Kenai Resources Ltd.: Update on Sao Chico Gold Project, Brazil
09 Agosto 2011 - 8:00AM
Marketwired Canada
Kenai Resources Ltd. ("Kenai") (TSX VENTURE:KAI) is pleased to provide the
following update on the Sao Chico gold project in north central Brazil.
-- Mining operations commenced earlier in the year for the trial mining
phase at the permit rate of 50,000 tons per annum, initially with
surface mining.
-- The recently installed gravity gold trial processing plant was
commissioned, demonstrating the ability to reach design throughput
capacity of 10 tonnes per hour of feed treating oxidized surface
material.
-- Initial plant feed gold ore grades were low, attributable to a lack of
defined Mineral Resources or Mineral Reserves (as those terms are
defined pursuant to National Instrument NI 43-101) making grade control
difficult, and the inability to mine very narrow gold-bearing veins with
a high degree of selectivity.
-- Modifications are being made to surface mining practices to minimize the
degree of excessive dilution of ore with waste rock.
-- Plant commissioning indicated the need for additional size reduction of
ore feed, by finer grinding of the ore feed.
-- Plant operations have been suspended since June, allowing for plant
modifications, including the installation of a grinding mill and other
gravity circuit changes. Recommencement of processing is scheduled
during August.
-- Further underground sampling results have confirmed excellent gold
grades in the quartz/sulphide vein structure. Metallurgical test work
results are awaited from this sampling during August.
-- A diamond drilling program is planned for commencement in August with
the objective of confirming the high grade quartz/sulphide hard rock
vein potential at Sao Chico.
Modifications to Kenai's Option Agreement with Gold Anomaly
Under its original September 21st, 2010 Option Agreement ("Original Agreement")
with Gold Anomaly Limited ("GOA"), the owner of the rights to the Sao Chico
project, Kenai has to date advanced A$2.5m in loan funds to GOA.
Kenai has executed an August 5th, 2011 agreement with GOA, formalizing changes
agreed to since the Original Agreement, and triggering the release of A$1.0m in
further loan funds from Kenai to GOA for the Sao Chico project resulting in a
total of A$3.5m in loan funds to GOA. The material changes to the original
terms agreed under the recent agreement include the following:
-- Kenai's option to acquire 50% of GOA's wholly owned subsidiary holding
the mineral project rights to Sao Chico are is exercisable by September
3rd, 2012, or about four months later than originally provided for. A
"Second Option" to acquire an additional 25% remains, for exercise by
Kenai up to 24 months after the exercise by Kenai of the initial 50%
option.
-- Kenai has agreed to advance a further loan of A$500,000 of loan funds
(from the original A$3m to A$3.5m). Should Kenai exercise the Second
Option, then these funds will be treated as a part-payment (of a total
of A$2m) towards the exercise of that Second Option. If the Second
Option is not exercised, the $0.5m will remain loan funds. Kenai
continues to provide project management advisory services for Sao Chico
to GOA.
-- Kenai will assume a direct project management role if it exercises its
50% equity option.
About Sao Chico:
The project is more completely described in Kenai's NI 43-101 Technical Report
on the project, details of which were contained in Kenai's news release of
January 20, 2011. It has since been filed on SEDAR and on Kenai's website at
www.kenairesources.com.
Sao Chico is located within the Tapajos region in Brazil, the site of one of the
biggest gold rushes in recent history. In the late 1970s and 1980s,
approximately 500,000 garimpeiros rushed to the region to exploit extensive
areas of newly discovered alluvial gold, producing approximately 20-30 million
ounces of gold before the easily won alluvial gold deposits were largely
depleted. Despite the gold rush, little modern exploration has been conducted
over the region to date, with excellent potential to expand gold operations at
Sao Chico. The Sao Chico project team has extensive experience and expertise of
operating within the region, which will provide a focussed and systematic effort
to gold production and exploration at Sao Chico.
As previously advised, Gold Anomaly via a wholly owned subsidiary will receive
all cash flow generated by GOAB at Sao Chico until Kenai exercises its options
to acquire 50% and then 75% equity in the Sao Chico mineral rights to the Sao
Chico project.
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 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
Indicated Resources
Quartz Mountain 15,050,200 0.80 g/t Au 352,667 NI43-101 compliant
Historical,
Hope Butte 5,000,000 0.91 g/t Au 146,300 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.
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