Rio Grande Mining Corp. (TSX VENTURE: RGV) ("Rio Grande" or the
"Company") is pleased to provide the following update. The Company
continues to move forward with its acquisition of all the issued
and outstanding securities of Tru Vision Corp., a private British
Columbia company ("Tru Vision").
Tru Vision, through its wholly-owned subsidiaries, holds an
option to acquire a 100% interest (the "Option Agreement") in El
Porvenir Minero S.A.S., a private Colombian company ("El Porvenir")
that owns the 'La Maria Gold Project' (the "La Maria Property" or
"Property"), which is located in the Department of Antioquia,
Colombia, 18-kilometres south-southwest of the town of Segovia.
The Company is pleased to announce that the "Technical Report on
the La Maria Property, Municipalities of Remedios and Vegachi,
Department of Antioquia, Colombia" dated September 12, 2011 (the
"Technical Report") has been filed and is available on SEDAR under
the Company's profile. Highlights of the sampling program contained
in the Technical Report include 649.50 g/t au, 598.6 g/t au and
197.60 g/t au (see table below).
The Technical Report was prepared for the Company by J. Douglas
Blanchflower, P. Geo. of Minorex Consulting Ltd. who is a qualified
person under National Instrument 43-101 and who is independent of
both Tru Vision and the Company.
The La Maria Property is situated in the northeastern part of
the Colombian Central Cordillera Andeas along the same regional
structural trend as several high-grade vein deposits in the
Segovia-Remedios district, including those of the famous Frontino
Gold Mines.
Within the Property, there is evidence of numerous historical
underground workings that have extracted undocumented amounts of
gold from mesothermal quartz-sulphide vein structures, plus there
is evidence of many colluvial and alluvial placer gold deposits
along the La Maria River drainage that crosses most of the
Property. The 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' 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 that is situated about 10 km east of the Property
and is part of the Palestina Fault System. Mineralized
mesothermal-type quartz-sulphide vein structures have been traced
by hand trenches, short adits and underground workings over strike
lengths of 100 to over 700 metres and to depths of 20 to 30 metres
down dip.
The Technical Report includes the following results of the
Company's December 2010 follow-up sampling program on the
Property:
During early December 2010, fifty-two samples were collected at
the La Maria Property in the form of rock chips (38 samples), rock
grabs (7), and saprolite (1). The remaining 8 samples were taken
from various stages of the processing circuit of a crusher and ball
mill on the Property.
The follow-up work concentrated on mapping and sampling the La
Clavada 1 vein at the La Maria shaft where the Company had
previously announced rock sample assay results that included 197.7
grams per tonne gold across a true vein width of 80 cm taken from a
depth of 21 metres, and a grab sample that was collected at a depth
of 15 metres from the side of the shaft which returned 73 grams per
tonne gold (RGV-V news release, February 9, 2011). The rest of the
December 2010 follow-up work concentrated on grab sampling
inaccessible mine workings south of the La Maria shaft, where the
La Maria vein is thought to trend, and sampling other underground
workings located within the Property.
Mapping and sampling results from the La Maria shaft confirm
that gold mineralization is hosted in quartz-pyrite
(+/-galena+/-sphalerite+/-chalcopyrite) veins developed at or near
the contact of granodiorite and gneiss. The estimated true vein
thickness at the shaft is 0.3 to 0.4 metres, with local thicknesses
up to 0.8 metres. Twenty chip samples of the vein and wall rock
from surface to a vertical depth of 16.4 metres and summarized in
the following table.
Vein chip samples 15016 to 15018 and 15020 were collected 6.4
metres vertically below surface. Vein chip samples 15024 to 15026
and 15028 to 15030 were collected 16.4 metres vertically below
surface. Sample 15002 is a chip of wall rock hosting
quartz-sulphide veinlets at surface.
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Sample Material Au Ag Pb Zn Cu
No. Lgth (m) Sampled g/t g/t ppm ppm ppm
---------------------------------------------------------------------------
15001 1.30 Schist. less less less less less
than than than than than
0.005 2 100 100 10
15002 1.05 Granodiorite/ 24.20 6 1100 300 20
Qz veinlets.
