Rye Patch shares rise on Nevada high-grade

Shares of Rye Patch Gold (RPM-V, RPMG-o)shot up 128% on news that the company hit high-grade gold mineralization in drilling at 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 starting from 23 metres depth, including 7.6 metres of 75 grams gold and 82 grams silver. Rye Patch stock surged to 28.5 from 12.5 on the hole, with 633,000 shares traded.

Another 14 holes returned mineralization, but the grades were far lower. Hole 18, the next best hole, returned 16.8 metres of 2.4 grams gold and 5.9 grams silver from 23 metres depth, including 4.6 metres grading 6.7 grams gold and 6.9 grams silver. Meanwhile, hole 10 intersected 23 metres of 117 grams silver from 8 metres. There were other holes that hit silver mineralization, but grades were lower.

Lincoln Hill, together with the adjacent Gold Ridge property, consist of about 13.4 sq. km and are located in Pershing Cty., about 180 km northeast of Reno, Nev., near interstate highway 80. They are in the Rochester mining district, about 6.5 km west of Coeur d’Alene Mines’ (CDM-T, CDE-n) Rochester gold-silver mine and about 5 km southwest of Midway Gold’s (MDW-V, MDW-x) Spring Valley discovery.

Historic deposits discovered in the Rochester mining district amount to 4.5 million oz. gold and 130 million oz. silver.

Gold was discovered at Lincoln Hill in 1912, and a mine operated there until 1917.

Gold and silver were mined intermittently in the 1980s, 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, Newmon Mining (NMC-T, NEM-n) conducted geological mapping, surface and underground geochemical sampling programs, and drilled eight reverse-circulation holes.

In the late 1980s, Coeur d’Alene 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 stock-work-veined host rocks.

Channel sampling conducted within the central adit underground workings by Coeur d’Alene and Newmont returned gold values averaging about 1.5 grams gold per tonne across an area of 150 by 90 metres.

Random surface grab samples collected from pervasively silicified outcrops, excluding the stock-work mineralization, returned grades of up to 4.6 grams gold.

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 to eventually develop Lincoln Hill as a bulk-minable project, as well as a high-grade underground mining operation.

The property has well-developed infrastructure that was established during past mining activities in the region, including 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 stockworkveining and fault zones.

Lincoln Hill 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.

Two other Nevada properties explored by Rye Patch, the Wilco and Jessup projects, host 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.