres. A total of 518 samples have been collected and assayed. The samples consist of one and two metre channel samples from the trench walls, rock chip samples from exposed veins and grab samples from rock piles excavated from the trenches. A total of 22 had assay values in excess of 1.0 g/t gold and are listed below.

Trench Sampling Results Greater than 1.0 gram per tonne:

Trench No Interval (m) Original Gold Assay (g/t) Gold Re-Assay (g/t)
1 9.0-11.0 4.32 8.81
1 9.0-10.0 112.11  
1 9.0-10.8 2.37  
1 9.3-9.4 15.92  
2 0.5-0.6 109.7  
4 29-30 1.90  
5 2.0-4.0 1.06  
5 2.0-2.6 9.12  
5 2.0-3.0 3.43  
6 22.0-24.0 1.01  
8 35.3-35.6 1.56  
8 107.7-108.1 2.57  
10 21.6-21.7 3.34  
11 2.6-2.7 1.62  
13 27.5-29.0 4.13  
13 45.5-45.55 2.48  
14 6.1-6.4 1.67  
17 1.2-1.4 1.42  
19 22.0-24.0 3.55  
21 14.0-14.2 11.34  
21 15.45-15.55 2.89  
21 16-18 1.02  

Many of the trenches intersected garimpeiro [artisanal miners] workings where the surface high grade vein material is mined out. These zones are not represented in the trench assay results. They do, however, outline high priority targets for drill testing below the trenches where the garimpeiro workings have not reached. Throughout the Tapajos gold district, including Eldorado Gold's Tocantinzinho project and Magellan Minerals projects, the significant modern gold resource discoveries were targeted on old garimpeiros mine workings.

Two bulk 100 kg oxide samples from trenches 1 and 21 have been collected and sent for metallurgical test work to assist in the gravity plant set up. The grade of these bulk samples has been estimated at 15.6 and 3.7 g/t gold. The metallurgical test results are expected within three weeks.

The trenching work has identified new east-west striking gold bearing veins adjacent to the previously known ones. New veins have also been identified further to the south. All veins vary in thickness from less than one centimetre to three metres and it is estimated that their aggregate thickness over the currently identified one km strike length is up to around five metres.

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 20-30 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 Sao Chico project site is located adjacent to the Trans Garimpeiro Highway and is also serviced by light aircraft from a nearby dirt airstrip. Previous sampling of the sulphide zone vein material by Gold Aura Do Brasil Mineracao Ltda (Gold Aura Brasil), Gold Anomaly's 100% owned subsidiary, has returned an average grade of 15 g/t Au, determined from over 100 samples. Gold grades and production from the weathered zone were reported to be erratic in the supergene (weathered and oxidised) zones of the veins. While trial mining and processing will be undertaken, it should be noted that the grade is conceptual in nature and that there has been insufficient work undertaken to date to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

Gold Aura Brasil's investigations have revealed that the veins are weathered to depths of up to around 10 metres below the surface alluvial cover of approximately five to 10 metres thickness and that the weathered veins are amenable to free digging by excavator. Preliminary test work on finely ground samples has indicated that a high gold recovery can be achieved by gravity concentrating techniques. Gold Aura Brasil plans to mine the weathered vein material by open cut methods under a recently granted GUIA license to generate an early cash flow and to provide a better understanding of the mineralization as part of a feasibility study in preparation for applying for a Mining Lease to mine the underlying unweathered sulphide zone mineralization.

The GUIA provides for mining and processing of up to 50,000 tonnes of gold mineralized rock per year for up to two years. It is anticipated that there is 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 from veins that vary in thickness from less than one centimetre to three metres. It is estimated that their 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 awaiting final customs clearance before being trucked to site.

Details of Kenai's investment in the Sao Chico project can be found in its release dated 21 September, 2010.

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 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.

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.

Contact Information