Kent Exploration Making Headway on Diverse Project Portfolio

Kent Exploration Inc. (TSX.V: KEX) has just completed an eight hole diamond drill program on the company's Gnaweeda Gold Project in Western Australia. The company is also awaiting IP results from the Alexander River Gold Project in New Zealand and is just one small step away from going into production on a high-grade barite property in Washington. All the while battling the highly controversial Australian Super Profit Tax proposition, Kent Exploration believes it has the goods to ride out this particularly cumbersome political storm.

Super Profit Tax, Not So Super
Announced in early May 2010, Australia's planned 40% tax on mining profits is due to come into effect in mid 2012, should it survive the elections in October of this year. Some argue that the tax is justified and unlikely to adversely affect investment in the long term. Most maintain that uncertainty over the tax proposal has wiped billions of dollars off Australian mining firms' market value and added to pressure on the Australian dollar, which is leveraged to the Asian growth story and has lost 11% against the US dollar since the tax was announced in May.

Whether or not the proposal will go through is yet to be seen, however the proposition itself has caused some challenges to Kent Exploration. Kent President and CEO Graeme O'Neill explains how.

"If you look at our stock price over this past month you'll see a dramatic fall and we attribute that to the ongoing consternation over this proposed resource super profits tax in Australia. It has taken one portion of our wealth, as I call it, because we are in quite an enviable position with three major projects on the go, one of them an earn-in with Teck Resources Australia Pty, Ltd.in Australia"

Gnaweeda Gold Project
The earn-in project O'Neill refers to is the Chalice Gold (ASX: CHN) Gnaweeda Gold Project. Comprising over 170 square kilometres of tenements covering an extensive part of the Gnaweeda greenstone belt, the property is located in the Murchison region of Western Australia, 640 kilometres from Perth.

Kent, through its wholly owned subsidiary Archean Star Resources Inc, entered into an Option Agreement with Teck Australia Pty Ltd. whereby Kent can earn 100% of Teck's now approximately 76% interest in Chalice Gold's Gnaweeda Project. To earn its 100% interest in Teck's interest in Gnaweeda, Kent is committing to spending AUD$3 million over 4 years with AUD$650,000 having been expended on geophysical programs and a first phase diamond drill program to May 31, 2010.

The company completed a 1,600 meter, first phase drill program consisting of 8 diamond drill holes by March 31, 2010. Approximately 1,100 meters were conducted on the Turnberry prospect and 500 meters on the Bunarra prospect, where significant intercepts of 18 meters grading 11.09 grams per tonne gold, including 4 meters at 37.7 grams per tonne and 99.10 g/t Au over 1 meter. were discovered.

Taxing Times
However, before Kent could announce these impressive results, the proposed tax created investor uncertainty in Australian projects that still persists today:

"About 3 weeks prior to us making an announcement on the drill results, the Australian government announced this proposal for the super profit tax. That soured the investment community on investing in Australia." O'Neill comments, "We believe it was a pre-election ploy, but it made things very, very difficult for us. We had plans to spin out the Gnaweeda property into Archean Star Resources to our shareholders, We thought that this was a very good choice for our shareholders. It essentially gave them a dividend of one of the Company's significant properties and reduced potential dilution in Kent for the Gnaweeda exploration. Unfortunately, with the super tax, the market doesn't see that. They're treating Kent as though the Gnaweeda property in Australia is the only significant property the Company has, and it is now under severe restrictions due to the perception, not the reality, that this tax proposal is in place. Now we know that in October there's going to be an election in Australia. There is significant resistance to this tax and while no one knows whether this proposal will go through, the odds are highly likely it won't. In the meantime, because we have been significantly reduced in price because of the uncertainty, in my estimation; we present a bargain."

Bargain Buy?
By bargain, O'Neill is alluding to the drop in the company's share price from CA$0.22 to CA$0.11 while maintaining the high caliber of the company's properties.

Gnaweeda is located in the middle of a significant mining community, rich in gold mineralization. The property, and the area, is relatively unexplored at depth and the spin-off is still on the cards.

"The spin-off has been approved by our shareholders and the courts. We're just going to have to wait a bit before completing the final stage as it's conditional upon financing, and the investment community is a wary of Australia now." O'Neill explains, "But we think it'll be overcome sooner rather than later. I'm always optimistic because I know that whenever you get a drop in the market like this, it always rebounds. So I'm confident. The property is substantial, it can stand on its own, the results demonstrate that and a number of people have also told us this, so we believe that in the medium term everything will prove to be just fine and our shareholders will be pleased that we continued with our plans."

New Zealand Properties
A substantial chunk of the Kent Exploration package remains, of course, unscathed by potentially preposterous Australian politics.

