Rainbow completes phase 1 drilling at Jewel Ridge

2012-12-04 17:11 AT - News Release


Mr. David Johnston reports


Rainbow Resources Inc. has acquired 100-per-cent ownership of 19 patented claims within and contiguous to the Jewel Ridge property in Nevada following completion of a phase 1 drill program that has intersected favourable mineralized zones at the past-producing property. Assay results are expected any time this month. Meanwhile, preliminary assays show near-surface silver and gold mineralization in the first two holes ever drilled at Rainbow's Gold Viking property in the West Kootenay region of British Columbia, with results pending from 10 more holes. Drilling has also intersected near-surface silver mineralization at the International property, which also forms part of the company's 100-per-cent-owned 13,000-hectare Big Strike project in southeast British Columbia.

Jewel Ridge

A phase 1 reverse circulation drill program has been completed at Jewel Ridge along the prolific Battle Mountain-Eureka trend in Nevada. All six holes showed significant mineralized intersections, with continuous silicic alteration, including considerable jasperoid content, hydrothermal breccia and quartz-carbonate replacement textures. Samples were taken every 1.5 metres, along the entire length of each drill hole. Multielement ICP analysis is being completed on all 756 samples, with initial results expected in the near future from ALS Chemex Labs Ltd. in Reno. In addition, numerous rock samples have been submitted to the lab from prospecting over a wide area of the property.

Based on a review of extensive historical data (mostly from before 2000), as well as Rainbow's exploration work carried out last spring and again in November, mineralization at Jewel Ridge appears to be continuous along multiple contacts over a north-south trend of at least four kilometres. A large tonnage sediment-hosted gold deposit is the exploration target. The area is also prospective for carbonate replacement type deposits (gold-silver-lead-zinc).

All six holes intercept mineralized zones

JR-12-04 was drilled on the north side of the past-producing Hamburg pit to intersect and traverse the mineralized zone discovered in the historical hole (HRC-11, 2004) that returned an impressive 2.1 grams per tonne gold over 39.6 metres (94.5 to 134.1 metres). Several mineralized intervals were intercepted in JR-12-04 to a depth of 152.4 metres, including intense silicic alteration, with considerable jasperoid content from a depth of 20 metres to 38 metres.

JR-12-06, drilled 120 metres north of JR-12-04 and toward the east to crosscut HRC-11, intercepted an altered zone with strong affinities to HRC-11, including intense silicic alteration, with abundant jasperoid at various intervals from a depth of 38 metres to the end of the hole (152.4 metres).

The target formations (Hamburg dolomite and Dunderberg shale) were intersected in each of the six holes drilled over a total distance of 200 metres in the past-producing Hamburg pit. Rainbow geologists also collected rock samples from a discontinuous margin of strongly silicified outcrop extending 630 metres immediately north and along strike of the mineralized contact drilled at the Hamburg pit.

Meanwhile, the patented claims Rainbow has acquired (these are not part of the company's joint-venture Jewel Ridge option agreement with Greencastle Resources Ltd.) total 35 hectares and are in the immediate vicinity of an area approximately three kilometres north of the Hamburg pit, where Rainbow geologists have outlined a minimum-500-metre-long altered zone, along trend with old workings, featuring strong oxide staining and heavily silicified rock. The patented claims cover the former-producing Croesus mine (gold, silver, lead and zinc) and were acquired from the DePaoli family for total cash consideration of $75,000 and 500,000 shares payable in three instalments ($25,000 and 200,000 shares upon signing, $25,000 and 150,000 shares April 1, 2013, and $25,000 and 150,000 shares July 1, 2013). The agreement is subject to the approval of the TSX Venture Exchange.

A more extensive phase 2 drill program is planned at Jewel Ridge during the coming first quarter. Moose Mountain Technical Services, Rainbow's resource consultant, is currently organizing extensive historical drill hole data for Jewel Ridge from various sources going back to the 1970s -- the first time such information for the property has been assembled into one common database. These data, along with results from the just-completed program, are being used to create a conceptual Jewel Ridge geological model that will play an important role in advancing the project, in part through defining a multitude of additional high-priority exploration and drill targets.

Barrick Gold's Ruby Hill mine is contiguous to the northern border of Jewel Ridge. Its 2011 annual report stated that, as of Dec. 31, 2011, proven and probable gold reserves at Ruby Hill include 16.8 million tons at an average grade of 1.99 grams per tonne gold, containing approximately 978,000 ounces. Barrick estimates additional mineralization of 107.6 million tons at a grade of 0.72 gram per tonne gold. Total production in 2011 was 127,000 ounces.

Timberline Resources' Lookout Mountain project, immediately to the south of Jewel Ridge, contains 390,000 ounces of measured and indicated gold resources (18,838,000 tonnes at 0.65 g/t Au) and 221,000 ounces of inferred resources (16,679,000 tonnes at 0.41 g/t Au) as reported by Timberline on April 19, 2012.

Gold Viking

Rainbow has intersected silver and gold mineralization very close to surface in the first two holes ever drilled at the Gold Viking property immediately adjacent to the village of Slocan (assays are pending for 10 additional holes, see Nov. 8 news release for more details on drill program).

