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Lac Cinquante Resource Increases by 92% to 27.13 million lbs U3O8

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January 17, 2012

Vancouver, B.C. - Kivalliq Energy Corporation (KIV: TSX-V) (the “Company” or “Kivalliq”) today announced a significant increase in the NI 43-101 compliant Mineral Resource estimate for the Lac Cinquante uranium deposit, located within Kivalliq’s 225,000 acre Angilak Property in Nunavut, Canada. The Company has received a summary report from Robert Sim, P.Geo. of SIM Geological Inc. that describes an Inferred Mineral Resource Estimate of 1,779,000 tonnes grading 0.69% U3O8, totalling 27.13 million lbs U3O8 (15.2 lbs U3O8/tonne) at a 0.2% U3O8 cut-off grade.

“This represents a 92% increase in the Lac Cinquante resource which clearly reflects the growth potential of this deposit and the increasing value of this project,” stated Kivalliq CEO Jim Paterson. “Lac Cinquante is one the largest undeveloped and highest grade uranium resources in Canada, outside of the Athabasca Basin, and contains significant quantities of silver, molybdenum and copper. The value that is added with these other metals, in addition to the rate of new discoveries and success at the Angilak Property, are contributing factors to the potential economics of this project as a whole.”

Mineral Resource Estimate

The updated Mineral Resource estimate for Lac Cinquante was prepared under the direction of Robert Sim, P.Geo., of SIM Geological Inc.  A resource model was generated using core sample assay results and interpretation of a geological model relating to spatial distribution of uranium at the Lac Cinquante Main, Eastern Extension and Western Extension Zones.  All assay and geological information was derived from work conducted by Kivalliq as part of the 2009, 2010 and 2011 exploration programs and available at December 31, 2011. At a base case cut-off grade of 0.2% U3O8, an Inferred Mineral Resource is estimated at 1,779,000 tonnes averaging 0.69% U3O8, containing 27.13 million pounds U3O8.  For evaluation purposes, three additional metals:  silver (g/t), molybdenum (%) and copper (%) have also been estimated within the resource model.
The increase in the Inferred Mineral Resource from the 2010 estimate is primarily attributed to the addition of two new zones: the Eastern and Western Extensions, situated near surface, adjacent to and along strike of the Lac Cinquante Main Zone resource.  The Mineral Resources contained within the Lac Cinquante uranium deposit are presented as a series of U3O8 cut-off thresholds for comparison purposes in Table 1 below and the base case cut-off grade of 0.2% U3O8 is highlighted.  Kivalliq feels that the base case used  is  conservative but  appropriate  at this stage of the project’s development. The distribution of mineral resources between the three different zones is listed in Table 2.



Table 1 - Updated Inferred Mineral Resource Estimate for the Lac Cinquante Deposit (January 2012)

Cut-off
U3O8 (%)
Tonnes
(T x 1000)
U3O8
(%)
Ag
(g/t)
Mo
(%)
Cu
(%)
U3O8
(Mlbs)
Ag
 (oz x 1000)
Mo
(Mlbs)
Cu
(Mlbs)
0.05
2485
0.53
13.3
0.13
0.24
28.9
1059.6
7.13
12.93
0.10
2163
0.60
14.8
0.14
0.24
28.37
1026.6
6.83
11.64
0.15
1954
0.65
15.7
0.15
0.25
27.8
983
6.46
10.77
0.20*
1779
0.69
16.3
0.16
0.25
27.13
931.1
6.17
9.92
0.25
1593
0.75
16.9
0.17
0.25
26.21
865.5
5.8
8.88
0.30
1444
0.80
17.2
0.17
0.26
25.32
800
5.45
8.12
0.35
1291
0.85
17.5
0.18
0.26
24.23
727.7
5.06
7.32
0.40
1159
0.91
18
0.19
0.25
23.14
668.9
4.75
6.46
0.45
1031
0.97
18.7
0.20
0.25
21.94
620.2
4.51
5.77
0.50
912
1.03
19.5
0.21
0.26
20.71
573.1
4.28
5.15

Notes
- Base case cut-off of 0.2%U3O8 is highlighted in the table.
- High U3O8 grades were cut to 5% and grade limiting was applied to those grades above 3%.
- Mineral Resources are not Mineral Reserves. Mineral Resources do not have demonstrated economic viability, and may never be converted into Reserves.
- Contained metal values may not add due to rounding.

