Rio Novo Gold Announces Second Quarter 2012 Results and Provides Update on its Almas Gold Project

TORONTO, ONTARIO--(Marketwire - Aug. 14, 2012) - Rio Novo Gold Inc. (TSX:RN)(TSX:RN.WT) ("Rio Novo" or the "Company") has today filed its interim operational and financial results for the second quarter ended June 30, 2012. Interim Financial Statements and the accompanying Management's Discussion and Analysis ("MD&A") have been filed on SEDAR.

During the second quarter of 2012, the Company incurred a loss of US$3.8 million (US$0.03 per share) compared to a net income of US$7.1 million (US$0.06 per share) in the corresponding period of 2011. Among the factors that contributed to the net loss in the period were differences in foreign exchange due to US dollar and Brazilian real exchange rate fluctuations, which resulted in a loss of $1.4 million, and a gain of $1.1 million resulting from a share purchase warrant revaluation.

As at June 30, 2012, the Company had working capital of US$15.1 million, including cash of US$16.3 million.

Corporate Development Highlights

• Development drilling was completed at the Vira Saia deposit to support resource modeling for the Almas Gold Project definitive feasibility study ("DFS").

• Exploration activities continue to delineate additional mineralization west and northwest of Vira Saia. A second pass follow-up drilling program is planned for 2013. The program will focus on proving up the continuity of the higher grade areas, as well as testing open edges of mineralization.

• Deep core drilling was initiated at the Paiol Deposit to test for higher grade extensions of the main gold zone. Based on geologic modeling and previous deep drilling (10.0m @ 8.0 g/t Au in FD-81 and 8.0m @ 9.2 g/t Au in FD-66), the Company believes higher grade gold mineralization extends beyond the currently identified resource, and two deep drill holes were completed with this in mind (a third hole was attempted but lost). Both holes hit the main gold zone penetrating up to 17m thickness (down hole). However, the +500m holes experienced major deviation (up to 60m from the target) and appear to have missed the higher grade shoot. On this basis, and considering the difficulty and expense of the deep drilling, the Company has decided to discontinue further drilling on this target at this time and focus on the DFS completion.

• Regional exploration initiatives continued to define new prospects within the Almas Greenstone Belt. Mapping and sampling have been conducted at the Jacobina Target, with results from rock chip sampling indicating the presence of gold in concentrations of up to 17 g/t. Similar activities are planned for eight new targets located on the Nova Prata trend, a 25 km greenstone belt parallel to the Paiol trend.

• At the Guarantã Project, the company plans to complete initial engineering and scoping studies for the X1 Deposit by early 2013. As previously noted, the Company views X1 as a strong deposit, but believes that additional resources will be necessary to satisfy its corporate goals at the project. Work at the Guarantã Project will therefore be concentrated on adding these additional resources to increase the overall size of the project. The main focus for exploration is expected to be the nearby Matupá Target, which is located in one of the largest placer gold mining districts in Brazil, with at least eight porphyry centres identified. The Company recently commenced exploration on this target. Mapping has been completed and trenching is in progress, with drilling expected in Q4 2012.

• A first-pass core drilling program was initiated at the Toldafria Project in Caldas, Colombia. As of June 30, 2012, approximately 3,500m had been drilled, representing ten completed drill holes. The program is expected to total 5,000m of diamond drilling, and is scheduled for completion in late August 2012.

Almas Gold Project Update

• The development of the DFS continues and the timeline has been extended to incorporate additional studies, particularly relating to pit slopes angles, final pit optimization and final capital expenditure and operating expenditure estimates. These studies are being conducted in coordination with Rio Novo's independent consultant engineering firms, Conestoga-Rovers Associates ("CRA") and Pincock Allen & Holt - Brasil ("PAH").

• In particular, pit slope angles in saprolite for Cata Funda and Paiol are being reviewed to incorporate new data from hydrologic studies and geotechnical drilling completed in Q2.

• The Paiol and Cata Funda mine plans are being optimized, mostly due to the revision of the pit slopes currently underway. A phased pit plan, optimized production schedule, and different bench heights are part of the planned pit optimization that could potentially increase grade and decrease waste stripping, particularly in the early years of the mine operations.

• Initial DFS capital expenditure estimates are significantly higher than those contained in the Preliminary Economic Assessment ("PEA") due to cost inflation, higher production rates, more accurate engineering, and project scope changes since the date of the PEA. The company is reviewing the capital expenditure estimates for improvement.

• These additional studies, while improving the overall understanding of the Almas Project, will delay the final decision by about three months. The company now expects to be in a position to make a final decision on Almas during the last quarter of this year.

• The Company has finalized the detailed engineering for the power supply required by the Almas Project, and has moved on to the acquisition of the necessary licenses for construction of the power line.

• The Company continues to progress in its efforts to secure sufficient project finance for the Almas Project, and will continue to work with its financial advisor, Endeavour Financial, towards this end. By the end of the second quarter, Rio Novo had received six indicative offers for senior debt based on the PEA cash flow. Five of these offers were made by international banks, while the remaining offer was put forward by a Brazilian bank. A positive construction decision and finalization of project finance will remain conditional upon receiving the final results from the DFS process.

Qualified Person

Mr. Brian Arkell, Senior Vice President of Exploration at Rio Novo Gold Inc., is a Qualified Person asset out in the Canadian National Instrument 43-101, and has reviewed and verified the technical content of the information contained in this release.

About Rio Novo

Rio Novo is focused on the acquisition, exploration and development of gold properties in Brazil and Colombia. The Company has Measured & Indicated Resources of 1,143,427 oz and 1,105,201 Inferred oz of gold at two projects in Brazil (Almas and Guarantã), and one in Colombia (Toldafria).

The Company's goal is to become a producer of gold by bringing into production the Almas Gold Project, located in the State of Tocantins, in 2013. The Almas Project enjoys both established infrastructure and main grid hydropower in a proven and mining-friendly jurisdiction, and is permitted for construction.

This press release contains forward-looking statements. All statements, other than of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding the estimation of mineral resources, exploration results, potential mineralization, potential mineral resources and mineral reserves) are forward-looking statements. Forward-looking statements are often identifiable by the use of words such as "anticipate", "believe", "plan", may", "could", "would", "might" or "will", "estimates", "expect", "intend", "budget", "scheduled", "forecasts" and similar expressions or variations (including negative variations) of such words and phrases. Forward-looking statements are subject to a number of risks and uncertainties, many of differ materially from those discussed in the forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include, among other things, without limitation, failure to establish estimated mineral resources, the possibility that future exploration results will not be consistent with the Company's expectations, the price of gold and other risks identified in the Company's most recent annual information form filed with the Canadian securities regulatory authorities on SEDAR.com. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement.