Rainy River reveals major gold resource

VANCOUVER — Rainy River Resources (RR-V, RRFFF-O) has calculated its first resource estimate for its namesake gold project, roughly 80 km south of Kenora, in northwestern Ontario.

The study puts the project’s indicated resource at 34.2 million tonnes averaging 1.26 grams gold and 2.6 grams silver per tonne, for almost 1.4 million contained ounces gold and 2.9 million oz. silver within the 17-ODM, 433 and CAP zones, plus the Beaver Pond area.

The project also holds 67.6 million inferred tonnes grading 1 gram gold and 2.4 grams silver for 2.2 million contained ounces gold and 5.1 million oz. silver.

The estimate used a block cutoff grade of 0.5 gram gold per tonne, and was based on more than 145,000 metres of drilling by Rainy River and previous operator Nuinsco Resources (NWI-T, NWIFF-O).

A bulk-tonnage, open-pit mining scenario was modelled for the project’s five near-surface deposits.

In a release, Rainy River presi- dent and CEO Nelson Baker said the company has increased resources at the project (in terms of ounces) by 600% over three years. Baker added that the company’s exploration costs are among the lowest in Canada at $8 per oz. gold.

Rainy River plans 42,000 metres of drilling in 2008, aimed at expanding the resource.

Recent drilling on the 433 zone returned 27.8 metres grading 5.7 grams gold in hole NR07-218, including a high-grade section of 4,158 grams gold over 1 metre. Further down, the same hole yielded a 6- metre interval grading 2.9 grams gold and 1.9% zinc.

A recent scoping-level metallurgical test program on 21 composite samples from the 17-ODM zone returned average gold recoveries of 94% using a combination of gravity concentration followed by flotation.

The Rainy River project is situated within the Rainy River greenstone belt and is associated with what is interpreted as an Archean caldera structure. Widespread past drilling identified a roughly 6-sq.- km semi-circular area of gold-enriched felsic-intermediate volcaniclastic rocks.

Following up 1980s Ontario Geological Survey programs that identified significant gold-in-till, Nuinsco Resources discovered a large geochemical anomaly in the mid-1990s that led to the identification of a hardrock source of the gold mineralization.

Rainy River acquired the project from Nuinsco in mid-2005 under an agreement that calls for staged cash payments of $2.5 million, plus another $2.5 million on the start of commercial production. Rainy River issued 7% of its capital (roughly 2.2 million shares) to Nuinsco as part of the deal. Nuinsco also retains a royalty of $1 per tonne of ore produced from the property.

Shares of Rainy River have recently risen to around $5.40, giving the gold explorer a market capitalization of almost $300 million based on its roughly 55 million shares outstanding. The stock has a 52-trading range of $3.60-5.95.