Rainy River Resources Ltd.
TSX VENTURE : RR

Rainy River Resources Ltd.

February 24, 2011 08:08 ET

Rainy River Announces Updated Mineral Resource Statement

TORONTO, ONTARIO--(Marketwire - Feb. 24, 2011) - Rainy River Resources Ltd. (TSX VENTURE:RR) ("Rainy River" or the "Company")  is pleased to announce an updated mineral resource statement for the Rainy River Gold Project ("RRGP") in Northwestern Ontario. Mineral resources were estimated by SRK Consulting (Canada) Inc. ("SRK") and are reported in accordance with Canadian Securities Administrators National Instrument 43-101. Mineral Resources above a 450 metre depth from the surface are considered to be amenable to open pit extraction, whereas mineral resources below this are considered to be amenable to underground extraction.

Potential open pit mineral resources are reported at a cut-off of 0.35 g/t gold, whereas potential underground mineral resources are reported at a cut off of 2.5 g/t gold. The consolidated mineral resource statement for the RRGP is tabulated in Table 1.

Highlights

  • 3.42 M oz gold in Measured and Indicated classes 
  • 3.17 M oz gold in Inferred class
  • RRGP reports Measured resources for the first time
  • Infill program demonstrates improved continuity
Table 1. Consolidated Mineral Resource Statement*, Rainy River Gold Project
SRK Consulting (Canada) Inc., February 24, 2011.

Category
Tonnes
'000s
Au
g/t
Au
ounces
Ag
g/t
Ag
ounces
Open Pit**
Measured 14,707 1.21 572,272 1.84 869,332
Indicated 77,934 1.05 2,639,850 2.24 5,615,597
Measured and Indicated 92,641 1.08 3,212,122 2.18 6,484,929
Inferred 104,591 0.80 2,702,754 2.31 7,781,272
 
Underground**
Measured 39 5.66 7,149 2.38 3,009
Indicated 1,197 5.18 199,147 3.30 127,019
Measured and Indicated 1,236 5.20 206,296 3.27 130,028
Inferred 3,831 3.83 472,029 2.62 322,811
 
Combined Mining
Measured 14,746 1.22 579,421 1.84 872,341
Indicated 79,131 1.11 2,838,997 2.26 5,742,616
Measured and Indicated 93,877 1.13 3,418,418 2.19 6,614,957
Inferred 108,422 0.91 3,174,783 2.32 8,104,083
* Mineral resources are reported in relation to an elevation determined from conceptual pit shells, and not all of the inferred resources lie within the optimized pit shell. 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.

** Open pit mineral resources are reported at a cut-off of 0.35 g/t gold, underground mineral resources are reported at 2.5 g/t gold. Cut-off grades are based on a gold price of US$1,025 per ounce gold and gold recovery of 88% for open pit resources and 90% for underground resources, without considering revenues from other metals.

Commentary

"We are very pleased to have increased our global resources to 3.42 M ounces in Measured and Indicated and 3.17 M ounces in Inferred, a significant increase from 2010," commented Raymond Threlkeld, President and CEO of the Company. "In addition, last year's infill program has greatly enhanced the quality of the resource, reporting Measured mineral resources for the first time on the project. The 107,000 metres that we drilled last year demonstrated the in-pit continuity that will allow us to proceed with scoping studies to determine the optimum pit size and mining methods. We will be aggressively expanding our exploration in 2011 to over 100,000 metres of drilling, to add to the potential in-pit ounces from the South and Cap Zones, and to conduct regional exploration outside the known resources to begin realizing the district potential at Rainy River."

Technical Description

Gold mineralization at the Rainy River Gold Project has a volcanogenic origin associated with minor amounts of silver, copper and zinc. Sulphide zones are generally sub-parallel to foliation, which strikes at approximately 300° and dips 50° to 70° to the south. As of December 31, 2010 the estimated gold mineral resource is based on data received from 836 diamond drill holes totaling 380,069 metres. Since the previous mineral resource estimate (see press release dated March 4, 2010) the Company has drilled an additional 174 diamond drill holes totaling 107,042 metres.

Mineral resources are reported over an area measuring approximately 2 kilometres x 1 kilometre to a depth of 700 metres. Mineral resources have been estimated using a geostatistical block model approach constrained by seven major zones sub-divided into 23 resource domains. Block size was set at cubes 5 metres in size. These zones are termed the ODM/17, 433, HS, New, Cap, 34 and other Zones. The bulk of the mineral resources occur in the ODM/17 and 433 Zones. Metal grades were estimated using ordinary kriging as the principal estimator. Metal grades were estimated separately in each domain from capped composite data within that domain. Kriging parameters were derived from variogram models with grade estimation completed in two successive passes. The first estimation pass generally considered a search neighbourhood adjusted to full variogram ranges. The size of the search ellipse was usually doubled for the second estimation pass. Mineral resources are classified as Measured, Indicated and Inferred, considering various aspects including geological continuity, data quality, block distance from the nearest informing composites, and variography results.

