VANCOUVER, BRITISH COLUMBIA, Feb. 10, 2010 (Marketwire) -- Rye Patch Gold Corp. (TSX VENTURE:RPM)(OTCBB:RPMGF) ("Rye Patch" or the "Company") is pleased to announce that it has entered into a binding definitive agreement (the "Agreement") with Centerra Gold (U.S.) Inc. ("Centerra"), a subsidiary of Centerra Gold Inc., for the acquisition of Centerra's participating interest (currently 63.96%) in the Ren property which is the subject of a joint venture (the "Ren JV") between Homestake Mining Company of California Inc. ("Homestake") and Centerra. 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 Ren property consists of 91 contiguous unpatented lode mining claims covering 7.4 square kilometres of the Northern Carlin trend which are under lease to the Ren JV. 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 Nevada Bureau of Mines and Geology (NBMG) compiled and published geologic mapping that shows the Meikle/Banshee geology and structural settings continue onto the Ren property. Using the REN drillhole database, Rye Patch has completed geologic cross sections confirming the NBMG interpretation.
The Company has completed a National Instrument 43-101 ("NI 43-101") compliant resource estimate on the REN property as of the date hereof. The results of the estimate are summarized in Table 1. The corresponding technical report will be filed on SEDAR within 45 days of this news release.
Table 1: REN Project Resource Estimate (February 2010)
Au Au Share
Cut Off Tonnes Grade Contained (63.96%) Gold
Grade Category x 1,000 (g/t) Ounces Ounces
Indicated 4,541 10.29 1,656,000 1,059,177
5 g/t Au ---------------------------------------------------
Inferred 1,135 12.94 520,000 332,592
The gold resource estimate is based on 3-D geologic model that incorporated over 645 individual gold assays, of 5 g/t Au or greater, from 395 drillholes. Holes were established by Reverse Circulation (RC) drilling to the mineralized rock, then completed by drilling out the mineralization with core drilling. Block model grades were interpolated from over 585 five foot down-the-hole composites, that had grades of 5 g/t Au or greater, using Inverse Distance Squared (ID2) estimation techniques. Assays that are greater than 70 g/t Au were capped at 70 g/t Au. SEWC is not aware of any known environmental, permitting, legal, title, taxation, socio-economic, marketing or other relevant issues that could potentially affect this estimate of mineral resources. The mineral resources may be affected by subsequent assessments of mining, environmental, processing, permitting, taxation, socio-economic and other factors.
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 which is the same geologic environment as Barrick's Meikle underground mine. These targets are within 400 metres of the surface and offer additional upside to the known REN resource.
In the known resource, the JB Zone, has expansion potential. The deposit is open to the north, northwest and south. Additional work is warranted to follow up high-grade intercepts such as the 69 zone (RU-69-W2 which returned 13.7 g/t Au over 28.2 metres at a 5 g/t Au cut off) where open-ended, high-grade gold mineralization requires follow up.
"The Ren acquisition will represent a milestone in the Company's goals for building a quality inventory of gold and silver resources in Nevada. This transformational event will elevate Rye Patch to a new level by becoming the only junior mining company controlling over one million ounces of gold on the Carlin trend. In addition, the project contains 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 provide for excellent value to Rye Patch's shareholders. At an acquisition cost of approximately US$30 per ounce of existing resource, completion of the Ren acquisition will be highly accretive to the Company," declared William C. (Bill) Howald, the Company's President and CEO.
The foregoing resource estimate was prepared by Scott Wilson, C.P.G., of Scott E. Wilson Consulting, Inc. ("SEWC"). Mr. Wilson is the "qualified person" as defined under NI 43-101 who is responsible for, and approves of, the technical disclosure in this news release. Mr. Wilson and SEWC are independent of the Company.
Pursuant to the Agreement, the Company will acquire all of Centerra's interest in the Ren JV (comprised of a 63.96% participating interest) for the total purchase price (the "Purchase Price") of US$42,000,000 payable in the following manner:
1. US$2,000,000 on the date (the "First Payment Date") that is no later than two business days after obtaining TSX Venture Exchange acceptance of Rye Patch's acquisition of Centerra's interest and Homestake declining to exercise its pre-emptive rights to acquire Centerra's interest under the Ren joint venture agreement (the "Ren JV Agreement");
2. US$10,000,000 on or before the second anniversary of the First Payment Date, or, at its election, the Company may issue that number of common shares of the Company with an aggregate value of US$5,000,000 or less and pay the balance of the US$10,000,000 to Centerra in cash; and
3. US$30,000,000 on or before the second anniversary of the First Payment Date, or, at its election, the Company may issue that number of common shares of the Company with an aggregate value of US$15,000,000 or less and pay the balance of the US$30,000,000 to Centerra in cash.
Effective the First Payment Date, the Company will perform all of Centerra's obligations under the Ren JV Agreement, including acting as manager. When the Purchase Price has been paid in full, Centerra will transfer its participating interest in the Ren JV to the Company's subsidiary, Rye Patch Gold US Inc.
There are three underlying royalties on the REN property. The first relates to the VEK/Andrus lease which is subject to a 3% net smelter return (NSR) production royalty and covers the eighty-two REN and four UREN claims. The VEK/Andrus lease requires annual advance royalty payments of US$225,000 plus a producer price index (PPI) adjustment based on the March 1987 PPI. In March 2009, the advance royalty payment was US$400,148.37.
The second royalty relates to the Weise lease which is subject to a 4% gross proceeds royalty on the five WS claims, with annual advance royalty payments payable in amounts that vary with the gold price (US$50,000 is payable annually where the gold price is in excess of US$400 per ounce). All advance payments are recoverable from royalties payable after the commencement of production. The Weise lease is subject to a minimum annual royalty of $50,000 once production commences. At a gold price of $350 per ounce or higher, there is an annual work obligation of $10,000 for the WS claims.
The third royalty is the Wallace 3.5% net profits interest (NPI) which applies to the REN and UREN claims and which converts to 3.5% of net sale proceeds if the property is sold to a third party (mergers and transfers to affiliated companies are exempt from the conversion).
About Rye Patch Gold
Rye Patch Gold Corp. is a Tier 1, Nevada-focused and discovery-driven company seeking to build a sizeable inventory of gold and silver resource assets in the mining friendly state of Nevada, USA. The Company's seasoned management team is engaged in acquisition, exploration and development of quality resource-based gold and silver projects. Rye Patch Gold is developing its primary assets - the advanced-stage Wilco project, Lincoln Hill and located within the emerging Oreana gold trend in west-central Nevada and the Jessup project in Churchill County, Nevada. The Company has established gold and silver resource milestones and time frames in order to build a premier resource development company. For more information about Rye Patch Gold, please visit our website at www.ryepatchgold.com.
On behalf of the Board of Directors
William C. (Bill) Howald, CEO & President
This news release contains forward-looking statements, which address future events and conditions, which are subject to various risks and uncertainties. The Company's actual results, programs and financial position could differ materially from those anticipated in such forward-looking statements as a result of numerous factors, some of which may be beyond the Company's control. These factors include: the availability of funds; the timing and content of work programs; results of exploration activities and development of mineral properties, the interpretation of drilling results and other geological data, the uncertainties of resource and reserve estimations, receipt and security of mineral property titles; project cost overruns or unanticipated costs and expenses, fluctuations in metal prices; currency fluctuations; and general market and industry conditions.
Forward-looking statements are based on the expectations and opinions of the Company's management on the date the statements are made. The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.