Rio Grande Mining Corp. (TSX VENTURE:RGV) has provided the following corporate update. The Company has signed a non-binding letter of intent with Tru Vision Corp., 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.
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.
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 Otú 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.
Source: Rio Grande Mining Corp.