Rainy River Resources Ltd.
TSX VENTURE : RR

Rainy River Resources Ltd.

March 02, 2010 07:30 ET

Rainy River Announces Updated Resource Estimate of 2.37 Moz Indicated and 2.66 Moz Inferred Gold

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 2, 2010) - Rainy River Resources Ltd. (TSX VENTURE:RR) -

Highlights:

  • Significantly increased inferred and indicated gold resources
  • Average gold grades increased with same cutoff grades as per 2009 estimate
  • Underground indicated contained gold increases +147%
  • Underground inferred contained gold increases +388%

Rainy River Resources Ltd. (the "Company" or "Rainy") is pleased to announce that it has received an independent mineral resource estimate prepared by SRK Consulting (Canada) Inc. ("SRK") for the Company's Rainy River property in northern Ontario. This updated mineral resource statement is reported in accordance with Canadian Securities Administrator's National Instrument 43-101 and was estimated in conformity with generally accepted CIM "Estimation of Mineral Resource and Mineral Reserves Best Practices" Guidelines, including the critical requirement that all mineral resources "have reasonable prospects for economic extraction". The Company does not consider the increase in resources to be material and therefore will not be filing a new technical report prior to the publication of the Preliminary Economic Assessment technical report later in 2010.

The addition of 124 diamond drill holes (68,453 metres) from the 2009 drilling campaign has resulted in an overall increase in gold resources to 2.37 Moz gold in the indicated category and 2.66 Moz gold in the inferred category. The company's focus of defining mineralization below the limits of the proposed open pit has successfully increased total underground gold resources to 935,000 ounces in all classes, a 298% increase over the 2009 NI 43-101 estimate. The consolidated mineral resource statement as prepared by SRK Consulting Ltd is detailed in Table 1.

Table 1: Consolidated Mineral Resource Statement*, Rainy River Gold Project, Ontario, SRK Consulting, February 26, 2010
 
Category   Quantity Grade Metal
    000't Au gpt Ag gpt Au 000'oz Ag 000'oz
Open Pit**            
Indicated            
Volcanic-hosted Within pit shell 55,657 1.2 1.76 2,153 3,151
Mafic-hosted Within pit shell 57 1.37 5.1 3 9
Inferred            
Volcanic-hosted Within pit shell 6,252 1.26 2.66 252 535
Volcanic-hosted Outside pit shell 58,339 0.9 2.81 1,688 5,270
Underground**            
Indicated            
Volcanic-hosted Below pit shell 1,119 6.03 4.28 217 154
Inferred            
Volcanic-hosted Below pit shell 4,339 5.15 1.69 718 236
Combined Open Pit and Underground        
Indicated   56,833 1.3 1.81 2,370 3,314
Inferred   68,930 1.2 2.73 2,659 6,041
 
* Mineral resources are reported in relation to optimized pit shells. Mineral resources are not mineral reserves and do not have demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimate. All assays have been capped where appropriate. Nickel, copper and platinum group metals were also estimated for one small zone (Zone 34) and are reported separately. The consolidated resource statement above includes the gold mineralization in Zone 34.
 
** Open pit mineral resources are reported at a cut-off of 0.4 gram of gold per tonne, Underground mineral resources are reported at 3.0 grams of gold per tonne. Cut-off grades are based on a gold price of US$850 per ounce gold and a gold metallurgical recovery of eighty-five percent, without considering revenues from other metals.

Pit Optimization for Reporting of Resources

CIM Definition Standards for Mineral Resources and Mineral Reserves (December 2005) defines a mineral resource as:

"a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge".

The "reasonable prospects for economic extraction" requirement generally implies that the quantity and grade estimates meet certain economic thresholds and that the mineral resources are reported at an appropriate cut-off grade taking into account extraction scenarios and processing recoveries. The reader is cautioned that the results from the pit optimization are used solely for the purpose of reporting mineral resources that have "reasonable prospects for economic extraction" by an open pit and do not represent a thorough economic study as is required to evaluate mineral reserves.

In accordance with these guidelines the Company elected to use more stringent parameters for determining the depth and extent of the conceptual pit for the purposes of reporting as open pit and underground amenable resources. A comparison of these assumptions from 2009 and 2010 is outlined in Table 2. These assumptions are based upon benchmarking with similar projects in preparation for the Company's upcoming preliminary economic assessment. Of particular note is the change to a shallower pit depth.

