VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 18, 2011) - The Board of Kenai Resources (News - Market indicators) is pleased to announce that preliminary gold production has now commenced at the Sao Chico mine in northern Brazil. As detailed in Kenai's news release dated September 21, 2010, Kenai has a loan and option agreement with ASX-listed Gold Anomaly Ltd, the parent company of Gold Aura Do Brasil Mineraçao Ltda ("GOAB") which holds provisional rights to the Sao Chico project 1416 hectare area of Exploration License AP12836. Kenai's initial option is to acquire 50% of the Sao Chico project through loans and expenditure of up to A$3 million.
Commissioning of a Gekko gravity concentrating plant was undertaken using low grade weathered vein material excavated and stockpiled over the last several weeks. Following successful plant commissioning, mining of higher grade run of mine vein material has now commenced and forms the basis for ongoing gold production. Mining will provide a better understanding of the gold mineralisation and will form part of a planned feasibility study for substantially expanding the operation.
To view the photo "Oxidised veins at Sao Chico and an old garimpeiros working", please click the following link: http://media3.marketwire.com/docs/kai0418a.pdf.
Kenai President and CEO, Greg Starr, commented "Initial production will be modest and quite volatile given the nuggetty nature and uneven distribution of the gold. Given the buoyant gold price, any positive cash flows would refund existing investment and fund the feasibility study required for the successful application for a Mining Licence."
"The Sao Chico project is now transitioning to a gold producer status which is an excellent achievement for our company. The investment strategy for this project was developed less than nine months ago. This has been a great achievement for Kenai, the existing local workforce and contractors, our partner Gold Anomaly, and the key construction managers, DENM Engineering and geological advisors, Exploration Alliance Limited."
"Our vision of near term production from the project has been achieved. The next step is to realise the exploration potential."
To view the photo "Gekko Gravity Concentrating Plant at Sao Chico", please click the following link: http://media3.marketwire.com/docs/kai0418b.pdf.
While GOAB had initially planned to commence production at a rate of some 50 tonnes per day and over two months progressively build up to a steady rate of 100 tonnes, 100 tonnes per day was shown to be readily achievable immediately during the commissioning.
In addition, planning for underground mining is underway. Promising high grade gold assays from recent sampling confirmed earlier sampling of a drive developed along the main shear hosted vein at 18 metres depth. A feasibility study has not been completed and there is no certainty the operations will be economically viable
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 1970's 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 its shareholding will receive all cash flow generated by GOAB at Sao Chico until Kenai exercises its option.
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 |
| Quartz Mountain |
15,050,200 |
0.80 g/t Au |
352,667 |
Indicated Resources NI43-101 compliant |
| Hope Butte |
5,000,000 |
0.91 g/t Au |
146,300 |
Historical, not NI 43-101 compliant |
Footnotes:
- 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.
- 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.
Shares Outstanding: 62,406,734
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. 
