Rio Grande Mining Corp. (TSX VENTURE: RGV) ("Rio Grande" or the
"Company") is pleased to provide the following corporate update.
The Company has signed a non-binding letter of intent (the "LOI")
with Tru Vision Corp. ("Tru Vision"), a private British Columbian
company, which contemplates the acquisition of all of the shares of
Tru Vision by the Company. Tru Vision holds rights to a high-grade
gold prospect known as the 'La Maria Gold Project' (the "La Maria
Property") which is situated 18 kilometres south-southwest of the
town of Segovia, in Antioquia, Colombia, South America.
The LOI
Pursuant to the LOI, Rio Grande and Tru Vision have agreed to
negotiate a definitive agreement (the "Definitive Agreement"),
whereby it is contemplated that Rio Grande will acquire all of the
issued and outstanding common shares in the capital of Tru Vision
(of which there are 13,450,000) from the shareholders thereof in
exchange for Rio Grande issuing 8,406,250 common shares in the
capital of Rio Grande or 1.6 Tru Vision shares for every 1 Rio
Grande share. Upon the closing of the Definitive Agreement, the
parties have agreed that Chris Verrico, president of Tru Vision,
will join the Company as a new director. Unless extended by the
parties, Rio Grande has an exclusive right to acquire Tru Vision
until March 31, 2011.
Closing will be subject to certain conditions including: (i)
satisfactory due diligence as between the parties; (ii) receipt of
all regulatory approvals, including that of the TSX Venture
Exchange (the "TSXV"); (iii) entry into the Definitive Agreement;
(iv) issuance of a technical report on the La Maria Property in
compliance with National Instrument 43-101 of the Canadian
Securities Administrators ("NI 43-101"); (v) completion of a part
and parcel financing as described below; and (vi) closing of
various internal restructuring transactions by Tru Vision.
Tru Vision has rights to acquire a 100% interest in the La Maria
Property in consideration for payments of US$6,500,000, issuances
of 5,000,000 shares and property expenditures of US$6,500,000 to
the vendors staggered over the next 3 year period. Upon earning its
interest, Tru Vision will grant a 2% net smelter royalty to the
vendors.
In conjunction with the completion of the transaction, a
finder's fee will be payable in accordance with the policies of the
TSX-V.
Financing
Pursuant to the LOI, the closing is subject to a part and parcel
equity financing of at least $3,000,000 which constitutes an
integral part of the transaction. The Company anticipates that all
proceeds from the financing will be used in connection with the
exploration and development of the La Maria Property following
closing of the transaction. The Company intends to raise at least
$3,000,000 by way of a non brokered private placement issuing at
least 7,500,000 units of the Company (each, a "Unit") at $0.40 per
Unit. Each Unit will consist of one (1) common share in the capital
of the Company and one (1) share purchase warrant of the Company.
Each warrant will have an exercise price of $0.70 for a period of
two years from the closing date. Securities to be issued pursuant
to the financing will be subject to a four month hold period in
accordance with applicable securities laws and the policies of the
Exchange.
La Maria Property
The La Maria property, which has limited mine production
permitting, is located along the same regional structural trend as
several high-grade vein deposits in the Segovia-Remedios district,
including the famous Frontino Gold Mines where Medoro Resources
Ltd. and Gran Columbia Gold Corp. have completed the acquisition of
Frontino Gold Mines Ltd for $200 million USD and maintain a joint
venture on the project. (Medoro Resources' News Release March 31,
2010 on SEDAR). According to the technical report titled "43-101
Technical Report, Frontino Gold Mines, Antioquia, Columbia" dated
June 9, 2010 by Scott E. Wilson, C.P.G. and Stewart D. Redwood, Ph.
