Rainy River Rises On High-Grade Hits

VANCOUVER — December was a good month for Rainy River Resources (RR-V), as a steady stream of high-grade gold intercepts propelled the junior’s share price up more than 80% in the first few weeks of the month.

The company is exploring its Rainy River gold project in Richardson Township, northern Ontario, where drills have uncovered six gold zones within a 6-sq.-km caldera. The two main zones, known as the ODM and 17 zones, sit near the centre of the caldera; the growing Cap zone is to the south; the Beaver Pond zone is to the west; and the 433 and HS zones are to the north.

Investors were pleased with the latest set of results from the project, where Rainy River has five drills turning. One of those drills is doing infill-drilling at the ODM zone and, in hole 406, it cut 48 metres grading 4.29 grams gold per tonne, starting 337 metres down-hole and including 10.5 metres of 16.73 grams gold. Deeper down, the hole crossed over into the downplunge extension of the adjacent 433 zone, where it hit 25.5 metres grading 6.04 grams gold from 702 metres down-hole. This lower intercept confirmed the existence of the 433 zone 260 metres downplunge of hole 250, which returned 18 metres of 7.61 grams gold and had been the deepest hit into the 433 zone.

Then, over on the western portion of the caldera, two holes successfully extended the Beaver Pond zone 200 metres to the west. Hole 410 intersected 6 metres of 3.62 grams gold from 257 metres depth and hole 411 returned 3 metres of 2.31 grams gold from 347 metres down-hole.

And at the beginning of the month, Rainy River released two other significant drill results. One was a hit into high-grade gold deep in the ODM zone: hole 399 returned 34.6 metres grading 5.1 grams gold, including 4.6 metres of 12.76 grams gold, and 4.5 metres of 25.33 grams gold. Nearby, hole 402 cut 12 metres of 3.37 grams gold. These intersections occur some 170 metres west of the currently defined resource, and at a vertical depth of 560 metres.

The other interesting hit came from the Beaver Pond zone, where hole 402 intersected 49.5 metres grading 1.34 grams gold. The intercept, which came just over 200 metres below surface, is 65 metres downplunge of the currently defined resource.

Rainy River’s share price started the month at $2.20. Seventeen days later, it closed at $4, a jump of 82%.

In the first quarter of 2010, Rainy River plans to calculate a new resource for its namesake project, incorporating results from more than 110 drill holes completed since the last estimate. The company also began a second metallurgical test program focused on optimizing mill and processing choices for Rainy River. An initial metallurgical program indicated gold recoveries of up to 93% in gravity and flotation concentrates.

Rainy River will keep probing the property with five drill rigs through 2010. Next year’s drill program has several goals: to continue expanding the near-surface zones along strike, to test the depth potential of the ODM and 433 zones, to assess untested geophysical anomalies, and to drill a potential target roughly 30 km east of the project.

The Rainy River project sits 80 km south of Kenora. Rainy River bought the project from Nuinsco Resources (NWI-T) in mid-2005 and has had three to four drill rigs turning on the property for the last three years.

According to a resource estimate completed in May, a conceptual open pit at the project contains indicated resources divided into 55 million tonnes of volcanic-hosted mineralization grading 1.21 grams gold per tonne and 1.89 grams silver, plus 57,000 tonnes of mafic-hosted mineralization at 1.37 grams gold. Inferred in-pit resources add 12.5 million tonnes of 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 gram 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 cutoff grade of 0.4 gram gold per tonne.

The mineralization at Richardson 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 cutoff grade of 3 grams gold.

Since the May resource, some 16 drill-holes have intersected mineralization grading better than 5 grams gold below the current conceptual pit, which Rainy River suggests adds to the potential for an underground mining operation.

Rainy River raised $8.2 million in a flow-through financing in November, topping the company’s treasury up to $22 million. The company has a 52-week trading range of $1.05-4.10 and 57 million shares outstanding.