Information has been incorporated by reference in this short form prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Secretary of Rainy River Resources Ltd. at Suite 302 - 1620 West 8th Avenue, Vancouver, British Columbia V6J 1V4, Canada, telephone: (604) 639-4456, and are also available electronically at www.sedar.com.

 

New Issue

Preliminary Short Form Prospectus

C$57,502,500 10,455,000 Shares

November 19, 2012

 

Rainy River Resources Ltd. (the “Company” or “Rainy River”) is filing this short form prospectus (“Prospectus”) to qualify the distribution (the “Offering”) of 10,455,000 common shares of the Company (the “Offered Shares”) at a price of C$5.50 per Share (the “Offering Price”). The Offered Shares will be sold and issued pursuant to an underwriting agreement (the “Underwriting Agreement”) dated as of November 19, 2012 between the Company and National Bank Financial Inc. and BMO Nesbitt Burns Inc. as lead underwriters (the “Lead Underwriters”), and including Scotia Capital Inc., CIBC World Markets Inc., RBC Dominion Securities Inc., Casimir Capital Ltd., Desjardins Securities Inc., Paradigm Capital Inc. and UBS Securities Canada Inc. (collectively, the “Underwriters”). The Offering Price was determined by negotiation between the Company and the Lead Underwriters with reference to the market price of the common shares of the Company (the “Common Shares”). See “Plan of Distribution”. The Offering Price has been publically disclosed in a press release of the Company dated November 14, 2012.

The Common Shares are listed and posted for trading on the Toronto Stock Exchange (“TSX”) under the symbol “RR”. On November 13, 2012, being the last day on which the Common Shares traded prior to the announcement of the Offering, the closing price of the Common Shares on the TSX was C$5.97.

The Company has applied to list the Offered Shares and the Additional Shares (as hereinafter defined) distributed under this Prospectus on the TSX. Listing will be subject to the Company fulfilling all the listing requirements of the TSX.

 

Price: C$5.50 per Share

 
 
 
 

Per Share........................................... Total(3) ................................................

Notes:

Price to the Public

C$5.50 C$57,502,500

Underwriters’ Fee(1) C$0.22 C$2,300,100

Net Proceeds to the Company(2)

C$5.28 C$55,202,400

 
  1. (1)  The Company has agreed to pay the Underwriters a cash fee (the “Underwriters’ Fee”) equal to 4.0% of the gross proceeds realized from the completion of the Offering and any exercise by the Underwriters of the Over-Allotment Option (as hereinafter defined).

  2. (2)  After deducting the Underwriters’ Fee which will be paid from the net proceeds of the Offering.

  3. (3)  The Company has granted the Underwriters an option (the “Over-Allotment Option”), exercisable by the Underwriters in whole or in part at their sole discretion upon giving written notice to the Company at any time until the date that is 30 days following the Closing Date, to purchase up to an additional 1,568,250 Common Shares (each, an “Additional Share”) on the same terms as set out above in respect of the Offered Shares, to cover over-allotments, if any, and for market stabilization purposes. A person who acquires Additional Shares pursuant to the over allocation position of the Underwriters acquires those securities under this Prospectus, regardless of whether the over-allotment position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases of Common Shares by the Underwriters. If the Over- Allotment Option is exercised in full, the total “Price to the Public”, “Underwriters’ Fee” and “Net Proceeds to the Company” will be C$66,127,875, C$2,645,115 and C$63,482,760, respectively. See “Plan of Distribution”.

The Underwriters, as principals, conditionally offer the Offered Shares, subject to prior sale, if, as and when issued by the Company and accepted by the Underwriters, in accordance with the terms and conditions contained in the Underwriting Agreement referred to under “Plan of Distribution” and subject to the approval of certain legal matters on behalf of the Company by Bull, Housser & Tupper LLP and on behalf of the Underwriters by Fraser Milner Casgrain, LLP. See “Plan of Distribution”.

Underwriters’ Position Maximum Size

Over-Allotment Option........................ Option to purchase up to 1,568,250 Additional

Shares

Exercise Period Exercise Price

Up to 30 days following Offering Price the Closing Date

 
 
 
 

This Prospectus qualifies the distribution of the Offered Shares, the grant of the Over-Allotment Option, and the distribution of the Additional Shares issuable on exercise of the Over-Allotment Option.

Subscriptions for Offered Shares will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. The completion of the sale of securities pursuant to the Offering (the “Closing”) is expected to take place on December 3, 2012, or such other date as the Underwriters and the Company may mutually agree, but in any event not later than 42 days following the date of a receipt for the final short form prospectus for the Offering (the “Closing Date”).

Other than in respect of the Offered Shares offered or sold to purchasers in the United States, which will be represented by individual certificates, the Offered Shares will be delivered under the book-based system in registered or electronic form to CDS Clearing and Depository Services Inc. (“CDS”) or its nominee and deposited with CDS on the Closing Date, against payment of the aggregate purchase price for the Offered Shares. A purchaser of Offered Shares (other than a purchaser of Offered Shares in the United States or that was offered the Offered Shares in the United States) will receive only a customer

confirmation from the registered dealer through which the Offered Shares are purchased. See “Plan of Distribution”.

In connection with the Offering, the Underwriters may over-allot or effect transactions that stabilize or maintain the market price of the Common Shares at levels other than those which might otherwise prevail on the open market. Such transactions, if commenced, may be discontinued at any time. Furthermore, the Underwriters may offer the Offered Shares to the public at a price lower than C$5.50 per Share. See “Plan of Distribution”.

The Underwriters propose to offer the Offered Shares initially at the Offering Price. After the Underwriters have made a reasonable effort to sell all of the Offered Shares offered hereby at that price, the Offering Price may be decreased, and further changed from time to time to an amount not greater than the Offering Price, and the fee realized by the Underwriters will accordingly also be reduced by the amount that the aggregate price paid by the purchasers for the Offered Shares is less than the gross proceeds paid by the Underwriters to the Company.

An investment in the securities being offered under this Prospectus is highly speculative and involves significant risks that should be carefully considered by prospective investors. The risks outlined in this Prospectus and in the documents incorporated herein by reference should be carefully reviewed and considered in connection with an investment in such securities. See “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”.

The registered office of the Company is located at Suite 302 - 1620 West 8th Avenue, Vancouver, British Columbia V6J 1V4, Canada. The head and principal office of the Company is located at 1 Richmond Street West, Suite 701, Toronto, Ontario, M5H 3W4, Canada.

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS..............................................5 ELIGIBILITY FOR INVESTMENT ................................................................................................................. 7 FINANCIAL AND CURRENCY INFORMATION...........................................................................................7 DOCUMENTS INCORPORATED BY REFERENCE....................................................................................7 RAINY RIVER RESOURCES LTD. .............................................................................................................. 8 MINERAL PROPERTIES..............................................................................................................................9 CONSOLIDATED CAPITALIZATION ......................................................................................................... 37 USE OF PROCEEDS..................................................................................................................................38 PLAN OF DISTRIBUTION .......................................................................................................................... 39 DESCRIPTION OF SECURITIES TO BE DISTRIBUTED..........................................................................42 PRIOR SALES ............................................................................................................................................ 42 TRADING PRICE AND VOLUME ............................................................................................................... 43 RISK FACTORS..........................................................................................................................................44 OTHER MATERIAL FACTS........................................................................................................................50 AUDITOR, TRANSFER AGENT AND REGISTRAR .................................................................................. 50 INTERESTS OF EXPERTS ........................................................................................................................ 50 STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION ................................................................ 50 INDEPENDENT AUDITOR’S CONSENT ............................................................................................... A - 1 AUDITORS’ CONSENT .......................................................................................................................... A - 2 CERTIFICATE OF THE COMPANY ....................................................................................................... A - 3 CERTIFICATE OF THE UNDERWRITERS............................................................................................ A - 4

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus and the documents incorporated by reference herein contain “forward-looking statements” within the meaning of applicable securities legislation. These forward-looking statements are based on projections, expectations and estimates as of the date of this Prospectus or, in the case of documents incorporated by reference herein, as of the date of such documents. Forward-looking statements are provided for the purpose of providing information about management’s expectations and plans relating to the future. All of the forward-looking statements made in this Prospectus are qualified by these cautionary statements.

Forward-looking statements may include, but are not limited to, statements with respect to the future price of gold and silver, the estimation of mineral and resources, the realization of mineral estimates, the timing and amount of estimated future production, anticipated costs of production, estimated capital expenditures, estimated net present values, estimated internal rates of return, estimated operating costs, estimates of capital costs, metallurgical recovery rates, success of exploration and development activities, mine development plans, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks or claims and the anticipated use of the proceeds of the Offering. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “is planned”, “expects” or “does not expect”, “is expected”, “is designed”, “budget”, “scheduled”, “estimates”, “projects”, “forecasts”, “targets”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”.

In particular, this Prospectus, the Annual Information Form (as hereinafter defined) and other documents incorporated by reference herein contain forward-looking statements pertaining to the following:

  • ?  any projections of earnings, revenues, synergies, cost savings or other financial items;

  • ?  any statements of the plans, strategies and objectives of management for future operations,

    including the development of the Rainy River Gold Project;

  • ?  any statements regarding future economic conditions or performance;

  • ?  any statements of belief; and

  • ?  any assumptions regarding the foregoing.

    The actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and in the section of this Prospectus entitled “Risk Factors”:

  • ?  fluctuations in gold and other metals prices;

  • ?  risks relating to the Company’s ability to generate material revenues or obtain adequate financing for

    its planned exploration and development activities;

  • ?  actual results of current exploration activities;

  • ?  conclusions of economic evaluations;

  • ?  changes in project parameters as plans continue to be refined;

  • ?  possible variations in ore reserves, grade or recovery rates;

  • ?  failure of plant, equipment or processes to operate as anticipated;

  • ?  risks related to the business being subject to environmental laws and regulations which may

    increase costs of doing business and restrict the Company’s operations;

  • ?  delays in obtaining governmental approvals or financing or in the completion of development or

    construction activities;

  • ?  risks related to operating hazards;

  • ?  risks related to the exploration, permitting, development and mining of precious metals;

  • ?  risks related to estimation of mineral resources;

  • ?  risks related to governmental regulation, including environmental regulation;

  • ?  risks related to First Nations rights and title;

  • ?  risks related to competition;

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  • ?  uncertainty of capital costs, operating costs, production, metal recoveries and economic returns;

  • ?  risks related to the uncertainty of the title of assets;

  • ?  the need to attract and retain qualified management and technical personnel;

  • ?  risks related to reclamation activities on properties; and

  • ?  other risks described in the section entitled “Risk Factors” in the Annual Information Form (as hereinafter defined) and in other documents incorporated by reference herein.

    Forward-looking statements provide information about management’s current expectations and plans relating to anticipated future events, and are based on the Company’s current beliefs and assumptions regarding, among other things:

    • ?  future gold and other metals prices;

    • ?  the overall success of the Company’s ability to generate material revenues and to obtain adequate

      financing for its planned exploration and development activities;

    • ?  actual results of current exploration activities;

    • ?  conclusions of economic evaluations;

    • ?  changes in project parameters as plans continue to be refined;

    • ?  future variations in ore reserves, grade or recovery rates;

    • ?  failure of plant, equipment or processes to operate as anticipated;

    • ?  fluctuations in the currency market;

    • ?  the regulatory frame work governing environmental laws and regulations;

    • ?  possible delays in obtaining governmental approvals or financing or in the completion of

      development or construction activities;

    • ?  hedging metal production and key operating inputs;

    • ?  operating hazards;

    • ?  the exploration, permitting, development and mining of precious metals;

    • ?  estimation of resources;

    • ?  capital costs, operating costs, production, metal recoveries and economic returns; and

    • ?  the Company’s ability to attract and retain qualified management and technical personnel.

      Statements relating to mineral resources are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the mineral reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future. Estimated values of future net revenue do not represent fair market value. There is no certainty that it will be commercially viable to produce any portion of the resources.

      Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company’s forward-looking statements are based on the beliefs, expectations and opinions of management as of the date the statements are made, and the Company does not assume any obligation to update any forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change, except as required by law. For the reasons set forth above, readers should not place undue reliance on forward- looking statements. Forward-looking statements are made as of the date of this Prospectus and, other than as required by applicable securities laws, the Company assumes no obligation to update or revise such forward-looking statements to reflect new events or circumstances.

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ELIGIBILITY FOR INVESTMENT

In the opinion of Bull, Housser & Tupper LLP, counsel to the Company, and Fraser Milner Casgrain, LLP, counsel to the Underwriters, based on the current provisions of the Income Tax Act (Canada) (the “Tax Act”) and the regulations thereunder, the Offered Shares, if issued on the date hereof, would be qualified investments under the Tax Act for trusts governed by registered retirement savings plans (“RRSPs”), registered retirement income funds (“RRIFs”), deferred profit sharing plans, registered education savings plans, registered disability savings plans and tax-free savings accounts (“TFSAs”), provided the Offered Shares are listed on a “designated stock exchange” as defined in the Tax Act (which includes the TSX).

