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Rio Novo Gold Announces Toldafria Gold Project Exploration Update

Rio Novo Gold provided today an update on its Toldafria Gold Project, located in Caldas Department, Colombia. Rio Novo recently completed an exploration program at the project, consisting of a first-pass drilling program and a complementary bulk sampling program.

The drilling intersected broad zones of low-grade gold mineralization with a core of high-grade veins. However, coarse gold and high assay variance in individual samples suggest that individual assays may not be representative of the overall tenor of mineralization. Rio Novo carried out an underground bulk sampling program to try to mitigate the sampling issue within the high grade vein zones.

Discussion of the Results

The initial 5,034m drilling program identified a number of mineralized structural vein zones at depth which conform and correlate to vein structures previously identified in the tunnel sampling campaign. As expected, the drilling did repeatedly cut through the projected structures; however, the high-grade nature of much of the tunnel sampling was only intermittently replicated in the drilling program.

A bulk sampling program was then implemented as a complement to the DDH program and results are more encouraging than the drilling results. In all cases, bulk samples showed consistent high grade results in the 5-10 g/t range, with coarse and free gold identification being a collateral result of the exercise.

Rio Novo has come to the conclusion that, due to the coarse grained nature and clustered distribution of the gold (the "High-Nugget Effect"), conventional drilling alone is ineffective to determine vein grade and potential resources. However, despite the coarse gold nature of the system, the drilling was able to locate extensive mineralization and, most importantly, was able to intercept and confirm the location of structures, which had been identified within the tunnels, and extend their continuity at depth.

Cross sections of Holes DH-TF-004 and DH-TF-009 show the correlation of the DDH higher grade intercepts to the high grade tunnel samples (please refer to page 10 of the Toldafria Presentation at the following link:

Senior VP Exploration, Brian Arkell stated, "The drilling delineated broad zones of mineralization, and most importantly, confirmed areas of higher grade that are potentially mineable by underground methods. The bulk sampling confirmed our previous assumptions that a significant amount of coarse, free gold is present in the system and that large samples are necessary to accurately access grade. We need to methodically evaluate the best methods to develop this attractive resource. Options would be additional drilling to help to further delineate the structures, as well as underground drifting and large samples to prove up continuity of economic grade. Rio Novo is currently evaluating its alternatives with the project."

Drilling Results

Phase 1 of the drilling program consisted of 17 drill holes totaling 5,034m. Holes were drilled to depths ranging from 150m to 400m, at 45 to 60 degree angles. Holes were drilled primarily east-west, or west-east, in order to cut the dominant north-south structures.

Analysis of the Phase 1 drilling results confirmed the at depth continuity of the vein structures, previously identified in near-surface tunnels. These structural zones generally exhibit a wide area (about 10m to 70m) of lower grade veinlet mineralization running from 0.3 g/t to 0.7 g/t Au, with internal higher grade veins assaying from 5.0 g/t Au to 36 g/t Au in some areas. The structural zones generally exhibit a sericite-chlorite-pyrite alteration halo that can be traced from the drill sections to the underground workings.

Previously executed structural geology suggests that the high-grade drill intercepts at depth are co-relatable to the high-grade in the tunnels. Although the gold zones can be correlated to the tunnels, the average grade assayed at depth in the drilling program is lower than the average grade sampled in the tunnels.

Rio Novo's analysis of the Phase 1 drilling results determined that: 1) Drilling effectively identified vein locations; 2) Coarse gold is common and presented severe sampling problems. High sample variance suggests that accurate representation of gold grade was not determined with any confidence.

A bulk sampling program was carried out to mitigate the effect of the high sample variance.

Results from the drilling and bulk sampling programs are provided in the following link:

Bulk Sampling Program

In addition to the Diamond Drilling Program, Rio Novo executed a Bulk Sampling Program consisting of 12 one-ton samples taken from the project's historical mining tunnels. Each one-ton sample was taken from a 3.0m x 0.4m x 0.3m slot from the back (roof) of existing underground drifts. The sample was then crushed, homogenized and split into 20 samples for fire assay. The remaining reject was further pulverized in a small ball mill and run over a shaker table. Assay services were provided by SGS Laboratories.

Summary assays revealed results averaging approximately 7 g/t Au, with a range of average values from 2.22 g/t to 10.09 g/t Au and individual assay results as high as 46.88 g/t. Moreover, the shaker table tests revealed a significant component of coarse and free gold (see bulk sampling results at Toldafria Presentation, page 6). These confirm the system of narrow, high-grade, coarse gold-bearing veins. The bulk sampling results confirm the coarse grain size of the gold and the resultant challenges around sampling with widely-spaced core drilling.


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