Rio Grande Mining Corp.

September 29, 2011 10:44 ET

Rio Samples High Grade Gold at La Maria

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 29, 2011) - Rio Grande Mining Corp. (TSX VENTURE:RGV) ("Rio Grande" or the "Company") is pleased to provide the following update. The Company continues to move forward with its acquisition of all the issued and outstanding securities of Tru Vision Corp., a private British Columbia company ("Tru Vision").

Tru Vision, through its wholly-owned subsidiaries, holds an option to acquire a 100% interest (the "Option Agreement") in El Porvenir Minero S.A.S., a private Colombian company ("El Porvenir") that owns the 'La Maria Gold Project' (the "La Maria Property" or "Property"), which is located in the Department of Antioquia, Colombia, 18-kilometres south-southwest of the town of Segovia.

The Company is pleased to announce that the "Technical Report on the La Maria Property, Municipalities of Remedios and Vegachi, Department of Antioquia, Colombia" dated September 12, 2011 (the "Technical Report") has been filed and is available on SEDAR under the Company's profile. Highlights of the sampling program contained in the Technical Report include 649.50 g/t au, 598.6 g/t au and 197.60 g/t au (see table below).

The Technical Report was prepared for the Company by J. Douglas Blanchflower, P. Geo. of Minorex Consulting Ltd. who is a qualified person under National Instrument 43-101 and who is independent of both Tru Vision and the Company.

The La Maria Property is situated in the northeastern part of the Colombian Central Cordillera Andeas along the same regional structural trend as several high-grade vein deposits in the Segovia-Remedios district, including those of the famous Frontino Gold Mines.

Within the Property, there is evidence of numerous historical underground workings that have extracted undocumented amounts of gold from mesothermal quartz-sulphide vein structures, plus there is evidence of many colluvial and alluvial placer gold deposits along the La Maria River drainage that crosses most of the Property. The Property is largely underlain by granitic rocks of the Santa Isabel stock which is closely associated with the nearby Antioquia and Segovia batholiths, the latter being the host of Frontino Gold Mines' quartz-sulphide vein deposits. Quartz-sulphide vein structures within the Property are commonly controlled by open-tensional northeasterly and younger east-northeasterly faults and shears that are related to repeated lateral movement along the Otú fault system that is situated about 10 km east of the Property and is part of the Palestina Fault System. Mineralized mesothermal-type quartz-sulphide vein structures have been traced by hand trenches, short adits and underground workings over strike lengths of 100 to over 700 metres and to depths of 20 to 30 metres down dip.

The Technical Report includes the following results of the Company's December 2010 follow-up sampling program on the Property:

During early December 2010, fifty-two samples were collected at the La Maria Property in the form of rock chips (38 samples), rock grabs (7), and saprolite (1). The remaining 8 samples were taken from various stages of the processing circuit of a crusher and ball mill on the Property.

The follow-up work concentrated on mapping and sampling the La Clavada 1 vein at the La Maria shaft where the Company had previously announced rock sample assay results that included 197.7 grams per tonne gold across a true vein width of 80 cm taken from a depth of 21 metres, and a grab sample that was collected at a depth of 15 metres from the side of the shaft which returned 73 grams per tonne gold (RGV-V news release, February 9, 2011). The rest of the December 2010 follow-up work concentrated on grab sampling inaccessible mine workings south of the La Maria shaft, where the La Maria vein is thought to trend, and sampling other underground workings located within the Property.

Mapping and sampling results from the La Maria shaft confirm that gold mineralization is hosted in quartz-pyrite (+/-galena+/-sphalerite+/-chalcopyrite) veins developed at or near the contact of granodiorite and gneiss. The estimated true vein thickness at the shaft is 0.3 to 0.4 metres, with local thicknesses up to 0.8 metres. Twenty chip samples of the vein and wall rock from surface to a vertical depth of 16.4 metres and summarized in the following table.

Vein chip samples 15016 to 15018 and 15020 were collected 6.4 metres vertically below surface. Vein chip samples 15024 to 15026 and 15028 to 15030 were collected 16.4 metres vertically below surface. Sample 15002 is a chip of wall rock hosting quartz-sulphide veinlets at surface.