Notwithstanding that the Offered Shares may be a qualified investment for a trust governed by a TFSA, an RRSP or a RRIF, the holder of a TFSA, or the annuitant of an RRSP or RRIF, as the case may be, which acquires Offered Shares will be subject to a penalty tax under the Tax Act if such Offered Shares are a “prohibited investment” for the particular TFSA, RRSP or RRIF for the purposes of the Tax Act. The Offered Shares will be “prohibited investments” for a TFSA, an RRSP or RRIF, if: (i) the holder of the TFSA, or the annuitant of the RRSP or RRIF, has a “significant interest” (within the meaning of the Tax Act) in the Company; (ii) the holder of the TFSA, or the annuitant of the RRSP or RRIF, has a “significant interest” (within the meaning of the Tax Act) in a corporation or partnership with which the Company does not deal at arm’s length for the purposes of the Tax Act; or (iii) the holder of the TFSA, or the annuitant of the RRSP or RRIF, does not deal at arm’s length with the Company for the purposes of the Tax Act. Investors should consult their own tax advisors in this regard, including with respect to any potential relief from the application of the prohibited investment rules under an undated letter that the Department of Finance (Canada) provided in 2012 to the Joint Committee on Taxation of the Canadian Bar Association and the Canadian Institute of Chartered Accountants.

FINANCIAL AND CURRENCY INFORMATION

The Company reports in Canadian dollars. Accordingly, unless otherwise indicated, all references to “C$” “$” or dollars in this Prospectus refer to Canadian dollars and any references to “US$” refer to United States’ dollars. The Annual Financial Statements (as defined hereunder) were prepared in accordance with Canadian generally accepted accounting principles. The Interim Financial Statements (as defined hereunder) were prepared in accordance with International Financial Reporting Standards.

On November 16, 2012, the noon exchange rate quoted by the Bank of Canada was C$1.00 equals US$0.9972.

DOCUMENTS INCORPORATED BY REFERENCE

Information has been incorporated by reference in this Prospectus from documents filed with certain securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Secretary of the Company at Suite 302 - 1620 West 8th Avenue, Vancouver, British Columbia V6J 1V4, Canada, telephone: (604) 639-4456 and are also available electronically at www.sedar.com.

The following documents filed by the Company with the applicable securities commissions or similar regulatory authorities in Canada, are specifically incorporated by reference herein and form an integral part of this Prospectus:

  1. (a)  the annual information form of the Company dated March 28, 2012 for the fiscal year ended December 31, 2011 (the "Annual Information Form");

  2. (b)  the audited annual consolidated financial statements of the Company for the fifteen-month period ended December 31, 2011 and for the fiscal year ended September 30, 2010 together with the notes thereto (the “Annual Financial Statements”) and the independent auditors' report thereon;

8

(c) the amended management's discussion and analysis of the Company for the fifteen-month period ended December 31, 2011;

  1. (d)  the unaudited interim consolidated financial statements of the Company for the three and nine months ended September 30, 2012 and 2011, together with the notes thereto (the “Interim Financial Statements”);

  2. (e)  the management’s discussion and analysis of the Company for the three and nine months ended September 30, 2012;

  3. (f)  the management information circular of the Company dated April 24, 2012 prepared in connection with the Annual General and Special Meeting of the shareholders of the Company held on May 29, 2012;

  4. (g)  the technical report entitled “Preliminary Economic Assessment Update of the Rainy River Gold Property, Ontario, Canada” dated October 12, 2012;

  5. (h)  the material change report of the Company dated October 17, 2012 with respect to the updated and revised positive Preliminary Economic Assessment for its 100% owned Rainy River Gold Project; and

  6. (i)  the material change report of the Company dated November 14, 2012 respecting the Offering.

All documents of the type referred to in section 11.1 of Form 44-101F1 of National Instrument 44-101, Short Form Prospectus Distributions, filed by the Company with the securities commissions or similar regulatory authorities in the applicable provinces of Canada after the date of this Prospectus, and before the completion of the Offering, are deemed to be incorporated by reference into this Prospectus.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this