(TSXV:RR)
NEW RECOMMENDATION / JUNE 16, 2010
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RAINY RIVER
RESOURCES LTD: RETURN ON CAD 10,000 INVESTMENT
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Purchase Date
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No. of Shares
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Purchase Price
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Cost (CAD)
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Price Today
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Value Today
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June 7, 2010
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1'700
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6.00
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10'020.00
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Total
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1'700
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6.00
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10'020.00
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6.55
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11'135.00
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Profit
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1'115.00
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Profit (in %)
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17%
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SHARES
OUTSTANDING / FULLY DILUTED
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MARKET CAP /
CASH
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72.4 million /
77.2 million
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CAD 415 million
/ CAD 65.0 million
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52 WEEK LOW /
HIGH
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TSXV
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CAD 1.75 to
6.68
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313,967
(200-day)
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RECOMMENDATION
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RISK RATING
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BUY
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HIGH
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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
Peter Zihlmann
The Timeless Precious Metal Fund
Peter Zihlman is
an independant Swiss asset manager, who manages the Timeless Precious Metal
Fund and the Sierra Madre Gold and Silver Venture Fund.
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