Table 2 - Inferred Mineral Resource Estimate for the Lac Cinquante Deposit by Zone - 0.2% U3O8 Cut-off (January 2012)

Zone
Tonnes (T x 1000)
U3O8 (%)
Ag (g/t)
Mo (%)
Cu (%)
U3O8 (Mlbs)
Ag (oz x 1000)
Mo (Mlbs)
Cu (Mlbs)
Main
923
0.79
13.3
0.22
0.15
16.06
393.0
4.57
3.13
Western Extension
598
0.57
19.0
0.04
0.38
7.54
365.4
0.59
4.97
Eastern Extension
258
0.62
20.8
0.18
0.32
3.53
172.8
1.02
1.82
Total
1779
0.69
16.3
0.16
0.25
27.13
931.1
6.17
9.92

Kivalliq has drilled 275 core holes totalling 42,109 metres on the Angilak Property over the past three years: 16 in 2009, 106 holes in 2010 and another 153 holes were completed during the 2011 field season.  Of these, 240 NQ holes totalling 37,394 metres were dedicated to delineating the Lac Cinquante deposit (Main, East and Western Extension Zones) which have been used in the generation of the mineral resource estimate.  The distribution of U3O8% in drill holes is shown in an image at http://kivalliqenergy.com/projects/angilak/program_images/.

The resource model is constrained within a 3-dimensional domain representing the mineralized portion of the host mafic tuff and shear zone.  Drill hole samples are composited to the full width of the zone and true thicknesses are determined for each drill hole intercept.  Blocks in the model measure 5x5x5 metres in size. Only the portion of those model blocks within the mineralized domain are included in the final resource estimate.  The method used for the estimation of U3O8 grade is ordinary kriging using length-weighted composited drill hole intervals.  Estimates for Ag, Mo and Cu utilize the inverse distance weighting interpolation method. Resource tonnages are calculated using bulk density data that originates from individual drill hole samples.  Composited to the full width of the mineralized domain, bulk densities range from 2.35t/m3 to 3.77 t/m3 with a mean of 2.85 t/m3.  All resources are considered inferred which is based on an analysis of continuity and confidence. Model blocks are included in the inferred category if they form relatively continuous zones of mineralization within a maximum distance of 50 metres from a drill hole intercept.

The Lac Cinquante deposit is considered to be an early stage therefore little is known about its potential minebility or metallurgical characteristics. When subjected to estimated technical and economic operating parameters, the base case mineral resource at 0.2% U3O8 cut-off forms a relatively continuous zone exhibiting thicknesses and grades that exhibit reasonable prospects for the economic extraction for this deposit through a combination of open pit and underground mining scenarios. 

A technical report will be filed on SEDAR within 45 days.

Comparison with Previous Resource Estimate

The previous mineral resource was presented in a technical report dated March 24, 2011 and was based on drilling results available up to the end of the 2010 field season.  The majority of the increase in the Lac Cinquante resource is attributable to the discovery of additional zones. Specifically, the 2011 drilling added the Western Extension and the Eastern Extension zones which have been the most significant contributor to the increase in resources.  Overall, the contained pounds of U3O8 have almost doubled from approximately 14 to 27 million lbs as a result of drilling completed in 2011.

Geology Model of Lac Cinquante

Lac Cinquante is a basement hosted, vein-hydrothermal type, unconformity associated uranium deposit. The emplacement of uranium is structurally controlled, often associated with a graphite-chlorite tuffaceous metasediment interlayered in Archean metavolcanics.  Mineralization consists of disseminated and patchy pitchblende with sulphides within fracture controlled, brecciated, hematite-quartz-carbonate veins that can occur in either the host shear or tuff unit. The deposit is comprised of three distinct mineralized sections occurring over 3.8 kilometres of strike length and interpreted to be off-set by faults.  The central “Main” Lac Cinquante zone is the largest, measuring 1.4 kilometres in drilled length, striking at an azimuth of 115 degrees and dips to the SSW at roughly -65 degrees. The “Western Extension” is a 120 metre left-lateral displacement of the Main zone.  The Western Extension has a drilled strike length of approximately 550 metre, is oriented at 125 degrees azimuth and dips to the SSW at -70 degrees.  The “Eastern Extension” is interpreted as a 250 metre left-lateral displacement of the Main zone with a strike of 122 degrees azimuth, a -78 degree SSW dip and an overall drilled strike length of approximately 550 metre.  The true thickness of the mineralized domain varies from 5 centimetres to a maximum of 13.5 metres with an average thickness of 2.2 metres.   

