Kinbauri Gold reports drilling at El Valle extends mineralization

When Kinbauri Gold Corp. (KNB-V) forked over US$5 million to buy the El Valle and Carles Mines and two other properties in Spains Rio Narcea Gold Belt earlier this year, it had a hunch it was getting a good deal.

We saw the price was right for what we thought was an excellent deal given the mill on the property and the resources, says Vern Rampton, the companys president. We knew there was tremendous blue sky potential with multiple phases of mineralization.

While Rio Narcea Gold Mines, the previous owner of the properties, had other priorities preventing it from spending the time and the effort to put the deposit into a position where it could be profitably mined, Rampton says we thought with the right personnel, we could do that.

The El Valle property in Asturias, northwestern Spain, is about a 4-hour drive north of Madrid.

A second set of assay results released today suggests the company is on track to do just that. Initial results from its 7,000-metre drill program at El Valle indicate that it will achieve its goal of establishing resources, equating to six years of production.

Rampton says if Kinbauri defines about 3 million tonnes of ore and converts at least half to reservesaveraging about 7 or 8 grams gold per tonneit should be able to restart profitable operations at a rate of 1,800 tonnes a day.

Weve had two sets of full results from the hole and everything is on track, Rampton says from his office near Ottawa. We are managing to increase these resources and I think by the time we end the drilling, we will have met our targets.

The results from this drilling and earlier drilling by Rio Narcea confirm mineralization in the Area 107 zone extends at least 150 metres west of its previous known extent. But the company will need to do more drilling to make sure its continuous in its western extent, Rampton points out.

In March, Kinbauri reported resources of 2.6 million measured and indicated tonnes at 5.7 grams gold per tonne for 477,000 oz. gold, and 3.16 million inferred tonnes at 8.3 grams gold per tonne for 845,000 oz. gold, exclusive of significant copper credits.

What were doing is were targeting the most easily accessible and easily minable ones first, Rampton says.

The most accessible parts of the property are Area 107, where reported resources averaged 11.6 grams gold per tonne, and Black Skarn North, where resources averaged 5.1 grams gold and 1% copper per tonne.

The primary objective of the present underground drilling program at El Valle, set to conclude at the end of September, is to define resources of 3 million tonnes averaging 8 grams gold, or about 770,000 oz. gold.

An independent estimate in March pegged the indicated resource for Area 107 at 12,000 oz. gold (38,000 tonnes at 9.8 grams gold per tonne) and the inferred resource at 342,000 oz. gold (913,000 tonnes at 11.6 grams of gold per tonne).

Inferred resources were estimated at 73,000 oz. gold and 5,000 tonnes of copper at Black Skarn North.

Rampton says he believes that if the Black Skarn works out the way its working out now, cash costs of production would be about US$300 to US$320 per oz. gold. Thats relatively good for a project of this size.

And if all goes well, Rampton forecasts production could start as early as 2010.