A pit optimizer was used to determine the quantities of material offering "reasonable prospects for economic extraction" by an open pit. 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. SRK considers that the material above the final depth of the conceptual pit shell (450 metres below the surface) offers reasonable prospects for economic extraction from an open pit, because ongoing drilling results suggest that the zone of gold mineralization is broader than currently modeled and that new drilling information should positively impact future pit optimizations. Input assumptions used for the conceptual pit optimization and to derive the cut-off grade of 0.35 g/t gold for open pit mineral resources include:

  • Gold price; US$1,025/oz (3 year trailing average as of December 31, 2010)
  • 88% gold recovery
  • $1.70/t mining cost per tonne ore
  • $6.46/t processing costs
  • $0.90/t general & administrative costs
  • 20,000 tpd processing throughput (combined pit and underground)
  • 10% dilution
  • 54° wall angle (West, East), 50.5° wall angle (South), 40.5° wall angle (North)

The block model quantities and grade estimates below 450 metres were also reviewed to determine the portions of the Rainy River deposit having "reasonable prospects for economic extraction" from an underground mine. Assumptions used to derive the cut-off grade of 2.5 gpt gold for underground resources include:

  • Gold price; US$1,025/oz (3 year trailing average as of December 31, 2010)
  • 90% gold recovery
  • $55/t mining cost per tonne ore
  • $6.46/t processing costs
  • $0.90/t general & administrative costs
  • 20,000 tpd processing throughput (combined pit and underground)
  • 20% dilution

Year on Year Review:

The increase in reported mineral resources over the previous resource estimate disclosed in March 2010 is attributable to a combination of factors including:

  • Significant increase in drilling (107,042 metres) and sampling data (72,000 additional samples), leading to increased grade continuity;
  • A better understanding of the geological model and its secondary structural controls, enabling reduced block size, revised variography and better domaining; and
  • Improved metallurgical recovery and geotechnical parameters for open pit slope design.

Sensitivity Analysis:

Block model quantities and grade estimates at Rainy River are sensitive to the selection of cut-off grade. The sensitivity of block model quantities for open pit (above 450 metres depth) and underground material (below 450 metres depth) to gold cut-off grade is presented in Table 2 and Table 3 below.

Table 2: Block Model Quantities and Grade Estimates* at Various Cut-off Grades - Potential Open Pit Material
Cut off grade
Au g/t

Category
Tonnes
'000s
Grade
Au g/t
Grade
Ag g/t
Au
Ounces
Ag
Ounces
0.30 Measured 16,449 1.12 1.77 590,410 937,660
  Indicated 92,240 0.94 2.14 2,788,760 6,349,501
  Inferred 131,757 0.70 2.15 2,984,892 9,121,949
             
0.35 Measured 14,707 1.21 1.84 572,272 869,332
  Indicated 77,934 1.05 2.24 2,639,850 5,615,597
  Inferred 104,591 0.80 2.31 2,702,754 7,781,272
             
0.40 Measured 13,350 1.30 1.88 555,947 808,682
  Indicated 67,694 1.16 2.33 2,516,737 5,067,116
  Inferred 86,696 0.89 2.42 2,487,478 6,811,674
 
Table 3: Block Model Quantities and Grade Estimates* at Various Cut-off Grades - Potential Underground Mining Material
Cut off grade
Au g/t

Category
Tonnes
'000s
Grade
Au g/t
Grade
Ag g/t
Au
Ounces
Ag
Ounces
2.5 Measured 39 5.66 2.38 7,149 3,009
  Indicated 1,197 5.18 3.30 199,147 127,019
  Inferred 3,831 3.83 2.62 472,029 322,811
             
3.0 Measured 31 6.41 2.58 6,484 2,609
  Indicated 833 6.25 3.67 167,235 98,295
  Inferred 2,835 4.21 2.86 384,153 260,276
* The reader is cautioned that the figures presented in Table 2 and Table 3 should not be misconstrued with the mineral resource statement presented in Table 1. The figures are only shown to illustrate the sensitivities of the block model quantities and grade estimates to the selection of cut-off grade.

Qualified persons

The mineral resource statement was prepared by Dorata El-Rassi, P.Eng,(APEO #100012348) and Glen Cole, P.Geo (APGO #1416), of SRK, both "independent qualified persons" as that term is defined in National Instrument 43-101. SRK's Technical Report will be filed on SEDAR within the prescribed 45 days following the date of issuance of this news release.

Rainy River's exploration program in Richardson Township is being supervised by Kerry Sparkes, P.Geo. (APEGBC #25261), Vice-President Exploration and a Qualified Person as defined by National Instrument 43-101. Garett Macdonald, P.Eng. (PEO #90475344), is the person responsible for the content of this news release. The Company continues to implement a rigorous QA/QC program to ensure best practices in sampling and analysis of drill core. The procedures of the QA/QC program are detailed on Rainy River's website at www.rainyriverresources.com.

About Rainy River

Rainy River is a Canadian precious metals exploration company whose key asset is the Rainy River Gold Project. With approximately $130 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 prefeasibility 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 in Canada. The Company is also working to advance the early-stage discoveries at its TPK Joint Venture Property, also in Ontario, where it can earn a 51% interest in the property from Northern Superior Resources. 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 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 facts, that address events or developments that management of the Company expects, are forward-looking statements. Although management 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 or developments may differ materially from those in the forward-looking statements. The Company undertakes no obligation to update these forward-looking statements if management's beliefs, estimates or opinions, or other factors, should change. Factors that could cause actual results to differ materially from those in forward-looking statements, include market prices, exploration and development successes, continued availability of capital and financing, and general economic, market or business conditions. Please see the public filings of the Company at www.sedar.com for further information.

Neither 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.

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