Kenai Resources Ltd.
TSX VENTURE : KAI

Kenai Resources Ltd.

January 20, 2011 13:36 ET

Kenai Resources Ltd.: Sao Chico Gold Project, Brazil, NI 43-101 Technical Report

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 20, 2011) - Kenai Resources Ltd. (TSX VENTURE:KAI) ("Kenai") is pleased to announce the release of its National Instrument (NI) 43-101 Technical Report titled "Field Review and Observations of the Sao Chico Property, Brazil". The report has been filed under Kenai's corporate profile on SEDAR and on Kenai's website at www.kenairesources.com. The report was prepared by Exploration Alliance Ltd. ("EAL"), an independent geological consultancy.

Mr. Andrew Tunningley, Principal Exploration Geologist of EAL, is a Qualified Person within the meaning of NI 43-101 and is the primary author of the Sao Chico Technical Report.

Highlights extracted from the EAL NI 43-101 Technical Report include:

  • A total of 30 channel samples were collected [by GOAB, not independently by EAL] and returned maximum assay results of 348 g/t gold, 41 g/t silver, 0.23% copper, 5.7% lead and 3.2% zinc. Eighteen of the 30 samples assayed over 1 g/t gold and averaged approximately 15 g/t gold. Observations [by EAL] of stockpiled material from the shaft indicates that these samples were taken from sulphide bearing quartz vein material and pyrite altered host rock. The encouraging results of GOABs sampling demonstrates the bonanza grades and excellent exploration potential of the Sao Chico project.
  • EAL channel sampled seven of the recently excavated trenches as part of a verification sampling program with encouraging results including 112 g/t gold over 1 metre (TR01), 3.42 g/t gold over 1 metre (TR02) and 3.43 g/t gold over 1 metre (TR05). Gold assay results of pulp duplicates showed considerable variation suggesting a nugget effect.
  • EAL considers Sao Chico to hold excellent exploration potential and only a small proportion of AP12826 has been explored. Further work should include diamond drilling, geological mapping, geochemical and geophysical surveys, bench scale metallurgical testwork and microscope gold studies for a total cost of CAD 1.3 million.
  • Sao Chico is hosted in an intrusive complex composed of granodiorite to diorite belonging to the Pararauri Suite.
  • Mineralisation comprises a number of east south-east striking, sub-vertical, mesothermal quartz-sulphide veins which have been observed outcropping in three different areas within the 1416 hectare exploration licence AP12836.
  • The main area of exploration activity and artisanal workings is on a vein zone in the southwest of AP12836 which comprises up to ten individual veins observed over a total width of 130 metres at surface. Individual veins vary between 20 centimetres and 3 meters wide. Structures which are host to the veins are consistent along strike for >900 metres. Vein width and gold grade is variable over short distances.

In its report, EAL described Sao Chico as a polymetallic mesothermal vein system, and that such mesothermal vein deposits can display relatively large vertical extents, with highest metal grades commonly observed at the vein-wall rock contacts. The EAL report referred to the proximity of the Palito Gold Mine at 20 kilometres north-east and the TZ (Tocantinzinho) gold deposit 54 kilometres north-west of Sao Chico, both hosted in the same Pararuiri Suite of rocks as Sao Chico.

Kenai President and CEO, Greg Starr, comments, "Kenai is very pleased with the quality of EAL's work and report, and is in the process of implementing the EAL recommendations. An EAL geologist is now on site preparing for sampling of primary quartz/sulphide veins underground in the next few days and for the commencement of core drilling in the next few weeks. EAL's recent work has exposed new high prospectivity areas of old workings outside the area where 21 trenches have been excavated and sampled since last August, which will be tested by the planned 2500 metre core drilling program."

About Sao Chico:

The Sao Chico gold project is located along a prominent NW-SE trend which is the most mineralized zone within the Tapajós 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.

Within the 1416 hectare exploration licence (AP12836), a smaller 56.5 hectare GUIA or trial mining use permit license area provides for mining and processing of up to 50,000 tons of gold mineralized rock per year for up to two years as part of feasibility studies. 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 Gold Aura Brasil's trenching and sampling 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. A gravity processing plant has been purchased and delivered to site and is currently being installed, for commissioning in the next several weeks. 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.

The technical content of this news release has been reviewed by Kenai's Vice President Technical Services, Neil Cole, who 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, who is the technical person responsible for this news release, has verified the technical data disclosed in this release, including references to Kenai's other projects and planned exploration and operational activities, and the sampling of the gold-bearing reef structures. This news release has been reviewed and approved by Mr Tunningley of EAL who has consented to the inclusion in this release of such technical information from the EAL NI 43-101 report 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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