Sample Material Au Ag Pb Zn Cu
No. Lgth (m) Sampled g/t g/t ppm ppm ppm
15001 1.30 Schist. <0.005 <2 <100 <100 <10
15002 1.05 Granodiorite/
Qz veinlets.
24.20 6 1100 300 20
15013 0.75 Granodiorite. 0.010 <2 <100 <100 10
15014 0.90 Granodiorite. 0.043 <2 <100 <100 20
15015 1.05 Granodiorite. 0.005 <2 <100 <100 <10
15016 0.50 Quartz vein. 0.074 <2 100 200 <10
15017 0.30 Quartz vein. 649.50 152 15200 6400 230
15018 0.40 Quartz vein. 2.958 <2 200 100 10
15019 1.00 Gneiss 0.136 <2 <100 <100 20
15020 0.70 Quartz vein. 598.6 159 16600 7900 100
15021 1.35 Granodiorite. 0.592 <2 100 <100 20
15022 1.30 Granodiorite. 0.104 <2 <100 <100 10
15023 1.50 Granodiorite. 0.439 <2 100 <100 20
15024 0.50 Quartz vein. 0.449 <2 100 200 20
15025 0.63 Quartz vein. 197.60 34 10800 3900 220
15026 0.90 Quartz vein. 84.80 26 153000 10200 1190
15027 1.50 Gneiss 0.049 <2 <100 <100 <10
15028 0.80 Gneiss(?) 0.114 <2 100 <100 20
15029 0.36 Quartz vein. 43.20 11 1400 1400 20
15030 0.80 Gneiss 0.178 <2 <100 <100 <10

The Company is pleased with the sample results at the La Maria shaft as well as the anomalous gold results from grab samples taken from dump piles of collapsed or flooded workings along or near the inferred strike of the La Maria vein structure. Those grab samples ranged from <0.005 to 24.1 grams per tonne gold and the workings occur along its inferred strike for a distance of 800 metres.

Samples were delivered to the Acme Analytical Laboratories (Vancouver) Ltd. preparatory lab in Medellin, Colombia under the supervision of a geologist. The samples were then crushed, pulverized, split, and sent to Acme's Vancouver, Canada, laboratory for gold assays and 24-element ICP analyses. Samples containing greater than 10 parts per million ("ppm") gold were re-analyzed with a gravimetric finish.

The author of the Technical Report verified the data disclosed in the Technical Report by collecting and testing verification samples. Gold values returned from the verification rock samples were within reasonable ranges of those reported from nearby Tru Vision rock samples, recognizing that the samples were collected across different lengths, had different sample volumes and that the known gold mineralization has an erratic distribution within the various vein structures. Gold values from samples that were collected elsewhere within the Property confirm the exploration potential of the known and tested mesothermal quartz vein structures.

The Technical Report has recommended a two-phase work program to further evaluate the gold mineralization on the Property. The first-phase program includes: surface mapping, detailed rock geochemical grid sampling, ground magnetic, and mechanized trenching. An initial 1,000-metre diamond drilling program is also planned for this phase to test the strike and down dip extensions of the La Clavada 1 vein structure. This first phase of work is intended to test the strike length of known veins and test the potential of discovering more veins on the Property. Pending the results of Phase 1, there is a second phase that includes 6,000 metres of diamond drilling to evaluate all resultant high priority exploration targets. The estimated expenses for the recommended Phase 1 exploration work is CDN$525,000 and for Phase 2 is CDN$1,475,000. The Company anticipates that it will have the funds necessary to complete the first phase of the recommended work program.

The Company is actively pursuing financing options and plans to announce the terms of such financing in the near future.

The Company also announces that the terms of the Share Exchange Agreement dated May 30, 2011 among the Company, Tru Vision and Tru Vision shareholders which were disclosed in the June 2, 2011 news release of the Company have been amended. Pursuant to the Share Exchange Agreement, the Company has agreed to acquire all of the issued and outstanding common shares in the capital of Tru Vision (of which there are 13,450,000) from the shareholders thereof in exchange for the Company issuing 8,406,250 common shares, so that the Company will issue one common share to each Tru Vision shareholder for every 1.6 shares of Tru Vision held. The amendment to the Share Exchange Agreement dated August 31, 2011 provides that, in addition to the share exchange set forth in the Share Exchange Agreement, the Company will acquire all of the currently issued and outstanding 5,146,799 common share purchase warrants of Tru Vision (the "Tru Vision Warrants") in exchange for 3,216,749 common share purchase warrants of the Company (the "Rio Grande Warrants"), with each Rio Grande Warrant being exercisable into one common share of the Company at an exercise price of $0.80 per share. The expiry date for 1,250,000 Rio Grande Warrants will be November 3, 2011 and for 1,966,749 Rio Grande Warrants will be December 5, 2011, the same expiry dates as the Tru Vision Warrants for which the Rio Grande Warrants are exchanged. The exchange rate applied for the exchange of the Tru Vision Warrants and the exercise price of the Tru Vision Warrants, is the same as the exchange rate applied to the exchange of the Tru Vision shares.

Upon closing of the transaction the Company anticipates it will have 31,457,382 common shares issued and outstanding.

The Share Exchange Agreement also provides that the Company will assume certain obligations of Tru Vision, including loans of Tru Vision for approximately $225,000 for which payment has been postponed for a period of one year following closing of the transaction. These loans were incurred by Tru Vision in connection with the Transaction and payment made for the Property.