15013 0.75 Granodiorite. 0.010 less less less 10
than than than
2 100 100
15014 0.90 Granodiorite. 0.043 less less less 20
than than than
2 100 100
15015 1.05 Granodiorite. 0.005 less less less less
than than than than
2 100 100 10
15016 0.50 Quartz vein. 0.074 less 100 200 less
than than
2 10
15017 0.30 Quartz vein. 649.50 152 15200 6400 230
15018 0.40 Quartz vein. 2.958 less 200 100 10
than
2
15019 1.00 Gneiss 0.136 less less less 20
than than than
2 100 100
15020 0.70 Quartz vein. 598.6 159 16600 7900 100
15021 1.35 Granodiorite. 0.592 less 100 less 20
than than
2 100
15022 1.30 Granodiorite. 0.104 less less less 10
than than than
2 100 100
15023 1.50 Granodiorite. 0.439 less 100 less 20
than than
2 100
15024 0.50 Quartz vein. 0.449 less 100 200 20
than
2
15025 0.63 Quartz vein. 197.60 34 10800 3900 220
15026 0.90 Quartz vein. 84.80 26 153000 10200 1190
15027 1.50 Gneiss 0.049 less less less less
than than than than
2 100 100 10
15028 0.80 Gneiss(?) 0.114 less 100 less 20
than than
2 100
15029 0.36 Quartz vein. 43.20 11 1400 1400 20
15030 0.80 Gneiss 0.178 less less less less
than than than than
2 100 100 10
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The Company is pleased with the sample results at the La Maria
shaft as well as the anomalous gold results from grab samples taken
from dump piles of collapsed or flooded workings along or near the
inferred strike of the La Maria vein structure. Those grab samples
ranged from less than 0.005 to 24.1 grams per tonne gold and the
workings occur along its inferred strike for a distance of 800
metres.
Samples were delivered to the Acme Analytical Laboratories
(Vancouver) Ltd. preparatory lab in Medellin, Colombia under the
supervision of a geologist. The samples were then crushed,
pulverized, split, and sent to Acme's Vancouver, Canada, laboratory
for gold assays and 24-element ICP analyses. Samples containing
greater than 10 parts per million ("ppm") gold were re-analyzed
with a gravimetric finish.
The author of the Technical Report verified the data disclosed
in the Technical Report by collecting and testing verification
samples. Gold values returned from the verification rock samples
were within reasonable ranges of those reported from nearby Tru
Vision rock samples, recognizing that the samples were collected
across different lengths, had different sample volumes and that the
known gold mineralization has an erratic distribution within the
various vein structures. Gold values from samples that were
collected elsewhere within the Property confirm the exploration
potential of the known and tested mesothermal quartz vein
structures.
The Technical Report has recommended a two-phase work program to
further evaluate the gold mineralization on the Property. The
first-phase program includes: surface mapping, detailed rock
geochemical grid sampling, ground magnetic, and mechanized
trenching. An initial 1,000-metre diamond drilling program is also
planned for this phase to test the strike and down dip extensions
of the La Clavada 1 vein structure. This first phase of work is
intended to test the strike length of known veins and test the
potential of discovering more veins on the Property. Pending the
results of Phase 1, there is a second phase that includes 6,000
metres of diamond drilling to evaluate all resultant high priority
exploration targets. The estimated expenses for the recommended
Phase 1 exploration work is CDN$525,000 and for Phase 2 is
CDN$1,475,000. The Company anticipates that it will have the funds
necessary to complete the first phase of the recommended work
program.
The Company is actively pursuing financing options and plans to
announce the terms of such financing in the near future.
The Company also announces that the terms of the Share Exchange
Agreement dated May 30, 2011 among the Company, Tru Vision and Tru
Vision shareholders which were disclosed in the June 2, 2011 news
release of the Company have been amended. Pursuant to the Share
Exchange Agreement, the Company has agreed to 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 the Company issuing 8,406,250 common shares, so that
the Company will issue one common share to each Tru Vision
shareholder for every 1.6 shares of Tru Vision held. The amendment
to the Share Exchange Agreement dated August 31, 2011 provides
that, in addition to the share exchange set forth in the Share
Exchange Agreement, the Company will acquire all of the currently
issued and outstanding 5,146,799 common share purchase warrants of
Tru Vision (the "Tru Vision Warrants") in exchange for 3,216,749
common share purchase warrants of the Company (the "Rio Grande
Warrants"), with each Rio Grande Warrant being exercisable into one
common share of the Company at an exercise price of $0.80 per
share. The expiry date for 1,250,000 Rio Grande Warrants will be
November 3, 2011 and for 1,966,749 Rio Grande Warrants will be
December 5, 2011, the same expiry dates as the Tru Vision Warrants
for which the Rio Grande Warrants are exchanged. The exchange rate
applied for the exchange of the Tru Vision Warrants and the
exercise price of the Tru Vision Warrants, is the same as the
exchange rate applied to the exchange of the Tru Vision shares.
