Vancouver – In one year Rainy River Resources (RR-V) managed to boost the indicated gold count at its namesake property by 60% and replenish almost all of the upgraded inferred resources with expansion drilling.
The Rainy River property, which sits 80 km south of Kenora in Ontario, has been home to three or four drill rigs since 2006. In that time the company has drilled 351 diamond drill holes and 208 reverse circulation drill holes, focused on upgrading inferred resources, expanding deposits at depth, and identifying new gold-bearing zones in nearby target areas.
The effort just paid off. According to a new resource estimate, a conceptual open pit at Rainy River now encompasses 2.5 million oz. gold and 4.3 million oz. silver as indicated and inferred resources. Within the pit shell, the indicated resource divides into 55 million tonnes of volcanic-hosted mineralization grading 1.21 grams gold per tonne and 1.89 grams silver per tonne as well as just 57,000 tonnes of mafic-hosted mineralization averaging 1.37 grams gold. Inferred in-pit resources add 12.5 million tonnes grading 0.95 gram gold and 2.36 grams silver.
The estimate also found a significant resource that is still considered open-pittable but falls outside of the current pit design. Those inferred resources total 50.6 million tonnes grading 0.79 grams gold and 2.19 grams silver, for 1.3 million oz. gold and 3.6 million oz. silver. All open-pittable resources were calculated using a cut-off grade of 0.4 gram gold.
The mineralization at Rainy River continues at depth and so the report also calculated the project’s underground resource. Indicated underground resources total 530,000 tonnes grading 5.14 grams gold and 1.47 grams silver; the inferred underground count stands at 875,000 tonnes averaging 5.22 grams gold and 1.27 grams silver. Underground resource calculations used a 3-grams-gold cut-off grade.
The resource calculations made use of data from 538 diamond drill holes completed by Rainy River and Nuinsco Resources (NWI-T), the previous project operator. The pit would incorporate the main ODM 17 zone as well as the 433 zone just to the north. Several other neighbouring zones – HS, Cap, and five unnamed areas – also contribute to the resource.
Rainy River bought the project from Nuinsco in mid-2005. Nuinsco had already completed over 200 diamond drill holes and 597 reverse circulation holes on site, discovering and partially delineating two gold zones known as 17 and 433. The zones were part of a 6-sq. km auriferous caldera sequence consisting of pyritized felsic volcanic rocks.
When Rainy River arrived on scene the company wanted to both expand the two known zones and search for new ones. Both goals panned out: the company discovered three new gold zones within the auriferous complex, three of which are part of the 3-km long 17 Gold Trend, and zones 17 and 433 have grown significantly.
The company plans to spend almost $10 million on exploration at Rainy River this year. And it can afford to do so: as of the end of March Rainy River held $23 million in cash and equivalents.
Access to capital has come in handy of late as Rainy River has been working to free its property from royalty burdens. In November the company spent $500,000 cash and 200,000 shares to purchase a tonnage royalty that Nuinsco had retained on the property. The royalty would have given Nuinsco $1, adjusted annually for inflation, for each ton of mineral ore produced from the property as well as a one-time bonus payment of $2.5 million at the start of commercial production.
And more recently Rainy River cleared the other royalty burden on its property by buying the rights to a 3% net smelter royalty. Two optionors were granted the royalty as part of a deal with Nuinsco and it carried through when Rainy River acquired the project. But the deal gave Rainy River the right of first refusal to match any offer to purchase the royalty. When Franco-Nevada (FNV-T) offered the optionors $1.5 million for the 3% NSR, Rainy River stepped in and offered $475,000 cash and shares worth at least $1.2 million. With that deal complete the property is now royalty-free.
On news of the resource estimate Rainy River’s share price fell 30¢ and currently sits near $2.50. The company has a 52-week trading range of 62¢ to $4.75 and has 56 million shares outstanding.