Upon closing of the Share Exchange Agreement, as amended, the Company will assume all obligations under the amended Option Agreement. The payments and share issuances to the optionors under the amended Option Agreement (the "Optionors") are as follows:

  1. On or before June 6, 2011, payment of US$100,000 (paid by Tru Vision);
  2. On or before August 31, 2011, payment of US$150,000 (paid by Tru Vision);
  3. On or before October 15, 2011, payment of US$600,000;
  4. On December 18, 2011, payment of US$500,000;
  5. On May 18, 2012, payment of US$500,000;
  6. On December 18, 2012, payment of US$1,500,000 and issuance of 2,000,000 common shares; and
  7. On December 18, 2013, payment of US$3,000,000 and issuance of 3,000,000 common shares.

Interest at a rate of one percent (1%) per month shall be calculated and paid on any renegotiated balances, specifically on US$600,000 which payment date was changed from September 1, 2011 to October 15, 2011, and on US$500,000 which payment date was changed from December 18, 2011 to May 18, 2012.

The amended Option Agreement also requires the following exploration expenditures:

  1. US$100,000 on or before June 2, 2011 (completed by Tru Vision);
  2. US$400,000 on or before December 18, 2011;
  3. US$1,000,000 on or before December 18, 2012;
  4. US$2,000,000 on or before December 18, 2013; and
  5. US$3,000,000 on or before December 18, 2014.

Upon completion of the terms of the amended Option Agreement, the Company will own, through its subsidiaries, all the issued and outstanding shares of El Porvenir, which holds the license to the Property, subject to a 2% Net Smelter Return royalty in favour of the Optionors. The shares of El Porvenir are currently being held in trust by an escrow agent and will not be released to the Company until the completion of all terms of the Option Agreement.

The Company intends to pay a finder's fee to Level 3 Capital Management Inc. in connection with completion of the transaction, by making a cash payment of $85,601.50 and by issuing 214,003 common shares at $0.40 per share.

Upon completion of the transaction, it is anticipated that Christopher Verrico, President of Tru Vision, will become a director of the Company, subject to approval of the TSX Venture Exchange. Mr. Verrico has over 25 years of mine development and operations experience within British Columbia, Alaska and the Canadian Territories, managing and contracting open pit mining, bulk ore handling and northern infrastructure construction operations. In the past 10 years, Mr. Verrico has focused on Canadian public junior resource companies, which involve scoping resource development opportunities throughout the America's, acting as a director and/or executive officer of a number of public companies, and providing key participation in raising venture capital.

The Share Exchange Agreement and all matters relating thereto are subject to a number of conditions including the acceptance of the TSX Venture Exchange. The transaction does not involve any relationship between a Non-Arm's Length Party and the Company, as that term is defined in the policies of the TSX Venture Exchange.

Mr. James A. McCrea., P. Geo., a qualified person as defined by NI 43-101, has reviewed this news release and approves all scientific and technical disclosure. All information regarding Tru Vision and the La Maria Property has been provided by Tru Vision.

On behalf of the Board of Directors,

Jerry Minni, President & CEO

Rio Grande Mining Corp.

Statements in this press release regarding the Company which are not historical facts are "forward-looking statements" that involve risks and uncertainties. Such information can generally be identified by the use of forwarding-looking wording such as "may", "expect", "estimate", "anticipate", "intend", "believe" and "continue" or the negative thereof or similar variations and includes the statement that; (i) the parties may close the Share Exchange Agreement, as amended; (ii) the Company anticipates having 31,457,382 common shares issued and outstanding on closing of the transaction; (iii) the Company may pursue financing options or announce terms of such financing in the near future; (iv) the Company anticipates having the funds necessary to complete the first phase of the recommended work program for the Property; and (v) the Company anticipates having the funds necessary to satisfy its obligations under the Share Exchange Agreement, including payment of the Tru Vision loans. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties such as the risk that the closing of the transaction and/or the financing may not occur for any reason. Actual results in each case could differ materially from those currently anticipated in such statements due to factors such as: (i) the inability of the parties to complete the Share Exchange Agreement, as amended; (ii) the inability of the parties to complete any financing, as proposed or at all; (iii) fluctuation of mineral prices; (iv) a change in market conditions; (v) the inability of Chris Verrico to act as a new director of the Company; and (vi) the refusal of the TSX Venture Exchange to accept the proposed transaction for any reason whatsoever. Except as required by law, the Company does not intend to update any changes to such statements.

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.

Contact Information

  • Rio Grande Mining Corp.
    Jerry Minni
    President & CEO
    (604) 683-8610
    (604) 683-8605 (FAX)