Table 2: 2009 and 2010 Conceptual Pit Optimization Assumptions Considered for Open Pit Resource Reporting
     
Parameter Assumption 2009 Assumption 2010
Overall pit slope angle 50 degrees (42 degrees north wall) 44 degrees (all walls)
Reference Mining Cost (ore and waste) C$1.00/t rock C$1.30/t rock
Incremental Mining Cost / 10m bench C$0.02/t C$0.02/t
G&A Costs C$1.25 feed C$0.90/t feed
Process Costs US$7.00/t US$6.46/t
Process Recovery 85% 85%
Assumed Process Rate 20,000 tpd 20,000 tpd
Gold Price US$800/ounce US$850/ounce
Mining Dilution and Losses 5.00% 5.00%
Exchange Rate (C$/US$) 1.00 0.95
Ultimate Pit Bottom Depth -410 metres below surface -380 metres below surface

Addition of Ounces (Potential Underground Amenable Resources)

Open pit resources increased to a limited degree in the 2010 estimate due to the change to a shallower pit model and also because the new South Zone was not included in the estimate. The most significant addition of contained gold can be attributed to the extensive yet widely spaced drilling that was performed in 2009 at depths below the conceptual pit bottom. This includes the ODM "Deeps", 433 Zone and the newly discovered high grade Beaver Pond depth extensions. Both tonnage and grade enhancements account for a +147% increase in indicated contained gold as compared to the previous estimate performed by SRK in 2009. As well, the addition of inferred ounces below the conceptual pit allowed for a tonnage increase of +396% (despite a -1% loss of gold grade) resulting in a +388% increase in inferred gold ounces. Factors that may have contributed to these net gains are:

1. Relatively small underground resource component reported in 2009;
2. New optimization parameters raised the base of the conceptual shell used for resource reporting by 30 metres transferring previous open pit resources to underground;
3. New drill data has allowed extensions to high grade zones below the conceptual pit; and
4. Increased contribution of inferred underground resources within sparsely drilled high grade resource domains.

A comparison between the open pit and underground reported resources for the 2009 and 2010 SRK resource estimates is presented in Table 3.

Table 3: Comparison of SRK 2009 and 2010 Resource Tonnage and Grade Estimates
         
Classification Year Quantity Grade Contained Metal
    Tonnes Gold Gold Ounces
    (000s) (gpt) (000s)
Open Pit        
Indicated 2009 55,084 1.21 2,138
  2010 55,657 1.2 2,155
Variation   +1% -1% +1%
Inferred 2009 63,128 0.82 1,655
  2010 64,591 0.93 1,940
Variation   +2% +13% +17%
Underground        
Indicated 2009 530 5.14 88
  2010 1,119 6.03 217
Variation   +111% +17% +147%
         
Inferred 2009 875 5.22 147
  2010 4,339 5.15 718
Variation   +396% -1% +388%
Combined        
Indicated 2009 55,614 1.25 2,226
  2010 56,889 1.3 2,372
Variation   +2% +4% +7%
Inferred 2009 64,003 0.88 1,802
  2010 68,930 1.2 2,659
Variation   +8% +36% +47%

2010 Underground versus Open Pit Grade Tonnage Comparison

Grade tonnage tables for the potential open pit and underground amenable resources are detailed in Tables 4 and 5 respectively.

Table 4: Classified Block Model Quantities* for Potential Open Pit Material (above -30 metres elevation):
   
Indicated Inferred
Au Cut off Tonnes Au Grade Au Metal Au Cut off Tonnes Au Grade Au Metal
(gpt) (Mt) (gpt) (000'oz) (gpt) (Mt) (gpt) (000'oz)
0.1 121,399 0.68 2,641 0.1 491,771 0.27 4,267
0.2 92,464 0.84 2,505 0.2 172,375 0.52 2,867
0.3 71,827 1.01 2,341 0.3 94,856 0.74 2,268
0.35 63,447 1.10 2,253 0.35 76,956 0.84 2,082
0.4 55,714 1.20 2,154 0.4 64,133 0.93 1,928
0.5 44,162 1.40 1,993 0.5 45,595 1.13 1,662
0.6 35,056 1.63 1,833 0.6 33,595 1.34 1,451
0.7 28,407 1.85 1,694 0.7 25,952 1.55 1,292
0.8 23,277 2.10 1,571 0.8 19,608 1.81 1,140
1.0 16,314 2.61 1,372 1.0 13,439 2.23 964
1.5 8,635 3.87 1,073 1.5 6,969 3.20 717
2.0 5,447 5.12 897 2.0 4,217 4.16 565
2.5 3,863 6.31 784 2.5 2,949 4.99 473
3.0 2,921 7.46 701 3.0 2,139 5.85 402
3.5 2,347 8.50 641 3.5 1,580 6.76 343
4.0 1,993 9.34 599 4.0 1,212 7.68 299
4.5 1,708 10.20 560 4.5 980 8.50 268
5.0 1,473 11.07 524 5.0 754 9.61 233
Table 5: Classified Block Model Quantities* for Potential Underground Material (below -30 metres elevation):
   