Preliminary assays show that GV-12-02 returned 45 grams per tonne silver, in addition to 0.6 g/t Au, from 7.1 metres to 11.7 metres. This 4.6-metre interval included two one-metre intercepts that assayed more than 100 g/t Ag through ICP analysis (the grade was beyond the accuracy of the ICP method that was used to assay the silver content). Samples are being resubmitted for fire assay analysis to determine the precise silver and gold content. Meanwhile, GV-12-01 intersected 18.4 g/t Ag over one metre directly beneath the collar of the hole in addition to anomalous silver and gold values in several other short sections. Both holes were drilled in the southern portion of the property immediately next to a road. Four additional holes were drilled in that area, as well as six holes approximately 1,000 metres to the north in the central portion of Gold Viking. The company is eagerly anticipating the balance of the assay results, including any high-grade rechecks, which will be reported once they are received, analyzed and validated.

International property

Initial shallow drilling at Rainbow's International property in August and September has confirmed the presence of a mineralized quartz vein over an 80-metre section approximately one kilometre south of the original high-grade silver and lead discovery reported at the Forgotten claims in the early 1900s. The vein was intercepted in each of the 15 holes and ranged in width from 1.5 metres to six metres (drilled widths). Best results included CB-12-12, which returned 14.4 g/t Ag over 1.7 metres, and CB-12-09, which graded 10 g/t Ag over 2.4 metres. Each intercept also included lead values of greater than 1 per cent. A total of 773 metres were drilled with holes ranging in depth from 9.1 metres to 130.5 metres. The Cabin showing is a quartz vein up to 2.5 metres thick with mineralization in the vein occurring as irregular massive sulphide bodies of galena, pyrite and sphalerite. The exposed vein appears to be conformable to the layering of the host schists with a strike of approximately 290 degrees and dips ranging from five to 20 degrees to the north.

While these assays returned lower values than grab samples collected in this area and elsewhere, drilling tested just a fraction (less than 7 per cent) of the vein structure that historically has been surveyed over a distance of at least 1,200 metres. The Forgotten showing, where grab samples have returned assays as high as 1,148 g/t Ag (33.5 ounces per ton) and 68 per cent lead, was not able to be accessed this season but will be a priority for 2013. In addition, a Fugro electromagnetic survey has outlined a series of promising targets over a potential strike length of seven kilometres.

"We're still in the early stages of exploration at the International, which covers 40 square kilometres and has never been drilled until now," explained Jim Decker, Rainbow's vice-president of operations and technical services. "We're looking forward to testing the original discovery area as we remain convinced the International has excellent potential for hosting a near-surface deposit or series of deposits. We need to continue to look for the source of the high-grade surface showings, and the material that historical reports state was extracted from several adits on the property."

Big Strike project

In addition to continued exploration at the International and Gold Viking properties in 2013, Rainbow is also focusing on its Referendum and Whitewater properties south of Nelson following productive site visits this summer as reported by the company Oct. 19, 2012. Rainbow considers the Referendum and Whitewater properties to be high-priority assets in the 13,000-hectare, eight-property Big Strike land package, and the company is currently finalizing plans to advance these important properties in 2013.

"This has been an extremely valuable initial year for us in terms of broadening our understanding of our West Kootenay project," explained Mr. Decker. "We have assembled a first-rate property package that offers exceptional opportunities for an important discovery, especially after what we've learned over the last 12 months through two drill programs and extensive prospecting. We're much further ahead now than we were a year ago."

Rainbow expands Slocan Valley flake graphite presence

Rainbow is pleased to report that it has more than doubled the size of its land package in the flake graphite region of the Slocan Valley, south and west of the Big Strike project, and now the second largest landholder in this area, which hosts the only producing flake graphite mine in western North America, operated by privately held Eagle Graphite. Rainbow has staked claims covering more than 5,500 additional hectares based on favourable geology and location, beyond the original 4,200 hectares in two large claim blocks announced last spring. Rainbow is examining options to unlock the value of this asset while maintaining its focus on gold and silver exploration through Jewel Ridge and its highest-priority Big Strike properties.

Rainbow's total Kootenay land package at 225 square kilometres

After assembling a combined land position of 225 square kilometres (Big Strike plus Flake graphite project) over the past year, Rainbow has established itself as an exploration leader in the West Kootenay district, with some of the most highly prospective properties in the region for the potential discovery of major new mineral deposits. Together with the more advanced exploration project in Nevada, which will be a major focus of attention during the coming first quarter, Rainbow believes it is in an ideal position to build shareholder value in the year ahead.

Qualified person

Rainbow's disclosure of a technical or scientific nature in this news release has been reviewed and approved by Robert Morris, PGeo, of Moose Mountain Technical Services, who serves as a qualified person under the definition of National Instrument 43-101.

Quality/assurance control and assaying procedures

Rainbow's disclosure of a technical or scientific nature in this news release has been reviewed and approved by Mr. Morris, PGeo, of Moose Mountain Technical Services, who serves as a qualified person under the definition of National Instrument 43-101. MMTS follows a strict quality assurance/quality control protocol, with certified reference material, blanks and duplicate samples inserted with every 25 samples. Two CRM types were used: one as a gold reference and as a high-base-metal reference. The blank samples are also certified blank material. Duplicate samples each represent one-fourth core with the one-half core retained in the core box for future reference. Acme Analytical completed the analytical work for International and Gold Viking samples at its lab in Vancouver. Samples were weighed and crushed before a 250-gram subsample was split out. The subsample was then pulverized to pass 200 mesh and a 15-gram split digested in one-to-one-to-one aqua regia. Analysis was by ICP-MS.

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