Rainy River Resources

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November 19, 2012 Issue

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With their Property in the Rainy River area of Northwestern Ontario showing potentially to be another Bousquet Mining District, Producing 300,00 Ounces of Gold Annually for at least Ten Years, Rainy River Resources is well Positioned for Future Growth

Raymond Threlkeld
President & CEO

Mr. Threlkeld is a seasoned mining professional with more than 30 years of experience in exploration, mine development, mine operations and executive management. Prior to joining the Company in June 2009, Mr. Threlkeld served as President and Chief Executive Officer of Western Goldfields Inc. from 2006 until May, 2009, where he led the team that acquired, developed and put into operation the Mesquite Gold Mine in California three months ahead of schedule and within 2% of budget. During his tenure the market capitalization of Western Goldfields rose from $12 million to over $300 million in less than 24 months. Western Goldfields was successfully merged into New Gold Inc. in June 2009. Mr. Threlkeld also served as Chief Operating Officer of Silver Bear Resources Inc., where he was responsible for the geologic reforming of Silver Bear's Mangaziesky Project in Yakutia, Russia, which resulted in the discovery of a potential world-class silver mining district. In 2004 and 2005 Mr. Threlkeld served as President of South American Operations for Coeur D'Alene Mines Corp., where he was responsible for the operation of the Cerro Bayo, Chile and Martha, Argentina silver-gold mines. From 1996 until 2004, Mr. Threlkeld was employed with Barrick Gold Corp. in the capacity of country manager for Peru and Tanzania, rising to the position of Vice President of Project Development. During his tenure at Barrick he was responsible for placing more than 30 million ounces of gold resources into production in South America, Africa and Australia. Among his accomplishments with Barrick were the recognition and development of the Pierina Gold Mine, Peru and leadership of the teams that developed the Bulyanhulu Mine in Tanzania, the Veladero Mine in Argentina, the Lagunas Norte Mine in Peru and the Cowal Mine in Australia. Mr. Threlkeld also led the feasibility team which developed the Pascua-Lama gold-silver deposit, Chile/Argentina and the operation and eventual closure of the El Indio Mine, Chile. The closure program has set the standard for mine closures in Chile. In addition to the management of more than $2 billion in gold mine development while with Barrick, Mr. Threlkeld oversaw the establishment of social development programs created in the respective countries, which established Barrick as a world leader in mine-local community involvement.

 

About Rainy River Resources:

www.rainyriverresources.com  
Rainy River Resources is focused on exploring and developing a newly discovered gold resource in Northwestern Ontario.


Resources
Gold

Rainy River Resources

1 Richmond Street West, Suite 701
Toronto, Ontario M5H 3W4

416.645.7280
www.rainyriverresources.com  


 

Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – November 19, 2012

 

CEOCFO: Mr. Threlkeld, what is the focus at Rainy River today?

Mr. Threlkeld: The focus of Rainy River today is a de-risking of our project. We have about 8.5 million ounces, across all categories, which we just press-released. We have a preliminary economic assessment that indicates a very profitable project with very low cash cost in a very safe jurisdiction. The next steps are to complete the feasibility study, which will be done in the first half of 2013 and all along de-risk the project. At the same time, we will be looking at types of financing for Rainy River in order to build this project as we finish feasibility and permitting, and move the project into construction, probably around mid-2014.

 

CEOCFO: Rainy River is defining Canada’s newest gold district; would you tell us how?

Mr. Threlkeld: The Rainy River deposits in the Rainy River area had no history of production whatsoever. It is relatively brand-new. We view it as a mining district and we have an extensive land position there which we have accumulated over the years. It is unlike many of the new mines in Canada that have gone into production, whereby these were old producing assets and the companies have taken advantage of the high gold prices to essentially re-open and deepen some of the mines in the Timmins area, or actually mine low-grade, like Detour Gold, around old mines that were much higher grade. We liken our project to the Bousquet mining district - it is the same type of geology and these are very long-term districts. We think that Rainy River is very similar in that it will produce initially 300,000 ounces annually for at least ten years, but we also believe that the mine life will actually extend to 27 to 30 years as we develop the resources more fully and, as we discover, the geology is very permissive for additional discovery.

 

CEOCFO: How did the area stay under the radar screen for so long?

Mr. Threlkeld: The deposit is actually buried by about 25 meters of glacial till, so there is no exposure of rocks. The deposit was discovered by the Ontario Geological Survey in the mid-eighties when they were doing some drilling along provincial roads, trying to promote exploration into western Ontario. They actually hit a little bit of gold on one of these roads and a company called Nuinsco, who was interested in the area, started following up and sampling the glacial till and they found gold grains. By the determination of the angularity and the roundness and the chemistry, they were able to trace what they call a “gold dispersion train” back to an ‘up-ice’ direction where the gold was in the ground and they drilled there. That was in 1994 and 1995 when they made the discovery, and in 1996 and 1997, they became focused on nickel and less gold. Prices went down in that area. The deposit really sat there. In 2005, a group of entrepreneurs in Vancouver heard about this deposit and discovery, bought the property from Nuinsco for $2 million, and proceeded to drill the project, generating a great amount of excitement. I took over as president and CEO in 2009 and we have since drilled from about 3.5 million ounces up to the current 8.5 million ounces, across all categories, and we are now focused on a development scenario.