Indicated Inferred
Au Cut off Tonnes Au Grade Au Metal Au Cut off Tonnes Au Grade Au Metal
(gpt) (Mt) (gpt) (000'oz) (gpt) (Mt) (gpt) (000'oz)
0.1 75,967 0.49 1191 0.1 985,634 0.28 8,917
0.2 48,209 0.69 1064 0.2 433,661 0.46 6,386
0.3 34,500 0.86 955 0.3 222,818 0.66 4,726
0.35 29,541 0.95 903 0.35 171,881 0.76 4,197
0.4 25,324 1.05 852 0.4 137,936 0.85 3,788
0.5 18,651 1.26 757 0.5 82,061 1.13 2,971
0.6 14,155 1.49 677 0.6 57,988 1.37 2,554
0.7 11,093 1.72 614 0.7 45,375 1.57 2,292
0.8 9,096 1.93 566 0.8 35,518 1.80 2,055
1.0 6,463 2.36 491 1.0 26,529 2.11 1,798
1.5 3,538 3.31 377 1.5 12,421 3.13 1,250
2.0 2,288 4.18 308 2.0 8,136 3.85 1,008
2.5 1,552 5.11 255 2.5 5,309 4.71 803
3.0 1,119 6.03 217 3.0 4,339 5.15 718
3.5 847 6.94 189 3.5 2,153 7.02 486
4.0 669 7.79 168 4.0 1,530 8.38 412
4.5 506 8.93 145 4.5 1,297 9.12 380
5.0 421 9.78 132 5.0 1,112 9.84 352
* The reader is cautioned that the figures presented in this table should not be misconstrued as a mineral resource statement. They are presented only to show the sensitivity of the mineral resources to the selection of cut-off grade.

Comments:

"We are very pleased to report a very significant overall increase of gold resources," commented Raymond Threlkeld, President and CEO. "The newly discovered South Zone was not sufficiently drilled to be included into the potential pit and further exploration of that zone will increase the resource confidence as well as expanding the strike length to the west. We will be focusing our 2010 efforts to discovery of shallow resources along the extensive gold geochemical anomaly to the west of the main Beaver Pond- ODM17 Zone and bringing our higher grade 433 and BP underground resources to a higher confidence level. We are also completing geophysical surveys and geologic compilation to target our potential for gold rich VMS deposits in the Richardson caldera."

About Rainy River Resources Ltd.

Rainy River Resources is a Canadian precious metals exploration company whose key asset is the Rainy River gold project. With CAN$69 million in its treasury, the Company is well funded to conduct a dual-focused drilling program consisting of: 1) definition diamond drilling of the main gold resources in preparation for scoping and pre-feasibility studies, and 2) selective diamond drill testing of high-priority gold targets defined primarily by RC drilling within the large gold system centered in Richardson Township. The Company's property is extremely well located in the southwestern corner of northern Ontario near the U.S. border. It is accessed by a network of roads and is close to hydro-electric infrastructure. The Rainy River district has a skilled labour force and is one of the lowest-cost areas for mineral exploration and development. Ontario has low political risk and, according to the annual Fraser Institute global survey of the mining industry, has consistently ranked as one of the top jurisdictions embracing mineral development.

RAINY RIVER RESOURCES LTD.

Raymond W. Threlkeld, President & CEO

This release includes certain statements that may be deemed to be "forward-looking statements". All statements in this release, other than statements of historical fact, that address events or developments that the Company expects to occur, are forward looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include gold prices, results of exploration and development activities, regulatory changes, defects in title, availability of materials and equipment, timeliness of government approvals, continued availability of capital and financing and general economic, market or business conditions. The Company cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on the Company's forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct. Please see the public filings of the Company at www.sedar.com for further information.

The TSX Venture Exchange has not reviewed and does not accept the responsibility for the adequacy or accuracy of this news release.

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