Kenai Resources Ltd (TSX VENTURE: KAI) ("Kenai") announces that
drilling at its Hope Butte, Oregon gold project located just west
of the Idaho border is scheduled to commence around the end of
September. Kenai's immediate drilling program of approximately
3,000 metres is designed to replicate the results and the mining
potential recorded at Hope Butte in the 1996 to 2000 period by
Chevron Resources and its joint venturers, and to advance Hope
Butte to NI 43-101 status. To this end, four initial holes are
being drilled by twinning Chevron's prior results, including
several very high grade intercepts. Assay results from the initial
drilling at Hope Butte will be released as soon as available.
Kenai also advises that, following the completion of the initial
drilling at Hope Butte, the rig will be remobilised for a planned
1,000 metre drilling program at the Albisu farm-in exploration
project in northern Nevada. This program is currently anticipated
to commence during November. The Albisu gold project was drilled by
Chevron Resources in 1979 and 1981 and Western Energy Development
Corp. ("WEDC") followed up with four core holes in 2008 to twin
Chevron's AL-14 drill hole that reportedly intercepted 6.5 meters
at 6.2 gram per tonne ("gpt"). The WEDC holes confirmed the gold
zone by intercepting 1.6 meters of 12.46 gpt and 8 meters of 1.94
gpt. To date WEDC has drilled a total of 3,729 meters of core at
Albisu in 2008 and 2009. That drill program defined a mineralized
stockwork sulphide-quartz-calcite zone that is up to 73 m thick.
Gold values range from 14.6 gpt over 1.8 meters to intervals
between 3 and 32 meters of 0.2 to 0.5 gpt.
Kenai Entry to Brazil via Strategic Joint Venture with Gold
Anomaly on its Sao Chico Gold Project
Kenai has executed an Option Agreement with Gold Anomaly Limited
(ASX: GOA) for Kenai to acquire 50% of the Sao Chico gold project
in Brazil, by funding project exploration ahead of a possible
decision to acquire equity in the project, with key terms as
under:
1. Kenai has an 18 months option to acquire 50% of Sao Chico following an
advance to GOA of A$1m and committing to provide A$2m project funding,
these funds will be in the form of a loan from Kenai to GOA until
exercise of the option. If Kenai does not exercise the option, the loan
funds advanced will be repaid to Kenai by GOA.
2. Kenai has a further option to acquire further 25% by payment to GOA of
A$1m and committing to provide A$1m project funding.
3. GOA has right to continuing participation at 25% level or can sell 25%
to Kenai based on US$30/oz for attributable CIM Mineral Resources gold
ounces plus US$60/oz for attributable CIM Mineral Reserves gold ounces
at that time.
4. Kenai to pay a 10% Net Profits Interest (NPI) for 5 years to GOA over
Kenai's attributable interest, whether at 50% or 75%.
Kenai's objectives in this transaction are to undertake local
and regional exploration and development, over the tenement area
covering 1,416 hectares, initially targeting one million gold
ounces in the 56 hectare core area, the site of extensive prior
garimpeiro surface workings. Kenai's project funding is to generate
the necessary data to accelerate a Mining Lease application.
Kenai will assume the role of project manager, utilizing
existing GOA personnel as well as its own personnel. The focus is
on fast tracking initial gold production and defining a NI 43-101
compliant mineral resource. GOA has been planning the commencement
of production by the end of 2010 at the rate of 20,000 gold ounces
per annum. Production is planned from an expected high grade gold
deposit using a minimal capital cost, low operating cost gravity
recovery operation. On exercise of the Option, Kenai's
participation will be as an incorporated joint venture with GOA,
covering GOA's rights under contract with the local garimpeiro
landowner. This landowner has recently been granted a 12 month
trial mining permit or GUIA, with a possible 12 month extension to
the permit, during which time a feasibility study for a full scale
project is planned to be completed. As Greg Starr, President of
Kenai is also a Director of Gold Anomaly; the intended transaction
may be determined by the TSX Exchange as a non-arms length
acquisition.