 

CEOCFO: You talked about alternative financing and ways to de-risk; what is on the table and what is in process?

Mr. Threlkeld: Financing is probably our biggest challenge today as it is for any single asset company. Our biggest challenge is the first $100 million of financing. Our initial capital costs are approximately $700 million to start the construction. We have been looking at different alternatives; one is equity financing, a second one is perhaps a silver stream. Rainy is unique in Canada in that it has a very high silver credit. There is a potential for a significant amount of capital for development to be had by the selling of the silver stream. Then the third method would be your traditional debt market with the bank. We are essentially looking at all alternatives today, although I am probably least favorable toward the silver stream, while on the other hand it certainly is a good method to raise capital and move the project forward.

 

CEOCFO: Is your team in place?

Mr. Threlkeld: We are pretty good to go for the next little bit. Financially, we are in very good shape. We will finish the year with a strong balance sheet, so we have the financing to move the project forward. We put together an extremely talented team that has built mines before and operated before. That has certainly been a big plus for us. Our engineering is very solid. We use a company out of Montreal called BBA, which is the same engineering firm that Detour Gold used, and they also did a significant amount of work for Osisko. One thing that makes us a bit different than the rest of the lower-grade deposits in Canada is our grade. We have a considerably higher grade of 1.45 grams per ton as the mill head grade. Our location in the Fort Francis area is superior and affords us very low-cost infrastructure: there is no camp required, no fly-in, fly-out camps as you would find normally in northern Ontario. This offers a huge advantage. We are ready to go and we are moving forward with feasibility. We are going to move forward with construction.

 

CEOCFO: Do you find the investment market prefers the higher grade or is it really opportunistic as to where the best deal seems to be?

Mr. Threlkeld: It is hard to say. Some are leveraged plays to gold where grade is not as important, but size is more important. Certainly there has been a movement towards wanting higher grades and higher margins. In my mind, it really reduces the amount of risk. We are not as susceptible or we are not as vulnerable to changes in grade or gold price or even capital cost when you have higher grades.

 

CEOCFO: How do you reach potential investors?

Mr. Threlkeld: We have a good network, good analyst coverage. Most of the major banks in Canada cover the Rainy River story and put out analyst reports to potential investors on our activity, so that is one way. The other way is through the banks and the efforts of the banks to market us, the banks want to trade our stock. They are bullish on our company. I just spent six weeks marketing all over Canada, eastern US, some of the people were in western US, Western Canada, and then we went to Europe. We take a very active view in getting out to the gold funds and potential investors and that has been the lifeline, especially for a junior company to market. Some people know what you are doing and look at the potential that we have.

 

CEOCFO: What is your take on the price of gold and the economy?

Mr. Threlkeld: I am not an economist, I am a geologist, but obviously I am bullish on the gold or we probably would not be in this business. Certainly the amount of quantitative easing in the US is a big factor. The other factors are the debt in the US and the debt in Europe that is accumulating, I think it bodes well for the price of gold and I see it continuing upward. I am not a big fan of great swings in the price of gold because that means the underlying economy is just getting worse, but I do not see the price of gold decreasing at all in the short-term. I do not see a turnaround in either US debt or European debt situation for quite a while, so I think the gold price is going to continue to be very strong and this bodes well as an opportunity for shareholders.

 

CEOCFO: What challenges if any other than raising money do you see with the project?

Mr. Threlkeld: I mentioned de-risking, we are continually de-risking by putting in the resources and improving the quality of the resources. The other one is producing feasibility study that is fully engineered. It all goes down to investor sentiment, the investors who invest in gold like liquidity and high margins, which we do have, with a very high grade. They want to eliminate risk and the risks are financing, engineering, permitting, and execution. We know we can execute and we are in the permitting phase, so we see no impediments there. We are very well engineered, so it is a matter of convincing the investor that everything is working and can go. It is a matter of getting out and telling our story and providing the details necessary to keep this going.

 

CEOCFO: Why should the business and investment community pay attention to Rainy River?

Mr. Threlkeld: This is 300,000 ounces of annual production in a very safe jurisdiction with very low infrastructure cost. It is $ 450 an ounce for the first five years. It has very manageable capital and very low capital cost of about $700 million. Those are the key features. I cannot stress enough the ability to manage our capital and the 300,000 ounces in annual production in Northwestern Ontario. It is extremely solid and there is great upside potential.

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“We liken our project to the Bousquet mining district - it is the same type of geology and these are very long-term districts. We think that Rainy River is very similar in that it will produce initially 300,000 ounces annually for at least ten years, but we also believe that the mine life will actually extend to 27 to 30 years as we develop the resources more fully and, as we discover, the geology is very permissive for additional discovery.” - Raymond Threlkeld

 

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