Metallurgical testwork has demonstrated the mineralisation at Sao Chico to be amenable to a variety of process routes including cyanidation leaching, gravity separation and flotation, with gold recoveries being reported of up to 99%. All of these potential process routes can be accommodated at the Palito processing operation.
The main area of focus for the Sao Chico project is an area of some 200 artisanal workings, close to the Sao Chico village, in the form of shallow pits and shafts. The current resources are identified in three vein structures namely the Main Vein, the Parallel Vein and the Highway Vein covering a strike length of some 600 metres. Artisanal activity at the Main Vein includes a shaft extending some 18 metres below surface giving access to a 58 metre long exploration drive.
The Main Vein comprises a gold-rich quartz/sulphide lens striking over 100 metres and with true widths between 0.9 metres and 2.9 metres wide. The lens is open along strike to the east and down dip to the west. The Parallel Vein is located 60 metres south of the Main Vein and has been defined over a strike length of 80 metres and to a depth of 75 metres, dipping steeply to the south. Surface workings in the form of small open pits exist 350 metres along strike from the known mineralisation at the Main Vein. Previous trenching has yielded high grades in this area which has not been thoroughly drill tested.
The Highway Vein is located 400 metres east along strike from the Main Vein and characterised by a number of artisanal workings in shallow (less than 15 metre deep) shafts and small open pits clustered in the area. One sub vertical west-northwest trending vein zone has been identified between 1.6 and 2.9 metres wide to a depth of 75 metres below surface.
The potential for discovery of blind sub parallel vein deposits has been demonstrated through the definition of inferred mineral resources in the Parallel Vein. Further exploration is also warranted in the immediate area around Sao Chico where some areas with artisanal workings on surface remain untested by drilling.
Exploration of the wider licence area outside of the Sao Chico prospect has located the Pedro and Paulo Arara prospects, located 1.7 and 1.1 kilometres north of the Sao Chico prospect respectively. These prospects are currently defined by artisanal surface workings and rare shafts exploiting similar styles of mineralisation to that observed at Sao Chico. Further work is warranted to advance the Pedro and Paulo Arara prospects given the successful drilling programme at Sao Chico. It is possible that given their proximity to each other, the Pedro and Paulo Arara prospects are related to the same mineralising event or structural control.
Kenai has an agreement, which will continue following the acquisition of Kenai by Serabi, with the original Brazilian vendors of the Sao Chico property, whereby Gold Aura do Brasil Mineracao Limitada (Kenai's wholly owned Brazilian subsidiary) will make the following payments:
I. Unconditional Payment
Property acquisition payment
-- US$600,000 (US$75,000 per quarter from December 2012 to September 2014) of which US$150,000 has already been paid.
II. Conditional on the Procurement of Project Finance for not less than $15m ("Project Finance")
Property acquisition payment
Total amount payable - US$3,500,000
-- US$1,500,000 payable 30 days after Project Finance is obtained plus-- US$2,000,000 payable over 36 equal monthly instalments starting 11 months after Project Finance is obtained
III. Conditional on Production
Production based royalties
-- 3% Net Smelter Royalty (NSR) to a maximum of US$10,000,000 (i.e. this NSR would cease after some 200,000 ounces of production at a US$1600 gold price) and S$3.75 per ounce of gold production. Based on a $1,600 per ounce gold price and 100,000 ounces of gold production, in aggregate these royalties equate to an average NSR of 3.2%. Based on a $1,600 per ounce gold price and 500,000 ounces of gold production, this overall production based royalty payable to the vendors equates to an average NSR of 1.5% (as the 3% NSR would cease after some 200,000 ozs). The above amounts are based on production from gold in the exploration licence area of AP12836. There are other minor royalty payments on metal production from any new exploration permits arising from the further contiguous and nearby 6,763 hectares which are the subject of current exploration permit applications.
About Kenai Resources Ltd.
Kenai is a Canadian company focused on precious mineral project exploration and development, towards early significant gold production. Its principal current activity is at the Sao Chico project in Brasil, with a corporate priority towards the earliest possible cash flow generation from Sao Chico.
Shares Outstanding: 105,906,734
On behalf of the Board of Directors.
Greg Starr, President and CEO
Forward-Looking Statements: Statements in this news 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 viability of the mineral resources estimates described herein has 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.
Kenai's Vice President Technical Services, Neil Cole, is responsible for technical information in this news release. Mr Cole 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 has verified the technical data disclosed in this release, including references to planned exploration and operational activities, and the sampling of the gold-bearing vein structures. Mr Cole has consented to the inclusion in this release of such technical information in the form and context in which it appears.
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.
Kenai Resources Ltd.