Rainy River Resources Ltd TSX:RR and Northern Superior Resources Inc TSXV:SUP announced completion of their 2012 drill program at the Ti-Pa-Haa-Kaa-Ning (TPK) Project in Ontario. Highlights of the program included
59.6 grams per tonne gold, 92.3 g/t silver, 3.19% copper over 0.5 metres
16.15 g/t gold over 1.5 metres
8.85 g/t over 1 metre
7.85 g/t gold over 0.8 metres
Rainy River is the operator of the TPK Joint Venture, located 470 kilometres northeast of Thunder Bay and 190 kilometres northeast of Pickle Lake in northwest Ontario. Rainy River has spent $6 million to date as part of its $9.4-million commitment to earn a 51% interest in the project. On June 21, Rainy River announced that a third and final $500,000 private placement to maintain its option. Rainy River will subscribe for 2.63 million common shares of Northern Superior at $0.19 per share.
President/CEO Raymond Threlkeld tells ResourceClips.com, “What the drill results tell us is that this was a very large gold grain anomaly out there that we’ve explained a portion of. There is still one target under what we call Crying Boy Lake that hasn’t been adequately tested. We believe there is a very high grade target there. What we’re doing now is evaluating how we can best get to that target. We won’t do anything this summer because the target requires drilling from ice. We’ll be working on planning as to what we might do come February or March of next year.
“We need to make a discovery; that’s the first thing. I think if we choose to drill that target in February or March and make a discovery we think had grade and thickness enough, then we would move forward. If it doesn’t, then we’d probably have earned into the project and have to review our options at that time.”
On May 29, Rainy River reported assays from its Rainy River Gold Project in Ontario as high as 4.5 g/t over 55.5 metres and 3.3 g/t over 349 metres. Threlkeld comments, “Those holes were designed to convert some of the inferred mineralization we had into measured and indicated and just tie together some lose ends in the deposit. Last year we added over a million ounces in gold to that pitshell, and I think some of this drilling is adding some more ounces. It’s certainly adding ounces in terms of grade because the average grade of all these drill holes we put in was much higher than the average resource grade. So we’re pretty excited about seeing that. One of the other things it did was it really established what we’ve been saying all along for Rainy River, and that it’s a very continuous gold deposit. It isn’t spotty; it’s not low grade, when we consider other sub-1-gram deposits in Canada that are being developed today. Rainy River is much more than a gram, and I think the upcoming PEA will demonstrate that the first four or five years of mining there will have significant grade and cashflow.
“After the PEA in August, probably towards the end of August or early September, we will put out the final resource estimate, which will serve as the resources for the feasibility study. The feasibility study we’re hoping to have completed by the end of 1Q 2013. With that in place, we will look to going into final permitting. On the permitting side, we’ve already submitted the terms of reference to the province and the draft of the project description to the federal government. We’re waiting to hear back now if the provincial and federal environmental permits can be combined under the new federal guidelines. If that’s the case, I think it will be very good for us and it will shorten the permitting time. So we expect that we will be in the EA process for the next 24 months and something probably before early 2014 to have permits in hand. We would anticipate and are hoping to get almost a full year of production in 2016.
“We will continue to drill Rainy River. We’ve pretty much finished the infill. Frankly, we have four to five years of production without drilling another hole. We are completely drilled out on the open pit portion of the ore body. We sent away most of the rigs, and we have three rigs working, and they’re looking at some underground extensions right now and some really high-quality targets. We felt it’s worthwhile to continue doing some of this exploration to really demonstrate some of the blue sky out there that we have.”
Asked about Rainy River relations with local First Nations, Threlkeld responds, “The relationship has been pretty good. I just came back from Fort Francis last night and held a meeting with one of the groups, the Fort Francis Chief Secretariat in which there are seven communities. We had an advisory committee meeting where we give them all an update of the progress of our permitting and what we’re doing. We’re now initiating a study with the elders of all the communities to kind of discuss the past of the Rainy River area so that we have all that input into the consultation. We have signed a participation agreement with that group, the Fort Francis Chief Secretariat, so they will sit down with us and discuss the project and especially the environmental assessment.
“We are in consultation and will be all the way through. In fact, it will be an operating group that will last through the mine life here and through closure essentially. We signed an MOU with one other community, and we anticipate speaking with several others in the area. So we’ve gone a long way.”
On June 5, CIBC cut its Rainy River price target from $11 to $8, “reflecting revised estimates for project development and financing of the Rainy River Gold Project.” Threlkeld responds, “I really don’t comment on the analysts’ reports. I think everybody in the business has received a bit of a haircut, especially the developers, and probably the biggest factor is capital and the risk of capital increasing. I think it’s a bit unfair that the analysts sometimes look at a project and say that it’s going to cost more than you say. Yeah, I think Rainy River is going to cost more than the $680 million for 32,000 tons a day, but we’re doing some things. We’re going to start out a little bit smaller, so we’re going to keep the capital lower, and we’ll fund expansion out of cash flow. But back to the analysts, I think painting projects that are less than a billion dollars of initial capital with a big cost escalator… I don’t think that’s correct. I think we’ll demonstrate when we put out the next PEA how these costs are calculated. They’re based upon some pretty solid engineering, and I think that we’ll use about a 30% contingency, and so we’re covered on a lot of things. It’s less than a billion dollars, way less, and so that’s a big deal.”
After falling below $3.50 in May, Rainy River’s share price has rebounded. Threlkeld says, “I think a lot of it is really investor confidence in the project. Of all the analysts that cover us, about 85% of them have a buy on us, so that’s very positive. And the morning blurbs that you hear from a lot of the people who cover us, they’ve all been very positive. In the marketing I’ve done, I’ve received a lot of good comments.”
Threlkeld concludes, “Rainy River is a little bit higher grade than the 1-gram ore bodies. It’s in a great safe jurisdiction and has very low infrastructure costs. We have good relations with the First Nations, and we have a team that can build it. I think those are the confidence builders that have come out. We have about $96 million in the bank today, so I think that eases people’s minds a little bit. We can go a long way and get the feasibility done, move this thing along and derisk it without having to go back to the marketplace right away.”
Rainy River Resources Ltd
Northern Superior Resources Inc
Thomas F Morris
by Kevin Michael Grace