(TSXV:RR) NEW RECOMMENDATION / JUNE 16, 2010
| RAINY RIVER RESOURCES LTD: RETURN ON CAD 10,000 INVESTMENT | |||||
| Purchase Date | No. of Shares | Purchase Price | Cost (CAD) | Price Today | Value Today |
| June 7, 2010 | 1'700 | 6.00 | 10'020.00 | ||
| Total | 1'700 | 6.00 | 10'020.00 | 6.55 | 11'135.00 |
| Profit | 1'115.00 | ||||
| Profit (in %) | 17% | ||||
| SHARES OUTSTANDING / FULLY DILUTED | MARKET CAP / CASH |
| 72.4 million / 77.2 million | CAD 415 million / CAD 65.0 million |
| 52 WEEK LOW / HIGH | TSXV |
| CAD 1.75 to 6.68 | 313,967 (200-day) |
| RECOMMENDATION | RISK RATING |
| BUY | HIGH |
A 5 MILLION OUNCE GOLD RESOURCE IN NORTHWESTERN ONTARIO, CANADA
Business Summary
Rainy River Resources is focused on exploring and developing a newly discovered gold resource in the southwest corner of northern Ontario, Canada.
The Rainy River Gold Project ("Rainy" or the "Project") is an advanced stage gold exploration project situated in the southern half of Richardson Township, approximately fifty kilometres northwest of Fort Frances in Western Ontario. In June 2005, Rainy River Resources Limited acquired a 100% interest in the project from Nuinsco Resources Limited and has since added approximately 4 million ounces in total gold resources to the deposit in this emerging Canadian Gold District.
The location of the Rainy River project is excellent. The Property is centred in Richardson Township in 'mining friendly' northwestern Ontario, approximately 162 kilometres south of Kenora and 418 kilometres west of Thunder Bay. The property has tremendous infrastructure - year round road access, powerlines in close proximity and the railway is located 21 kilometres to the South of the property. The town of Fort Frances has a population of approximately 10,000 people which would be invaluable in the event that this property becomes a mine, as it would provide a local work force and there would be no requirement of establishing a camp.
With over $65 million in its treasury, the Company will be carrying out an aggressive exploration plan in 2010. In addition to over 70,000 metres of planned drilling, the Company will be completing a Preliminary Economic Assessment in the third quarter of 2010. The Company is also conducting Metallurgical Testing and Environmental Baseline and Geotechnical Studies.
Regional and Local Geology
The Rainy River property falls within the 2.7 Ga Rainy River Greenstone Belt ("RRGB"), which forms part of the Wabigoon Subprovince. The Wabigoon Subprovince is a 900 kilometres long E-W trending area of komaiitic to calc-alkaline metavolcanics which are in turn succeeded by clastics and chemical sediments. Granitoid batholiths have intruded into these rocks, forming synformal structures in the supracrustals which often have shear zones along their axial planes.
The Wabigoon Subprovince is host to the Sturgeon Lake VMS deposits to the northeast in addition to several other, but smaller ore-bodies. It is a very prospective terrain in which to conduct exploration.
The Wabigoon Subprovince basement lithologies were once overlain by Mesozoic (Jurassic and Cretaceous) sediments and were subjected to deep lateritic weathering followed by Quaternary glaciation. Limited preservation of the Mesozoic cover sediments and saprolite occurs in localized palaeolows.
The Wabigoon basement rocks and remnant Mesozoic cover sediments are overlain by Labradorian till of northeastern provenance. This till has been found to contain anomalous concentrations of gold grains, auriferous pyrite and Cu-Zn sulphides. It is overlain by a glaciolacustrine clay and silt horizon and by argillaceous and calcareous Keewatin till of western provenance. The Rainy River area therefore was covered successively by the Labradorean and Keewatin ice sheets.
The Property is centered on Richardson Township with the Sabaskong granitoid batholith to the north and the Black Hawk Stock to the east. A package of metasediments is found south of Richardson Township. Wedged in between these lithologies are a conformable series of tholeiitic mafic and overlying calc-alkalic intermediate to felsic metavolcanics. These strike almost east-west and dip to the south.
Intermediate rocks (dacites) host most of the Rainy River gold mineralization. A well-defined penetrative fabric is commonly observed on a regional scale. This foliation is approximately parallel to the trend of the metavolcanics on the Rainy River Property, which strike at approximately 300 degrees and dip fifty to seventy degrees to the south. A steep southwest-plunging stretching lineation is recorded in all lithologies within the main mineralized zones, with kinematic indicators suggesting south-overnorth reverse-sinistral deformation.
The regional-scale, east-west trending Quetico Fault has been interpreted to not extend as far west as the Richardson Township area, not being detected in diamond and reverse circulation drilling programs to date. No other thoroughgoing shear zones have been identified; significant shearing appears to be restricted to gold-bearing rocks that were weakened by the earlier volcanogenic alteration. Late, broadly N-S, brittle faulting produces small offsets in the mineralized horizons.
