Kenai Resources Ltd.
TSX VENTURE : KAI

Kenai Resources Ltd.

November 17, 2010 19:50 ET

Kenai Resources Ltd.: Sao Chico Project Update, Para State, Northern Brazil

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 17, 2010) - Kenai Resources Ltd. ("Kenai") (TSX VENTURE:KAI) -

  • Engagement of key Geological Consultants Exploration Alliance Ltd.

  • Engagement of key Engineering Personnel and Project Managers D.E.N.M. Ltd.

  • Commencement of infrastructure improvements on site

  • Commencement of plant foundations construction

  • Plant progressing through Customs

  • TSX-V reviewing independent NI 43-101 Technical Report

Further to the Company's News Release of September 21, 2010, the Company wishes to provide an update of its activities toward consummating the Sao Chico Gold Project option, TSX Venture Exchange approval and progress towards early gold production.

About the Sao Chico Project:

The Sao Chico gold project is the subject of the recently announced Option Agreement dated September 21, 2010 between Kenai and Gold Anomaly Ltd. ("Gold Anomaly"). The Option Agreement, along with the recent NI 43-101 report commissioned by Kenai and supporting papers have been lodged with TSX-V for which conditional approval has been received.

The Option Agreement provides Kenai with the right to acquire initially 50% and thereafter in stages 75% and 100% of the Sao Chico gold project. The project is subject to an existing 40% net profit sharing agreement ("NPI") and a royalty equivalent to US$8.80 per ounce of gold production, payable to the owner of the mining rights.

The Sao Chico project is centred at 6.41°S 55.94°W, 240 kilometres south of the city of Itaituba, capital of Pará state, and 580 kilometres south-east of the major inland port city of Manaus. It is located in the emerging Tapajós Gold District, 54 kilometres south-east of the Tocantinzinho project recently acquired by Eldorado Gold Corp. and 23 kilometres south-west of the established Palito underground gold mine owned by Serabi Mining plc, in which Eldorado Gold Corp. acquired a 26.8% equity interest in June 2010. Mineralisation at Sao Chico is located within the same geological sequences that host the Tocantinzinho and Palito gold project defined mineral resources.

The Sao Chico project is within a single Authority to Prospect exploration permit, AP12836, of 1416 hectares, within which there is a small trial-mining Use Permit (locally, "GUIA") covering 56.5 hectares. The GUIA covers the area of historical garimpeiro or artisanal mining and permits 50,000 tons to be mined and processed up until June 6, 2011, with the possibility of a 12 month extension for a further 50,000 tons. An application for renewal has been lodged covering a further three year term for AP12836 from November 30, 2010, when the current permit expires.

The following Sao Chico project information is taken from information and earlier releases provided by Gold Anomaly.

Apart from garimpeiro activity over around 30 years, for which there are no production records, there has been no prior modern exploration. Gold Anomaly's local subsidiary has conducted exploration work including 16 trenches totalling 377 metres. The local owner of the mining rights constructed a vertical shaft to a depth of some 18 metres on one of the quartz-sulphide veins and established a drive in the primary vein material, shown in the Gold Anomaly photo below, along a strike length of approximately 68 metres. Gold Anomaly channel sampled the drive with several high grade intercepts, including a maximum assay of 348 g/t gold over 1 metre. Gold Anomaly's limited historical metallurgical testwork has indicated satisfactory gravity processing recoveries and very good cyanide process leach recoveries.

To view the first photo accompanying this press release, please click on the following link: http://media3.marketwire.com/docs/KAI4.jpg

Engagement of key Geological Consultants Exploration Alliance Ltd.

Kenai has now engaged Exploration Alliance Ltd. ("EAL") to coordinate and direct the technical work towards the demonstration of defined mineral resources and mineral reserves at Sao Chico. EAL has prior experience both in the region and with world class deposits. They are the authors of the recent NI 43-101 technical report on Sao Chico commissioned by Kenai, currently awaiting TSX approval.

A core early objective of Kenai is to demonstrate over the next year an initial defined mineral resource for Sao Chico in NI 43-101 compliant terms. Based on Gold Anomaly's prior work and interpretation, the target is towards an initial high grade open pit and underground resource containing a minimum of 250,000 gold ounces with substantial blue-sky potential.

Kenai views the project to be significantly larger. It is 54 kilometres south-east of the 2 million ounce resource Tocantinzinho project recently acquired by Eldorado Gold Corp. and 23 kilometres south-west of the established Palito underground gold mine owned by Serabi Mining plc, in which Eldorado Gold Corp. acquired a 26.8% equity interest in June 2010.

Engagement of key Engineering Personnel and Project Managers D.E.N.M. Ltd.

Kenai, in conjunction with Gold Anomaly, has engaged D.E.N.M. Ltd. ("DENM") as Project Managers for the early commencement of gold production at Sao Chico, targeted before the end of 2010.

DENM has extensive experience with the establishment of small scale gold projects in South America, Central America and Mexico, and have, over the past two years, been actively involved with the Sao Chico project.

Commencement of infrastructure improvements and pre-production works at Sao Chico site

Extensive preparatory work is now being undertaken at Sao Chico, mainly covering several infrastructure improvements and also preparations for the installation of the gravity processing plant currently being imported to Brazil.

The infrastructure works include building of additional camp accommodation units, pictured below, with an expanded mess, camp rewiring, water supply and sanitation, enhanced communications, local roads and airstrip upgrade.

To view the second photo accompanying this press release, please click on the following link: http://media3.marketwire.com/docs/KAI2.jpg

Work on the preparation of plant foundations has recently commenced, with preparing the footings for the foundations for the slab on which the gravity plant and ancillary equipment are to be mounted, as seen in the photo below.

To view the third photo accompanying this press release, please click on the following link: http://media3.marketwire.com/docs/KAI3.jpg

Plant progressing through Customs

The gold gravity plant concentration units along with ancillary plant items sourced by Gold Anomaly from Gekko Systems have recently arrived in Brazil. They are going through Customs clearance and related procedures ahead of being trucked to Sao Chico within the next fortnight.

It is expected by Kenai that it will be possible for gravity plant commissioning and initial gold production to occur within the next 60 days.

About Kenai Resources:

Kenai is a Canadian company focussed on precious mineral project exploration and development, towards early significant gold production.

Apart from the Sao Chico gold project in Brazil, Kenai is also involved in exploration projects - Albisu, Nevada, an advanced gold exploration project, and the wholly-owned Quartz Mountain and Hope Butte gold projects in South-Eastern Oregon, both located in Malheur County, close to the Oregon border with Idaho. All three of these projects are epithermal gold projects.

Kenai's current gold resources from the two Oregon projects, aggregating approximately 500,000 contained gold ounces, 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, NI 43-101 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 Kenai Resources Ltd.

Greg Starr, President and CEO

FOR ADDITIONAL INFORMATION PLEASE CONTACT:

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.

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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