Rio Novo Gold Inc.

Rio Novo Gold Inc.

August 13, 2013 17:15 ET

Rio Novo Gold Announces Second Quarter 2013 Results and Resignation of President & CEO

TORONTO, ONTARIO--(Marketwired - Aug. 13, 2013) - Rio Novo Gold Inc. (TSX:RN)(TSX:RN.WT) ("Rio Novo" or the "Company") has filed its operational and financial results for the second quarter ended June 30, 2013. The Company's unaudited interim consolidated Financial Statements and the accompanying Management's Discussion and Analysis can be found on SEDAR ( The Company is pleased to provide a general overview of its activities to date.

During the period ended June 30, 2013, Rio Novo incurred a net loss of US$ 1,468,531 (US$ 0.01 per share) compared to a net loss of US$ 3,781,109 (US$ 0.03 per share) in the same period of 2012. The net loss is mostly comprised of general and administrative expenses, which totaled US$ 512,890 in Q2 2013 compared to US$ 2,156,253 for the same period in 2012.

The Company's aggregate operating, investing and financing activities during the period resulted in a net cash position of $226,558 ($6,136,842 at December 31, 2012) and working capital deficit of $704,140 ($5,212,721 at December 31, 2012). Management is actively pursuing funding options, being debt or equity financing, and alternative funding options, required to meet the Company's requirements on an ongoing basis.

Resignation of President & CEO

The Board of Directors of Rio Novo (the "Board") has accepted the resignation of Mr. Julio Carvalho as President and Chief Executive Officer ("CEO") effective August 31, 2013. Mr. William Dorson, non-executive Chairman of the Board, said, "The recent decline in the price of gold has resulted in a deferral of the Almas project in Brazil, until financing becomes available. Accordingly, Julio felt that his experience would not be required as Rio Novo enters its next phase of activity and chose to retire to spend more time with his family. We will retain Julio's corporate knowledge with Rio Novo as a Director effective September 1, 2013. On behalf of the Board, we wish to thank Julio for all his contributions including advancing the Almas Gold Project to the Definitive Feasibility Study stage, putting the Tolda Fria Gold Project in Colombia into pilot production and obtaining the exploration license for the Matupá target, an area of the Matupá Gold Project in Mato Grosso, Brazil." The Board is pleased to announce that they have appointed Mr. Patrick Panero as President and CEO of the Company effective September 1, 2013.

Mr. Panero joined Rio Novo in June 2011 as Country Manager, Colombia, bringing with him over twenty years of experience in the Latin American infrastructure and mining fields. Prior to joining Rio Novo, Mr. Panero served for nearly ten years as Country Manger/Managing Director for MDU Resources Brasil (a U.S. based energy and natural resources group listed on the NYSE). Mr. Panero has managed investments and partnerships with several Brazilian industrial groups, including Cemig, EBX, MPX, Brascan, Celesc, Alupar, Copelmi Mineração, among others. Mr. Panero also served for several years at the Empire State Development Corporation, the economic development arm of New York State government, where he lead projects for the privatization of State owned real estate assets. As a dual US-Colombian citizen, he brings a wealth of knowledge of the Colombian industry. Mr. Panero has an MBA in finance and international business from the Fordham University Graduate School of Business Administration, New York. Currently, Mr. Panero is a member of the Energy Committee of the Rio de Janeiro Chamber of Commerce, and the Board of Directors of ECTE, a Brazilian transmission line company and had previously served on the Board of Directors of ENTE and ERTE, also Brazilian transmission line companies.

Almas Gold Project Update

In the second quarter of 2013, the Almas Gold Project ("Almas") was placed on care and maintenance due to the lack of financing through debt or equity. At the time of this release, the Company had not approved a budget for construction of the Almas mine. The approval of such budget is dependent upon the successful arrangement of project financing. Until such financing is arranged, the Company has minimized costs by dismissing the Exploration and Almas Project Construction teams in Brazil and nearly all employees in the Rio de Janeiro and Toronto offices, except for two key senior employees and six junior staff members required for security and reporting purposes. Office space has been significantly reduced and all agreements with suppliers and contractors have been cancelled. Additionally, the Board of Directors of Rio Novo has agreed to reduce their fees by 75%, the remaining 25% will be payable half in cash and half in DSUs.

Management continues to procure sources of financing to build the Almas gold mine. In April 2013, debt financiers had expressed their interest in financing the Almas project, subject to their internal credit approvals, and the Company was at a point of mandating senior lenders. However, as the equity portion of the financing requirement could not be arranged, discussions with such potential lenders have been suspended. Arranging equity financing is proving challenging given the current market environment. Management continues to seek potential investors with a view to obtain the required equity financing for this project.

Tolda Fria Gold Project Update

BID Mining Group ("BID"), to whom Rio Novo leased the mine in January 2013 (see press release dated March 28, 2013, "Rio Novo Gold Announces Results for the Year Ended December 31, 2012") to produce gold in a small plant (the "Plant") of 8 tons a day, continues operating the Plant with supervision and oversight over all aspects of the operation by Rio Novo. BID continues to comply with all Colombian Federal and Caldas State mining laws and codes as well as Federal and State environmental regulations, procedures, processes, guidelines and codes. Rio Novo maintains the right to interrupt and close down operations, in its sole judgment, if it determines infringement of any State or Federal laws.

Operation of this Plant and areas to be mined will be focused on testing various high grade areas within the Tolda Fria concession contract. As such, the operations by BID will provide the Company with a complement to previously generated geological understanding of the Tolda Fria resource. Bulk sampling, as executed by the pilot Plant, and increased vertical mining of the high grade zones should be of significant value in the future.

Rio Novo is currently in advanced discussions with potential investors and financiers with a view to build one or two plants, of 50 tons per day each, at a very low Capex and a construction period of three to four months. Given the several already identified high grade areas of the Tolda Fria deposit, and by focusing on these areas, each plant would produce approximately 300-400 oz/month at a very low Opex.

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 1,191,252 oz and 1,464,831 Inferred oz of gold at two projects in Brazil (Almas and Matupá Gold Projects) and one in Colombia (Tolda Fria Gold Project).

The Company's goal is to become a producer of gold by bringing the Almas Gold Project, located in the State of Tocantins in Brazil, into production. Almas Project enjoys both established infrastructure, 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 which 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 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 statements.

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