About the Sao Chico Gold Project, Para State, Brazil:
The Sao Chico project is located 340 kilometres south-east of
the major city of Manaus. It lies within a prominent north-west to
south-east trend in Brazil's Tapajos Mineral Field, exploited over
only the past 30 years by a gold rush of some 500,000 garimpeiros,
ie artisanal alluvial miners, for the production of unofficially
estimated 20 to 30 million ounces of gold. With little underground
mining expertise, the garimpeiros were urged by government to
consolidate their claims and joint venture with established mining
companies. The field has had little modern exploration
undertaken.
San Chico is in cleared low grade farming land adjacent to the
Transgarimpeiro Highway, at a road distance of about 350 kilometres
or 8 hours' drive from the regional city of Itaituba, to the
north-east. Light aircraft from Itaituba service Sao Chico via two
local airstrips.
Extensive surface mining has been undertaken by garimpeiros at
Sao Chico for over 20 years, with minor underground workings in
primary rock which occurs at less than 20 metres depth. There are
several sub-parallel gold-bearing coarse grained quartz/sulphide
veins, with a strike length so far known of 1000 metres.
Investigations by GOA to date have determined the following:
-- Veins weathered up to around 10 metres depth, free dig by excavator to
the depth of oxidation.
-- Underground sampling by GOA along about 70 metres of drives from a 20
metre deep shaft in free-standing primary rock, with average gold grades
of 15 g/t, from over 100 samples.
-- Good metallurgical recoveries, both by gravity and cyanidation methods.
Current plans are for delivery during October of a 100 tonnes
per day capacity, integrated gravity processing plant, which will
allow commencement of the GUIA trial mining at the permit rate of
50,000 tonnes per annum by year end. There are abundant local water
supplies and ample tailings dam capacity.
From its due diligence investigations, Kenai considers there is
excellent potential at Sao Chico for delineation of NI 43-101
mineral resources of sufficient tonnage and grade to support a
substantial gold project operation. An independent NI 43-101 report
is currently being prepared for the project.
The Tapajos gold region is situated in the south-central part of
the vast Amazon Craton, which is divided into two, the Guyana
Shield north of the Amazon River and the Brazilian Shield, with its
nucleus as the Archaean greenstone-granitoid terrane, south of the
Amazon. As shown in the appended regional geology plan
(http://media3.marketwire.com/docs/k921c.pdf), Sao Chico is in the
same geological unit, the intrusive Parauari Suite, as the
Tocantinzinho (TZ), Palito and Sao Domingo projects. TZ is a major
gold project acquired for CAD$122 million in July 2010 by Eldorado
Gold (TSX:ELD, ASX:EAU). In June 2010, ELD acquired 26.8% equity in
Serabi Mining plc, the AIM-listed company which owns 100% of the
Palito underground mine. From Sao Chico, the TZ project is 54
kilometres north-west and Palito is 23 kilometres east
north-east.
Kenai Chairman Daniel Kunz said today, "Kenai is pleased to be
joint venturing with Gold Anomaly on the Sao Chico project. We are
committed to bringing the project into production in the short term
and have expectations of defining a significant resource at Sao
Chico leading to a long term mining project. Kenai has negotiated a
deal structure that overall is low-risk in terms of financial
exposure in the event that our positive expectations for Sao Chico
are not realised during the Option Agreement period."
GOA Non Executive Director Tom Fermanis said today, "We believe
our shareholders will view this agreement as favourable. The
agreement with Kenai injects funds into the Sao Chico project, fast
tracking production and exploration, and should a JORC or CIM NI
43-101 compliant resource be developed at Sao Chico, both GOA and
Kenai will share in the upside. Kenai are targeting a potential
million ounce deposit, potentially enabling GOA to benefit from a
strong cash flow from the project. The agreement with Kenai will
enable GOA management to fully focus on developing its flagship
Crater Mountain project in PNG".
About Kenai Resources:
Kenai is a Canadian company focussed on precious mineral project
exploration and development, towards early significant gold
production. In addition to the Albisu, Nevada, advanced gold
exploration project, Kenai's principal project assets are 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.
Shares Outstanding: 31,231,734
On behalf of the Board of Kenai Resources Limited
Daniel Kunz, Chairman
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.
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.
Contacts: Kenai Resources Ltd. 604-669-5753 604-688-9895 (FAX)
info@kenairesources.com www.kenairesources.com
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