The company holds three gold projects in New Zealand; the most advanced being the Alexander River Gold project in the historical, highly prolific, Reefton Goldfield district. Kent also holds projects within the Lyell Goldfield District as well as the Paparoa project, which holds potential for both lode gold and intrusive-related gold mineralization.

The Alexander Gold Project covers 2,669 hectares and lies approximately 20 kilometers south of Oceana Gold's (TSX: OGC) Globe Progress mine, which is currently producing between 50,000 and 75,000 ounces of gold per year. Historic reports indicate that approximately 10 million ounces of placer gold and 2 million ounces of lode gold have been recovered from the Reefton mining camp, the area that plays host to the Alexander project.

Alexander River Potential
In December 2009 Kent completed an initial geological assessment of the project, with over 200 assays received from trench samples. Significant gold assays include 8.0 meters at 10.96 g/t Au and 3.2 meters at 24.6 grams per tonne gold, including 1.9 meters at 40.38 grams per tonne. In April 2010 the company completed an IP Survey that, together with the trenching results, will assist in determining locations for a drill program on the property expected to conclude late 2010.

"The Alexander River project is something to be very excited about." comments O'Neill, "The old historic soil samples seem to show the potential for additional gold bearing zones parallel to the main zone. We could have 2 or 3 parallel structures. Our geologists are waiting for the results of the IP survey, due by early July, and all the other data we've built up to assist in locating our diamond drill holes. We do have a diamond drill program already planned there. This project is, in our estimation, going to be a winner. The grades from the surface sampling are excellent and substantially compare to the numbers from a prior 1985 – 1995 program when a potential resources of 4 million tonnes at 5+ g/t Au (643,000 oz/Au) was estimated. Of course we are going to have to prove that up, but the Globe Progress and Blackwater mines in the immediate vicinity have each had production in excess of 700,000 ounces, so there is good reason to believe that Alexander will be no different"

Kent is also working on the Lyell and Paparoa New Zealand gold projects. Both properties are home to historic mines with known gold on the land. Focusing for now on reconnaissance work, Kent intends to explore these projects to their utmost, expecting a great deal of success from the past producing properties, especially since the recent sampling from the historic Red Queen mine gave an assay over 0.8 meters of 69 g/t Au and visible gold is evident in the samples taken..

Flagstaff Barite Property
Far away from the golden sands and soil of Australia and New Zealand lies the property promising to inject a much appreciated flow of cash into Kent circulation; The Flagstaff Barite Property in Washington, US.

The Flagstaff property, located approximately 10 miles west of Northport Washington, and 15 miles south of Rossland, BC, is highly prospective for both gold and silver mineralization. In 1981, CE Minerals of Athens, Georgia, outlined a historic resource of over 1.3 million tons of 4.2 specific gravity barite while drill defining on the open-pittable, barite deposit.

Being primarily a precious metals exploration company, Kent originally picked up the project for its gold potential. However, they soon saw it was the high-grade barite that presented the most near term potential and submitted a mine permit application. Mine plan approval was received in May 2009 and now the plan is to bring Flagstaff into production.

All that's left to do is to put the $140,000 reclamation bond in place. With current financing underway, Kent hopes to complete the bond process as soon as possible as the company has already entered into an agreement with Matovitch Mining Industries Ltd (MMIL) to supply approximately 20,000 tonnes per year of 4.1 specific gravity barite from the historic open pit barite deposit.

Barite Bonus
The price to be paid under this agreement is the price of crude barite in the most current United States Geological Survey commodity pricing report. For reference, the most recent price paid is US$52 per tonne at the mine gate. The company estimates that there is approximately 30,000 to 40,000 tons of ore stockpiled on the site ready for processing.

Having made its most prominent public appearance in the ongoing BP Oil catastrophe, many investors now know barite is used in oil and gas exploration as a weighting agent for drilling fluids, and Kent believes local demand for barite is rising.

"We think the demand for local barite will increase." says O'Neill, "We believe those not using using barite in their drilling programs will have to address significant insurance costs, now that the BP well blowout has brought increased public attention to the hazards of oil and gas well drilling, and Kent is the only public junior company in North America with a high-enough grade barite deposit ready to go to immediate production. The proposal with Matovitch Mining could bring about up to $1.5 million into the company on an annual basis, so we're very excited about this project. It's an incredible bonus for a company such as Kent to have the potential to come into cash flow at very little capital cost."

Kent Exploration Inc. has been riding on a veritable rollercoaster of mining highs and lows this year. However, with such a diverse collection of promising projects on the go, the company is confident it's shareholders will be rewarded for their support and understanding during these challenging times..

Follow the progress of the company's reclamation bond in Washington, the IP survey results in New Zealand and the outcome of the Australian Super Profit Tax at www.kent-exploration.com.

ByClaire O'Connor and James West

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SOURCE: http://www.midasletter.com/news/100623_Kent-exploration-making-headway-on-diverse-project-portfolio.php