Rye Patch Gold intersects high-grade gold in Nevada

Shares of Rye Patch Gold (RPM-V) shot up to 28.5 from 12.5, a surge of 128%, on 633,000 shares after the company released news on September 24 of high-grade gold mineralization intersected in one hole on its Lincoln Hill project in Nevada, part of an 18-hole, 2,500 metre reverse-circulation drill program. Hole 13 cut 21 metres of 27 grams gold per tonne and 34 grams silver per tonne at a depth of 23 metres, including 7.6 metres of 75 grams gold per tonne and 82 grams silver per tonne at a depth of 27 metres.

Of the 18-hole program, another 14 holes returned mineralization, but grades were far lower. For example, hole 18 was the next best hole, and it returned 16.8 metres of 2.4 grams gold per tonne and 5.9 grams silver per tonne at a depth of 23 metres, including 4.6 metres grading 6.7 grams gold per tonne and 6.9 grams silver per tonne at a depth of 27 metres. Meanwhile, hole 10 intersected high silver grades, returning 23 metres of 117 grams silver per tonne at a depth of 8 metres, and there were other holes which intersected silver mineralization, but grades were lower.

The Lincoln Hill project, together with the adjacent Gold Ridge property, hold about 3,300 acres and are located in Pershing Cty., about 180 km northeast of Reno, Nevada, near interstate highway 80. They are in the Rochester mining district, about 6.5 km west of the Rochester gold and silver mine and about 5 km southwest of the Spring Valley discovery by Midway Gold (MDW-V). Historic deposits discovered in the Rochester mining district amount to 4.5 million oz. gold and 130 million oz. silver.

The Lincoln Hill project is subject to a 4% net smelter return (NSR) royalty, half of which can be purchased by Rye Patch for US$4 million. Rye Patch has committed to making payments in cash and shares for the property, as well as spending money on exploration.

Gold was discovered at Lincoln Hill in 1912, and a mine operated there until 1917. Gold and silver were mined intermittently in the 1980’s, and about 900 metres of underground workings, the majority of which are dry and accessible, remain along the central portion of the mineralized system, but Rye Patch says that the site has seen minimum systematic exploration and development work.

There is a large tailings dump at the base of Lincoln Hill and many small ones along a strike length of over 2,000 metres from the bottom to the top of the hill, which is about 300 metres high. Material with visible gold can be found on several dumps.

Between 2001 and 2002, Newmont Mining (NMC-T, NEM-N) conducted geologic mapping, surface and underground geochemical sampling programs, and drilled eight reverse-circulation holes. In the late 1980’s, Coeur d’Alene Mines (CDM-T, CDE-N) drilled seven reverse-circulation holes along the upper, eastern portion of the mineralized system. The majority of the 15 drill holes returned gold-silver mineralization while intersecting significant intervals of silicified and stockwork-veined host rocks.

Channel sampling conducted within the central adit underground workings by Coeur d’Alene and Newmont returned gold values averaging approximately 1.5 gram gold per tonne across an area of 150 by 90 metres. Random surface grab samples collected from pervasively silicified outcrops, excluding the stockwork mineralization, returned grades to a maximum of 4.6 grams gold per tonne.

However, Rye Patch says that the most prospective portion of this extensive mineralized precious metal system has not been adequately drill-tested, and it hopes that Lincoln Hill will become a bulk-minable gold-silver target, as well as a high-grade underground mining operation. The property has a well-developed infrastructure that was established during past mining activities, which includes numerous roads, drill pads and a nearby power line.

Limited surface and underground mapping has recognized at least three, and possibly four, gold-silver mineralized systems. Bonanza-grade, coarse-free gold occurs on the property as pockets, void and vein fillings, and disseminations within quartz stockwork-veining and fault zones

Two other Nevada properties explored by Rye Patch, the Wilco and Jessup projects, have National Instrument 43-101-compliant resources. Measured and indicated resources for the two projects are 780,000 oz. gold equivalent (gold and silver), while inferred resources stand at 1.15 million oz. gold equivalent.

On June 30, Rye Patch’s treasury held $2.9 million in cash and equivalents. The company has 43.5 million shares fully diluted.