Kenai Resources Ltd.

Kenai Resources Ltd.

June 10, 2013 10:50 ET

Kenai Resources Ltd.: Sao Chico Gold Project, Brazil Issue of GUIA and Commencement of Stage 2 Drilling

VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 10, 2013) - Kenai Resources Ltd. (TSX VENTURE:KAI) ("Kenai") is pleased to provide an update on progress at the Sao Chico Gold project located on the Tapajos Gold Belt in Brazil.

Kenai's wholly owned subsidiary Gold Aura do Brasil Mineração Ltda ("GOAB") has recently received the Licença de Operação ("LO"), valid for 12 months, from SEMA, the Pará state environmental authority. Subsequent to this condition precedent, GOAB has also received the trial mining GUIA licence, which has yet to be formally gazetted, from DNPM, the Brazilian Mines Department.

The President and CEO of Kenai, Mr Greg Starr commented "This is a major milestone for Kenai allowing for a high grade underground mine development, initially by way of a trial mining GUIA licence. Kenai's directors consider this to be a very positive step towards initial production from Sao Chico, with a simple ore processing flowsheet including crushing and grinding, and gravity concentration, followed by either cyanidation or flotation of the gravity plant tailings."

Commencement of Stage 2 Diamond Drilling Program

Following the success of the Stage 1 drilling program in Q4 2011, the Stage 2 diamond drilling program has now commenced:

  • A program in the order of 6000 metres is planned, using two rigs.
  • GOAB has marked out where the first 16 holes are to be collared.
  • Drilling pads have been prepared for the first nine holes.
  • A mix of exploration and in-fill resources definition drilling is planned.
  • The first six holes are for three holes in each of two areas outside the main vein, where there are clusters of old garimpeiro workings, as yet untested by drilling.
  • Both rigs commenced drilling on June 6th, with 95 metres drilled to date, and initial intercepts of quartz/sulphide vein zones anticipated in the next two weeks.
  • Using the same crews and in the same drilling conditions, the monthly drilling rate achieved in the Stage 1 drilling program was about 1500 metres per month, with two rigs.
  • For ongoing drill program planning and scheduling, GOAB plans the same assaying protocol as for the Stage 1 drilling program, with rush assay samples prepared and assayed at Serabi Gold plc's nearby Palito assay laboratory, and with official NI 43-101 fire assays done at an accredited external laboratory.

The objective of the Stage 2 drilling program is to extend the size of NI 43-101 compliant mineral resources from the maiden high grade mineral resources estimate released on October 15th, 2012. A further outcome of this work will be the completion of the necessary FER (Final Exploration Report) to be filed with DNPM, which is a prerequisite to the submission of an application for a long term Mining Concession for Sao Chico.

About the Sao Chico, Brazil project

The Sao Chico project is located in the Tapajós Gold Belt in Pará state, northern inland Brazil, about 600 kilometres south-east of the major Amazon River city of Manaus. Sao Chico is within AP12836, a Brazilian exploration permit of 1416 hectares owned by GOAB, which owns the Sao Chico mineral rights. The Tapajós Gold Belt, south of the regional city of Itaituba, hosts seven significant gold discoveries and developments in recent years, notably Eldorado Gold Corporation's TZ (Tocantinzinho) project and Serabi Gold plc's Palito project.

The Sao Chico project, like all the other discoveries, evolved from the old workings mainly in and after the huge 1970s and 1980s local gold rush. Much of the region has been crudely mined by artisanal miners (garimpeiros), mainly from simple alluvial workings with inefficient gravity separation and gold recovery by amalgamation, but only at surface or near surface because the simple garimpeiro methods could not extract gold from primary or unoxidised ores.

At Sao Chico, over an east-west strike length of about 1000 metres and north-south 400 metres, some 220 old workings, mainly shallow shafts, have been identified by GOAB. Following prior GOAB surface trenching to trace the gold-bearing quartz veins, Kenai's Stage 1 diamond drilling was the first ever undertaken in the Sao Chico area. That drilling program of 3,268 metres confirmed the hypothesis of a series of sub-parallel near vertical vein structures, in the same rocks and with the same structure as the Palito mine 30 kilometres north-east.

About Kenai Resources Ltd.

Kenai is a Canadian company focused on precious mineral project exploration and development, towards early significant gold production. Its principal current activity is at the Sao Chico project, with a corporate priority towards the earliest possible cash flow generation from Sao Chico.

On behalf of the Board of Directors,

Greg Starr, President and CEO

Forward-Looking Statements: Statements in this news 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 viability of the mineral resources estimates described herein has 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 news 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 vein structures. Mr Cole has consented to the inclusion in this release of such technical information in the form and context in which it appears.

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