Continuing Resource Expansion

Lac Cinquante remains open along strike to the east, west and at depth, demonstrating potential to increase the size of the resource of this deposit. In 2010, step-out drill hole 10-LC-013 intersected 0.21% U3O8 over 1.96 metres, approximately 500 metres west of the resource drilling. This hole was later determined to be part of the Western Extension zone, and now forms part of this updated resource estimate for Lac Cinquante. Drill hole intercepts from 30 to 327 metres vertically at the Western Extension were incorporated into the resource estimate. Potential exists to add resources with drilling in the projected zone below the existing resource area.

In Kivalliq’s news release dated January 10, 2012, the Company provided assay results from 1,732 metres of diamond drilling in 14 holes conducted in 2011 at the Blaze/Spark, Pulse and Joule Zones. These zones, discovered during the 2010 and 2011 drilling campaigns, are all located within a 5.0 kilometre radius of the Lac Cinquante uranium deposit.

Two of these diamond drill holes tested the Pulse zone, part of a 3.0 kilometre long VLF EM conductive trend situated 650 metres northeast and parallel to the Lac Cinquante uranium deposit. The holes were drilled to follow up on a mineralized zone identified by anomalous radioactivity in 9 out of 10 reverse circulation (“RC”) test holes along 600 metres of strike length in 2011. Preliminary interpretations suggest that mineralization occurs within structurally controlled sheared basalt similar to that found at the Lac Cinquante Western Extension and as pitchblende bearing brecciated quartz carbonate veins. Due to its close proximity to Lac Cinquante and the geological similarities noted, “Pulse” represents a high priority drill target for the upcoming 2012 exploration campaign.

The 2011 drill results on exploration targets demonstrate the potential to identify additional mineralized zones near the resource area, and verify the success of the Company’s targeting techniques on previously untested conductive trends parallel to the Lac Cinquante.

QA/QC

The information in this release related to the mineral resource estimate has been approved by Robert Sim, P.Geo of SIM Geological Inc., who is an independent Qualified Person as defined under National Instrument 43‐101. Jeff Ward, P.Geo, President of Kivalliq and a Qualified Person for the Company, has reviewed and approved the information contained in this release.

About Kivalliq Energy Corporation

Kivalliq Energy Corporation is a uranium exploration and development company, and the first company in Canada to sign a comprehensive agreement with the Inuit of Nunavut to explore for uranium on Inuit Owned Lands in Nunavut.

With an NI 43-101 Inferred Mineral Resource of 1,779,000 tonnes grading 0.69% U3O8, totalling 27.13 million lbs U3O8, (15.2 lbs U3O8/tonne) at a 0.2% U3O8 cut-off grade, the Lac Cinquante Deposit is Canada’s highest grade uranium deposit outside of the Athabasca Basin. Kivalliq’s flagship project, the 225,000 acre Angilak Property in Nunavut, hosts the high-grade Lac Cinquante deposit, along with nine additional high priority target areas.

Since acquiring the Angilak Property in 2008, the Company has invested approximately $30 million conducting systematic exploration, including ground and airborne geophysics, geological mapping, prospecting and approximately 48,000 meters of RC and diamond drilling.

On behalf of the Board of Directors

“Jim Paterson”

James R. Paterson, CEO
Kivalliq Energy Corporation

For further information about, Kivalliq Energy Corporation or this news release, please visit our website at www.kivalliqenergy.com (m.kivalliqenergy.com) or contact Investor Relations toll free at 1.888.331.2269, at 604.646.4527, or by email at info@kivalliqenergy.com.

Kivalliq Energy Corporation is a member of the Aurora Resource Group of companies.

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.