Upon closing of the transaction the Company anticipates it will
have 31,457,382 common shares issued and outstanding.
The Share Exchange Agreement also provides that the Company will
assume certain obligations of Tru Vision, including loans of Tru
Vision for approximately $225,000 for which payment has been
postponed for a period of one year following closing of the
transaction. These loans were incurred by Tru Vision in connection
with the Transaction and payment made for the Property.
Upon closing of the Share Exchange Agreement, as amended, the
Company will assume all obligations under the amended Option
Agreement. The payments and share issuances to the optionors under
the amended Option Agreement (the "Optionors") are as follows:
1. On or before June 6, 2011, payment of US$100,000 (paid by Tru Vision);
2. On or before August 31, 2011, payment of US$150,000 (paid by Tru
Vision);
3. On or before October 15, 2011, payment of US$600,000;
4. On December 18, 2011, payment of US$500,000;
5. On May 18, 2012, payment of US$500,000;
6. On December 18, 2012, payment of US$1,500,000 and issuance of 2,000,000
common shares; and
7. On December 18, 2013, payment of US$3,000,000 and issuance of 3,000,000
common shares.
Interest at a rate of one percent (1%) per month shall be
calculated and paid on any renegotiated balances, specifically on
US$600,000 which payment date was changed from September 1, 2011 to
October 15, 2011, and on US$500,000 which payment date was changed
from December 18, 2011 to May 18, 2012.
The amended Option Agreement also requires the following
exploration expenditures:
1. US$100,000 on or before June 2, 2011 (completed by Tru Vision);
2. US$400,000 on or before December 18, 2011;
3. US$1,000,000 on or before December 18, 2012;
4. US$2,000,000 on or before December 18, 2013; and
5. US$3,000,000 on or before December 18, 2014.
Upon completion of the terms of the amended Option Agreement,
the Company will own, through its subsidiaries, all the issued and
outstanding shares of El Porvenir, which holds the license to the
Property, subject to a 2% Net Smelter Return royalty in favour of
the Optionors. The shares of El Porvenir are currently being held
in trust by an escrow agent and will not be released to the Company
until the completion of all terms of the Option Agreement.
The Company intends to pay a finder's fee to Level 3 Capital
Management Inc. in connection with completion of the transaction,
by making a cash payment of $85,601.50 and by issuing 214,003
common shares at $0.40 per share.
Upon completion of the transaction, it is anticipated that
Christopher Verrico, President of Tru Vision, will become a
director of the Company, subject to approval of the TSX Venture
Exchange. Mr. Verrico has over 25 years of mine development and
operations experience within British Columbia, Alaska and the
Canadian Territories, managing and contracting open pit mining,
bulk ore handling and northern infrastructure construction
operations. In the past 10 years, Mr. Verrico has focused on
Canadian public junior resource companies, which involve scoping
resource development opportunities throughout the America's, acting
as a director and/or executive officer of a number of public
companies, and providing key participation in raising venture
capital.
The Share Exchange Agreement and all matters relating thereto
are subject to a number of conditions including the acceptance of
the TSX Venture Exchange. The transaction does not involve any
relationship between a Non-Arm's Length Party and the Company, as
that term is defined in the policies of the TSX Venture
Exchange.
Mr. James A. McCrea., P. Geo., a qualified person as defined by
NI 43-101, 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
Rio Grande Mining Corp.
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; (i) the parties may close the Share
Exchange Agreement, as amended; (ii) the Company anticipates having
31,457,382 common shares issued and outstanding on closing of the
transaction; (iii) the Company may pursue financing options or
announce terms of such financing in the near future; (iv) the
Company anticipates having the funds necessary to complete the
first phase of the recommended work program for the Property; and
(v) the Company anticipates having the funds necessary to satisfy
its obligations under the Share Exchange Agreement, including
payment of the Tru Vision loans. 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 of the transaction and/or the financing 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 complete the Share
Exchange Agreement, as amended; (ii) the inability of the parties
to complete any 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;
and (vi) the refusal of the TSX Venture Exchange 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) 683-8610 (604) 683-8605 (FAX)
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