2007 Exploration Budget of $5.4 Million-Drilling Underway
OTTAWA, ONTARIO, Jul 04, 2007 -- Kinbauri Gold Corp. (TSX VENTURE: KNB) ("Kinbauri";) is pleased to announce that conditional approval for the acquisition of the El Valle Mill and Mine, Carles Mine, auxiliary facilities and La Brueva and Godan properties in the Rio Narcea Gold Belt of Asturias, northwestern Spain (the "Assets") has been received from the TSX Venture Exchange (the "Approval"). In connection with the approval process, Kinbauri is filing a NI 43-101 compliant Technical Report prepared by Alan Noble, P.E., of Ore Reserves Engineering ("ORE") with respect to the Assets, and a Filing Statement (TSXV Form 3D2), both of which will be available at www.SEDAR.com. In addition, shareholder approval of the transaction is being sought by way of written consent of at least 51% of its shareholders, which is expected to be received within the week.
Conversion and Use of Funds
With Approval, 31,727,131 previously issued subscription receipts were converted into 31,727,131 common shares of Kinbauri plus 15,863,565 common share purchase warrants; each warrant entitles the holder to acquire a common share at a price of $0.70 per share until September 31, 2008. The net proceeds from the offering of the subscription receipts of $15,092,928 will be released to Kinbauri in connection with conversion of the subscription receipts; commissions and expenses totalling $1,161,030 having been paid to the agents for the offering, M Partners Inc. and Clarus Securities Inc.
The funds will be applied towards repayment of the US$7.5 million costs incurred by Kinbauri Espana, S.L. for the purchase and development of the Assets to date and for exploration and development at El Valle and Carles, as recommended by ("ORE") in its NI 43-101 compliant Technical Report for El Valle, Carles, La Brueva and Godan Gold Deposits and as detailed below (and filed on Sedar). Approval secures Kinbauri Espana, S.L. as Kinbauri Gold Corp's wholly-owned subsidiary.
Exploration and Development Programs
The first drill program has been initiated with the objective to expand resources and define reserves towards recommencing mine production at El Valle. A 21-hole underground drill campaign has been proposed at Area 107 (14 holes) and Black Skarn North (7 holes) for a total of 7,000 metres. Drilling priorities at Area 107 will include following the high grade mineralization at depth and extending it to the north and south, whereas drilling at the Black Skarn North will focus on extending the continuity of the mineralization. The program is expected to be completed near the end of September 2007.
Surface drilling with one rig is expected to commence in September over three areas: Area 208 at El Valle, Carles and Godan:
- Area 208 (El Valle): Six holes for a total of 1,750 meters to be drilled from August to October to test this potential high grade zone.
- Carles: Three holes in Carles for a total of 1,150 meters to be drilled in September and October to test the extension of open-pittable resources.
- Godan: Two holes for 600 meters to be drilled in November to test a Mo-Au target.
The 2007 planned program also includes drifting at Area 107, including 150 meter access and 20 meters of drilling bays with a 15 meter testing drift in ores, to be followed by definition drilling of 1,500 meters with one rig in November. As well, drifting will be undertaken concurrently in the Black Skarn area in the fall with a 300 meter decline and 50 meters of drilling bays to accommodate definition drilling of 3,000 metres, with two rigs slated to begin in November.
The aforenoted highly mineralized zones targeted in the 2007 exploration program have been identified among those having the potential for rapid identification of reserves to support a mining operation, due to their proximity to existing mine workings and apparent continuity of mineralization. As of March 21, 2007 ORE has estimated indicated resources of 12,000 ounces gold (38,000 tonnes at 9.8g Au/t) and inferred resources of 342,000 ounces gold (913,000 tonnes at 11.6g Au/t) for Area 107; it is open at depth and along strike. The Black Skarn North has estimated inferred resources of 73,000 ounces gold and 5,000 tonnes copper (445,000 tonnes at 5.1g Au/t and 1% Cu) and is open to the east and west.
