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Rye Patch Gold Continues Expansion Towards 10 Million Ounces Through Transformational Acquisition
By James West and Claire O'Connor
MidasLetter.com
Thursday, March 11, 2010
Rye Patch Gold (TSX.V:RPM) continues to expand its resource base in the pursuit of a 10 million ounces of gold resource. With the acquisition Centerra Gold’s (TSX:CG) 64% interest in the Ren project, Rye Patch is not only developing resources in the Oreana trend in Pershing County, Nevada, but has now obtained a very advanced project centered in the heart of and surrounded by roughly 60 million ounces of gold within the northern Carlin Trend.
The announcement, made on February 10th , said that “the company has completed a binding definitive agreement, arranged to acquire Centerra Gold (U.S.) Inc.'s 63.96% interest in the Ren project located on the northern Carlin gold trend. The Ren property is a joint venture between Homestake Mining Company of California, a subsidiary of Barrick Gold Corporation, and Centerra Gold (U.S.) Inc., a subsidiary of Centerra Gold Inc. Completion of the acquisition is subject to a waiver of a pre emptive right in favour of Homestake which must be exercised by Homestake within 60 days of notification by Centerra, and is subject to final acceptance of the TSX Venture Exchange.
"The project contains high-grade gold, multiple targets with potential for resource expansion and is located on one of the most prolific gold belts in the world. The close proximity to infrastructure and a strong operating partner in Homestake/Barrick provides for excellent value to Rye Patch's shareholders. Acquisition of an interest in this gold resource propels Rye Patch closer to its corporate resource inventory goal. At an acquisition cost of approximately US$40 per ounce, completion of the Ren acquisition will be highly accretive to the company," commented Bill Howald, the Company's CEO and President.
“The company is not only expanding resources in North Central Nevada along the Oreana trend, we are growing through a substantial acquisition in the Carlin trend,” he said in a recent telephone interview. The Ren project is centered along the northern Carlin trend and has gold mining operations surrounding the project. Within 5 kilometres of the Ren property, the Carlin Trend has produced or has an inventory of over 60 million ounces of gold. The Goldstrike and Meikle complex are within two kilometres of the southern boundary of the property, and the Bootstrap/Arturo and Dee areas wrap around the Ren project on the west and north. Five kilometres to the north, the Rossi underground deposit is producing.
The company is acquiring Centerra’s 64% interest, and the Ren property already has a gold deposit of 2.1 million ounces using an 5 gram per tonne gold cutoff from all categories, and RPM’s share of that will be 1.3 million ounces. It’s hard to believe that we are acquiring those million ounces of gold for roughly $30 per ounce. The purchase price is an extremely good value when you think about the economics of the mines on the Carlin trend.
With the Ren acquisition, Rye Patch Gold will be the only junior company with a gold deposit on the Carlin trend - there are no others. There are juniors that have exploration ground near or around the Carlin trend, but none with a bona-fide gold deposit that is part of the Carlin Trend, so this is a very transformational acquisition for the company.
There are 1.65 million ounces of gold in the measured and indicated category, and a half million ounces of inferred; however, the Rye Patch’s data review shows the Ren property has what we believe is an amazing set of drill targets with significant upside potential. The first priority target sits along the north extension of the Post fault system.
At the Meikle, Goldstrike and Deep Post, the Post fault system is an important control on high grade gold within the northern Carlin Trend. The Post fault, on the Ren property, has not been explored for 1.4 kilometres starting at the southern end of the property. The target has potential to host a Meikle-like (8Mozs of gold) or Deep Post-like (6Mozs of gold) gold deposit within the Devonian-age Popovich limestone along the footwall of the Post fault. Based on the project data, this target has not been addressed in past exploration campaigns. It seems that most of the last 8 years on the property have been spent identifying and delineating the JB zone which is the 1.7 million ounce gold deposit.
In addition, Rye Patch has found through looking at the data several additional targets on the Ren property. We’ll take the next two years to aggressively explore these attractive targets, as well as put some additional work in to the JB deposit (2.1 million ounces gold deposit), but the real blue sky potential is along the Post fault system,” he concluded.
According to the press release of November 18th:
The Ren property consists of 91 contiguous unpatented lode mining claims covering 7.4 square kilometres of the Northern Carlin trend. The southern boundary of the property adjoins Barrick Gold's Goldstrike property. On the Goldstrike property, Barrick is currently mining from the Meikle mine and is developing the Banshee deposits, located approximately 250 metres south of the Ren property. The Meikle/Banshee geology and structural settings continues onto the Ren property.
Rye Patch is prioritizing a number of targets for exploration on the Ren property for drilling in the spring of 2010. The most obvious targets are within the southern portion of the Ren property along the extension of the north-northwest trending Post fault system.
A second target area, located in the north central portion of the property, is the JB zone which hosts the bulk of the existing Ren resource. The deposit footprint, grade and geometry of the JB zone is similar to the operating Meikle mine. There are also several high-grade target zones which have been identified outside the JB zone. A drill program to connect the outlying high-grade drillhole intercepts to the main JB zone is being designed.