D., and prepared for Medoro Resources Ltd., Gran Columbia Gold,
S.A. and Tapestry Resource Corp., the 43-101 compliant resources at
Frontino Gold Mines include "an Indicated Mineral Resource
(including Probable Mineral Reserves) estimated to contain 315,000
tonnes grading 13.1 g/t Au and containing 132,000 ounces of gold at
a cut-off grade of 7.1 g/t Au" and "an Inferred Mineral Resource
estimated to contain 914,000 tonnes grading 15.4 g/t Au and
containing 453,000 ounces of gold at a cut-off grade of 6.5 g/t
Au." The total recorded production from that operation during the
period of 1869 to 2010 has been estimated at 4.6 million ounces of
gold plus silver, credits (Wilson and Redwood, 2010). These
estimated mineral resources are on an adjacent property and not
necessarily indicative of the mineralization on the La Maria
property.
There are at least eighteen historical underground workings
within the La Maria Property that have extracted undocumented
amounts of gold from mesothermal quartz-sulphide vein structures,
plus there is abundant evidence of many colluvial and alluvial
placer gold deposits along La Maria River drainage within the
property.
During the initial property examination, Mr. James A. McCrea, P.
Geo., collected two rock geochemical samples from the La Maria
shaft. One chip sample that was collected at a depth of 21 metres
within the shaft returned 197.7 grams per tonne gold across a true
vein width of 80 cm, and the second one, a grab sample, that was
collected at a depth of 15 metres from the side of the shaft
returned 78 grams per tonne gold. Samples are not conclusive
evidence of the likelihood of the occurrence of a mineral
deposit.
The La Maria property is largely underlain by granitic rocks of
the Santa Isabel stock which is closely associated with the nearby
Antioquia and Segovia batholiths, the latter being the host of
Frontino Gold Mines' rich gold-bearing quartz-sulphide vein
deposits.
Quartz-sulphide vein structures within the property are commonly
controlled by open-tensional northeasterly and younger
east-northeasterly faults and shears that are related to repeated
lateral movement along the Otu fault system, a major regional fault
system transecting Segovia-Remedios gold mining district. Known
veins have been traced by historical workings over strike lengths
of a few hundred metres to over one kilometre with reported widths
varying from 0.35 to over 2 metres.
Gold mineralization occurs as native gold and electrum hosted in
quartz-sulphide veins and their silicified and altered margins.
According to recent reports, historical mining operations recovered
approximately half of the gold values by crushing and gravity
separation while the rest of the recoverable gold values were
extracted using mercury amalgamation or cyanidization at local
treatment facilities.
Recent exploration work by Messrs. James McCrea, P. Geo., and
Ryan Grywul, G.I.T., examined and sampled 8 underground workings
that were driven on multiple vein structures within the 791-hectare
property. Fifty-two rock geochemical samples have been collected
from various vein structures. The assay results from this sampling
are pending.
Mr. James A. McCrea., P. Geo., a qualified person as defined by
NI 43-101, and independent from the Company has reviewed this news
release and approves all scientific and technical disclosure. All
information regarding Tru Vision and the La Maria Property has been
provided by Tru Vision.
On behalf of the Board of Directors,
Jerry Minni, President & CEO
Statements in this press release regarding the Company which are
not historical facts are "forward-looking statements" that involve
risks and uncertainties. Such information can generally be
identified by the use of forwarding-looking wording such as "may",
"expect", "estimate", "anticipate", "intend", "believe" and
"continue" or the negative thereof or similar variations and
includes the statement that the parties may sign and close the
Definitive Agreement. Since forward-looking statements address
future events and conditions, by their very nature, they involve
inherent risks and uncertainties such as the risk that the closing
may not occur for any reason. Actual results in each case could
differ materially from those currently anticipated in such
statements due to factors such as: (i) the inability of the parties
to consummate the Definitive Agreement; (ii) the inability of the
parties to complete the financing, as proposed or at all; (iii)
fluctuation of mineral prices; (iv) a change in market conditions;
(v) the inability of Chris Verrico to act as a new director of the
Company; (vi) the inability to produce the technical report for any
reason whatsoever; and (vii) the refusal of the TSXV to accept the
proposed transaction for any reason whatsoever. Except as required
by law, the Company does not intend to update any changes to such
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.
Contacts: Rio Grande Mining Corp. Jerry Minni President &
CEO (604) 638-8610
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