Kinbauri’s efforts at El Valle paying off (February 18, 2008)

Vancouver – It’s looking more and more like Kinbauri Gold‘s (KNB-V) $5-million bet on the past-producing El Valle and Carles gold-copper deposits in northwestern Spain was a good one.

Kinbauri acquired the deposits and mine infrastructures, including a 2,000-tonne-per-day mill and a tailings disposal facility, in spring 2007 after Rio Narcea Gold Mines, now part of Lundin Mining (LUN-T, LMC-N), put the project on care and maintenance. In eight years of production the mines had produced roughly 1 million oz. of gold and 47 million lbs of copper.

When Kinbauri bought the project measured and indicated resources were pegged at 477,000 oz. gold and 57.2 million lbs copper, plus inferred resources of 845,000 oz. gold and 25.5 million lbs copper. Kinbauri quickly moved drill rigs into the area, concentrating exploration on the Area 107 and Black Skarn North targets within the old mine.

By November the junior had successfully increased El Valle’s resources considerably. Black Skarn North and Area 107 now host measured and indicated resources of 1.58 million tonnes grading 4.94 grams gold per tonne and 0.8% copper, as well as inferred resources of 3.05 million tonnes grading 6.85 grams gold and 0.56% copper.

Before the new estimate was even out the company was back on the ground drilling. The new drill program is working on infill drilling at Black Skarn North and Area 107, as well as exploring three new targets Area 208, Carles, and Godan. And results to date are encouraging.

At Area 107 hole 1031 returned 3.58 grams gold, 2 grams silver, and 0.1% copper over 21.8 metres from 229 metres downhole, including 2 metres grading 24.14 grams gold, 2 grams silver per tonne, and 0.05% copper. Hole 1033 cut 17.25 metres grading 10.58 grams gold, 3.82 grams silver, and 0.34% copper, including 7.4 metres grading 22.39 grams gold, 6.25 grams silver, and 0.58% copper. And hole 1044 returned 19.4 metres from 37 metres depth grading 12.87 grams gold, 36.3 grams silver, and 0.85% copper.

Other strong results from Area 107 include hole 1028, which intercepted 1.4 metres grading 57 grams gold, 185 grams silver, and 11.47% copper from 172 metres below surface, and hole 1026, which cut 1 metre of 17.49 grams gold, 110 grams silver, and 2.16% copper.

Kinbauri plans to complete 13,600 metres of drilling in Area 107 and Area 107 West before August 2008 to inform engineering plans.

At Carles, hole 1001 cut 3.5 metres grading 7.87 grams gold, 14.43 grams silver, and 0.84% copper from 132 metres depth.

Mineralization in the district is hosted in a series of Lower Cambrian to Devonian sedimentary rocks. The stratigraphic package has been thrusted, folded, and faulted to form the Rio Narcea anticline; it is also overturned to the northwest and affected by a number of low angle reverse faults that produce strong brecciation.

At El Valle two types of gold mineralization dominate: mesothermal gold-copper skarn mineralization related to a granite porphyry intrusive stock and younger epithermal mineralization realted to faulting and subvolcanic quartz-feldspar porphyry dykes. The highest gold grades occur where low temperature mineralization overprints a gold-copper skarn, forming hematitic jasperiod with native copper and minor cuprite and chalcocite.

Kinbauri moved up 4 on the latest drill results to close at 58. The company has a 52-week trading range of 36 to $1.00 and has 43.6 million shares issued.