Kenai Resources Ltd.; Sao Chico Gold Project, Brazil: Exploration Update

Kenai Resources Ltd.; Sao Chico Gold Project, Brazil: Exploration Update

Kenai Resources Ltd. is pleased to announce that it has discovered numerous artisanal workings along strike from the area of known high grade mineralisation mainly to the east and south-east of the current trenching area. The artisanal workings are variable in size, with a maximum depth of 10 to 15 metres below surface. The workings occur over an area of 500 metres by 200 metres and are coincident with a chargeable geophysical anomaly indicative of sulphide bearing alteration. Float material observed proximal to the workings comprises oxidised quartz fragments and altered intrusive rocks.

Artisanal workers have been active in the area of Sao Chico for 25 to 30 years constructing numerous shafts to approximately 15 metres below surface on oxidised vein material. High grades were recognised on one of numerous shafts and this led to the focus of exploration in the second half of 2010 on this structure, over an area of 900 metres east-west by 300 to 500 metres north-south, where 23 trenches were excavated. The oxidised upper 10 to 15 metres of this vein structure is believed to be amenable to gravity recovery. There has been no drilling on the property hence trenching along strike is the only source of data relating to grades in the area of forthcoming small scale gravity plant operations. Gold grade and vein width vary in short distances along strike and down dip and display a nugget effect, resulting in difficult estimation of gold grades.

This discovery has highlighted further the excellent potential for a bulk tonnage, near surface target along with narrow but high grade vein targets. Exploration of the bulk tonnage target will continue with surface trenching and scout drilling. Other geophysical anomalies exist in the area; however the geophysical survey currently covers an area of only 350 metres by 350 metres and needs to be extended across the entire licence.

Kenai President and CEO, Greg Starr, comments, “Kenai is very pleased with results of the exploration work on site over the past few weeks, exposing new highly prospective areas of old workings outside the prior trenching area. We await assay results from recent underground sampling. Kenai is also preparing for an initial 2,500 to 3,000 metre program of core drilling, along the lines shown in the plan prepared by our consulting geologist group. We also look forward to the commissioning of the gravity plant now being installed at Sao Chico in the next several weeks.”

As shown on the attached figure (, the trench intersections of gold-bearing vein structures extend over several hundred metres. Several sub-parallel vein structures have been sampled, with vein thicknesses varying from less than one centimetre to three metres. From the trenching and sampling undertaken since August 2010, it is estimated that the aggregate vein thickness over the currently identified one kilometre strike length is up to around five metres.

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