Recent News: Rainy River Intersects 128.5 g/t (4.13 oz/t) Gold Over 5.5 Metres in 433 Zone
Rainy River Resources Ltd. announced high-grade gold intercepts from the 433 zone at the Rainy River Gold Project in Northwestern Ontario.
Highlights
- 433 Zone high-grade plunge continues - 128.5 g/t (4.13 oz/t) gold over 5.5 metres
- 76.0 g/t (2.44 oz/t) gold over 1.5 metres discovered 100 metres east of main 433 zone
- New 433 FW zone returns 17.7 g/t (0.57 oz/t) over 1.5 metres 433 Drill Hole Extension Program
Rainy River continues to extend previously drilled holes into the deep areas of the 433 zone with encouraging results. Drill hole NR06-42E intersected 128.5 g/t (4.13 oz/t) gold over 5.5 metres, including 220.3 g/t (7.08 oz/t) gold over 3.2 metres, including 452.8 g/t (14.5 oz/t) gold over 1.5 metres approximately 500 metres below surface. This new intersection lies approximately 50 metres up-dip of an intersection of 7.6 g/t (0.24 oz/t) gold over 18.0 metres in NR08-250, including 79.5 g/t (2.56 oz/t) gold over 1.5 metres (see news release dated May 27, 2008) and further supports the presence of a high-grade corridor within the 433 zone.
Additionally, drill hole NR08-244E intersected 76.0 g/t (2.44 oz/t) gold over 1.5 metres approximately 100 metres down plunge from an intersection of 9.8 g/t (0.31 oz/t) gold over 1.5 metres in hole NR06-77E. These two intersections are significant in that they lie 100 metres east of the main 433 Zone in a previously untested area and represent a possible eastward strike extension of the zone.
Further drill results at a depth of approximately 600 metres include NR09-355E intersecting 17.7 g/t (0.57 oz/t) gold over 1.5 metres in the 433 FW (FootWall) Zone and NR06-65E intersecting 17.0 g/t (0.55 oz/t) gold over 1.5 metres in the main 433 Zone. In addition, NR10-486 demonstrated that significant upside exists in the shallow regions of the 433 Zone by intersecting 1.77 g/t (0.05 oz/t) gold over 40.5 metres, including an interval of 5.22 g/t (0.17 oz/t) gold over 7.5 metres.
Commentary:
"We have had great success finding and improving the continuity of high-grade gold throughout both the 433 and ODM zones," commented Garett Macdonald, Vice President of Operations. "The exploration program continues to demonstrate the potential for underground mining and we have commissioned an alternative scoping scenario to study an all underground mining operation versus a pit & underground operation. We will be aggressively pursuing a drilling and engineering program to look at both options, including the development of a decline from surface to access these high grade areas. In addition to strengthening the continuity of the deposit the drill program will also be designed to increase resources."
Fundamental Considerations
RAINY RIVER OFFERS MANY ATTRACTIVE ARGUMENTS FOR INVESTING:
- A TOTAL COMBINED GOLD RESOURCE OF 5 MILLION OUNCES (INDICATED & INFERRED) AND EXPANDNG
- THE LOCATION OF THE PROPERTY IN MINING FRIENDLY ONTARIO, CANADA, WITH EXCELLENT INFRASTRUCTURE
- MANAGEMENT TEAM WITH A WELL PROVEN TRACK RECOCRD
- TREMENDOUS POTENTIAL FOR RESOURCE EXPANSION, UNTESTED IN ALL DIRECTIONS AND AT DEPTH
- DRILL RESULTS CONTINUE TO SHOW IMPRESSIVELY HIGH GRADES, AT TIMES IN EXCESS OF 100 G/T
- WELL FINANCED WITH OVER $ 60 MILLION IN TREASURY
Technical Considerations
THE PRICE OF GOLD SHARES DOES NOT REFELCT THE INCREASE IN EARNINGS AND CASH FLOW SINCE 2007.
THE TIMELESS PRECIOUS METAL FUND
THE SIERRA MADRE GOLD & SILVER VENTURE FUND
are shareholders in the company and will benefit from any increase in the company's share price.
Disclosure: The author has not been paid to write this article, nor has he received any other inducement to do so.
Disclaimer: The author's objective in writing this article is to invoke an interest on the part of potential investors in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information nor the opinions expressed should be construed as a solicitation to buy or sell this stock.
Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock - or to use their own brains.
In our opinion, the best approach is to buy a diversified portfolio of stocks as represented in THE TIMELESS PRECIOUS METAL FUND or THE SIERRA MADRE GOLD & SILVER VENTURE CAPITAL FUND instead of shares of only a small number of companies.