The total exploration budget for these properties in 2007 has been estimated at approximately 3.5 million Euros (C$5.4 million). A successful program will result in defined resources to support six years of production. Kinbauri then plans to complete engineering studies to determine the mine development required to convert resources to reserves sufficient for three years production at El Valle mill's optimal production rates. Thereafter, the plans are to continue exploration in order to delineate resources and reserves at El Valle/Carles to allow a mining life beyond six years. Until reserves are established and a feasibility study is completed, there is no certainty that production will be realized.
Rio Narcea Gold Belt Resources: Potential for Additional Discoveries
The Rio Narcea Gold Belt, with present measured and indicated resources of 477,000 ounces gold and 26,000 tonnes copper (2,594,000 tonnes at 5.7g Au/t and 2,343,000 tonnes at 1.13% Cu) and inferred resources of 845,000 ounces gold and 11,600 tonnes copper (3,159,000 tonnes at 8.3g Au/t and 1,607,000 tonnes at 0.84% Cu) at El Valle and Carles, has been subjected to multiple phases of mineralization common to most major mining camps. The El Valle project was first identified in 1992 when several areas having significant gold mineralization were discovered. After the 1996 Feasibility Study by Rio Narcea Gold Mines, Ltd., additional gold deposits were discovered, including Area 107, Black Skarn North, Sienna, Charnela, Charnela South and Caolinas, and Area 208. Discovery of these deposits clearly indicates that the El Valle-Boinas area still has great potential for discovery of additional gold mineralization. Some locations may have potential to combine the mining of large tonnage, low grade deposits concurrently with lower tonnage, high grade deposits.
For further description of the Assets purchased, proposed work programs and objectives, please refer to Kinbauri's press releases of January 16, 2007 as well as ORE's Technical Report and Kinbauri's third quarter MD&A available on Kinbauri's website at www.kinbauri-gold.com and on Sedar.
Options and Warrants
Kinbauri has approved the issuance of 2,275,000 options under its current Stock Option Plan to Directors, Officers, Consultants and Employees expiring July 03, 2010 and 200,000 options expiring July 03, 2012 all at an exercise price of C$0.75. In addition, as a result of the transaction, 1,890,000 broker's warrants are now outstanding at C$0.50 per warrant and 330,900 at C$0.55 per warrant; each broker's warrant consisting of one Unit of Kinbauri. All securities are subject to a four-month hold period. Following the Unit issuance, Buffalo Gold Inc. will own 25.4% of the outstanding common shares of Kinbauri and Aquilon Capital Corporation will own 13.9%.
McEwen and Dionne Appointments
Kinbauri is also pleased to announce that Mr. Brian McEwen, President of Buffalo Gold Ltd. has been appointed to the Board of Directors and Mr. Louis Dionne, Mining Consultant, has been appointed to Kinbauri's Advisory Board. Mr. McEwen and Mr. Dionne are to each receive 200,000 options expiring July 03, 2010 (see above for details).
This press release was prepared by Dr. V.N. Rampton, P.Eng. in his capacity as a qualified person.
Kinbauri is a mineral exploration company focused on the development of mineral properties, primarily precious metal prospects in northwestern Spain, Nevada and Canada. Its immediate focus is to expand and upgrade resources to reserves at the El Valle property in Asturias, Spain with a view to re-starting operations at the mine and mill complex, and to establish resources to support a mine and mill at Corcoesto in Galicia, Spain where it has an option to earn a 65 percent interest.
This press release contains certain forward-looking statements, which are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected. Kinbauri undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.
THIS PRESS RELEASE WAS PREPARED BY KINBAURI GOLD CORP. AND THE TSX VENTURE EXCHANGE HAS NEITHER APPROVED OR DISAPPROVED THE CONTENT OF THIS RELEASE.
Contacts:
Kinbauri Gold Corp.
Ms. Donna Yoshimatsu
Investor's Relations
(647) 293-7047
Email: dyoshir@rogers.com
Kinbauri Gold Corp.
Dr. Vern N. Rampton
(613) 836 2594
(613) 831 2730 (FAX)
Email: kinbauri@kinbauri-gold.com or vrampton@kinbauri-gold.com