The Ren deposit is close to a number of existing gold mining and milling operations and has good access to skilled personnel, power and water sources. With roaster and autoclave milling complexes located within a few kilometres of the property, custom milling of ores is a viable processing option.
"The project contains high-grade gold, multiple targets with potential for resource expansion and is located on one of the most prolific gold belts in the world. The close proximity to infrastructure and a strong operating partner in Homestake/Barrick provides for excellent value to Rye Patch's shareholders. Acquisition of an interest in this gold resource propels Rye Patch closer to its corporate resource inventory goal. At an acquisition cost of approximately US$40 per ounce, completion of the Ren acquisition will be highly accretive to the Company," commented William C. (Bill) Howald, the Company's CEO and President.
Investors, including insiders of Rye Patch Gold itself, have endorsed the acquisition through further investment.
The company announced the closing of a first tranche of a non-brokered private placement announced on December 24th, 2009, issuing 20,830,000 units at $0.25 per unit for gross proceeds of CA$5,207,500. Each unit consists of one common share of Rye Patch half a share purchase warrant. Each Warrant will entitle the holder thereof to purchase one additional share at a price of $0.35 until December 24, 2011.
Kinross Gold Corp, Sun Valley Master Fund, and a private investor, as insiders, subscribed for a total of 5,250,000 units under the Private Placement. The closing of the insiders' Units occurred less than 21 days from the date hereof in order for the Company to complete the first tranche of the Private Placement prior to year end. The remainder of the first tranche was placed with five additional gold funds that represent new investors in Rye Patch. The second tranche (approximately CA$800,000) closed on January 7th with the majority of the tranche filled by another gold fund and long term value investors.
The net proceeds from the Private Placement will be used to facilitate the acquisition by Rye Patch of Centerra Gold (U.S.) Inc.'s 64% interest in the Ren project, to commence a drilling exploration program on the project, as well as for general working capital.
Another Rye Patch property worth keeping an eye on is the Wilco Project. Located in West Central Nevada, approximately 100 miles northeast of Reno, Rye Patch has defined two key gold zones with resources of 625,000 ounces measured and indicated and 1,124,700 ounces inferred.
A press release issued on February 23rd 2010 reports final assay results from the 2009 Wilco drill campaign. Gold assays were received for the seven-hole reverse circulation drill program totaling 2,705 metres (8,870 feet).
According to the press release:
The extent of the Lower Mineralized Zone (LMZ), located at the siltstone/claystone contact, appears to be controlled by the intersection of a dominate N-S fault, and a newly identified NE trending structural zone. As WR-094 indicates (1.5m @ 13.13 g/t Au), this favorable structural intersection (NE and NS) appears to be responsible for the high grade strata-bound mineralization located in the southern part of North Basin along the contact. North of the northeast structural zone, the favorable lithologic contact continues to be hydrothermally altered and returned anomalous gold values.
The Upper Mineralized Zone (UMZ) containing lower-grade oxide mineralization extends northward across the NE structural zone along the eastern part of the North Basin where mineralization becomes enriched in silver. Additional shallow, lower-grade (>3 metres @ 0.17 g/t Au) oxide mineralization was intercepted in WR-088, WR-089 and WR-090 starting at 62 metres, 90 metres and 27 metres respectively, and range from 14 to 47 metres in thickness.
Based on the new drill information, additional high grade gold could be intercepted between the WR-087 and the northeast structural zone. Additional 3-D visualization will be employed to better define this favorable structural intersection. Additional lower-grade strata-bound shallow oxide mineralization, (less than 120 metres from the surface) can be expected along and across the North Basin. Investigation of the contact zone to the north of Willard and especially along the Oreana Trend is also recommended.
"The Wilco drill program shows the upper oxide mineralization continues into the North Basin area, and northeast faults and structural intersections with north-south oriented structures are controlling the high-grade gold encountered in the target area. Based on the new drill information, a follow up program to test the northeast high grade is warranted,” commented Bill Howald.
Exploring under an option agreement with Newmont Mining, Rye Patch can earn a 100% interest in the Wilco project from Newmont by spending $3 million in exploration and development on the project by December 2010. With these recent results on Wilco, Rye Patch believe that they may now be able to achieve that 100% interest.
Regarding future plans, Rye Patch is working towards completing a preliminary economic analysis on their Section Line Discovery and Colado deposit within the Wilco property. They’re also in the process of preparing their first ever resource estimate for the Lincoln Hill project, expected out this Spring, whilst simultaneously planning drilling to commence on the Ren Project in April.
Considering the company’s continuing success and access to opportunities like the Ren and Wilco Projects, and considering the small but significant fact that CEO Bill Howald himself is buying shares in the company, Rye Patch Gold could be one of the winners for 2010.
SOURCE: http://www.midasletter.com/news/10031101_Rye-Patch-Gold-continues-expansion.php
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