Rye Patch Gold on Track to Reach 10 Million Ounce Gold Resource

       Rye Patch Gold is ahead of schedule in achieving a promised goal: building a 10 million ounce gold inventory by the end of 2011. In just the past year, the company has increased its NI 43-101-compliant resource base to more than 3 million gold equivalent ounces (349,900 ounces measured, 815,000 ounces indicated and 2,177 million ounces inferred).
       Even better news for the company’s investors is that Rye Patch Gold has announced it is arranging to acquire a 64% interest in the Ren property located 82 kilometers by road northwest of Elko, Nevada, along the Northern Carlin trend, and is approximately 1,500 metres north of Barrick Gold’s Meikle mine. Using a cut off gold grade of 8 g/T Au, reported by Centerra, the Ren property contains 1,652,000 ounces of gold with an average grade of 13.43g/T Au.
       The company’s Wilco Project in Pershing County currently hosts a total 2.872-million gold and gold equivalent ounces (measured, indicated and inferred). Recent drilling at Wilco expanded the Willard and Colado zones and increased the inferred resource by 48% and the measured and indicated resource by about 10%, The Willard and Colado deposits are open along strike and at depth.
       A June resource update for the 100%-owned Jessup Project, further to the southwest in Churchill County, showed a 150% increase to 300,000 ounces of gold (measured and indicated) and a 250% increase to 77,000 ounces of gold inferred. Silver resources were also increased significantly to 5.09 million ounces from 1.65 million ounces (measured and indicated). The inferred silver resource also increased from 286,000 to 1.146 million ounces. Both gold and silver mineralization remains open both down dip and along strike.
       Meanwhile, the apparent richness of the Oreana Trend’s blanket-like stockwork gold zones can only add to those totals. The area is characterized by impressive high-grade gold mineralization with significant silver upside. Drilling also indicates there is substantial mineralized gold porphyry at depth. New discoveries at Gold Ridge/Lincoln Hill and along the Oreana Trend promise to boost the company’s resource inventory significantly.

Location, Location, Location

       The Ren property covers 7.4 square kilometers of the Northern Carlin trend. The southern boundary of the property adjoins Barrick Gold’s Goldstrike property. On the Goldstrike property, Barrick is currently mining from the Meikle mine and has pushed underground working to within a few 100 metres of the Ren property. Barrick is currently developing the Banshee deposit that appears to continue on to the Ren property. The Ren deposit is close to a number of existing gold mining and milling operations and has excellent access to skilled people, power and water sources. With roaster and autoclave milling complexes located within a few kilometers of Ren, custom milling of ores is a viable processing option.
       Rye Patch Gold is arranging to acquire Centerra Gold’s 64% of the project. The remaining 36% is held with Barrick Gold Corporation. The purchase price is approximately US$40 per ounce of gold for Rye Patches pro-rata share of the Carlin Trend resource, and positions Rye Patch as the only junior company with a gold deposit in the Carlin trend.
       Rye Patch Gold’s remaining Nevada properties are located within the emerging Oreana Gold Trend. The trend is roughly 30 kilometers long by about 5 kilometers wide. First defined by discoveries at Rye Patch’s advanced-stage Wilco Project, the trend was further outlined by new high-grade gold and silver discoveries at the company’s Lincoln Hill property and similar discoveries by Midway Gold and Barrick at Spring Valley. Geologic models of the gold mineralization portend that the Oreana Gold Trend could host up to 20 million ounces of gold. Nearly 5 million ounces of gold and significant silver mineralization have been discovered so far along the trend.

Fall Drilling Program Completed on the Oreana Trend Enhances Lincoln Hill and Wilco Projects

       The main focus of the fall drilling program was 14 high-grade gold targets at the 100%-controlled Lincoln Hill deposit Earlier exploration at Lincoln Hill identified gold grades of up to 59 ppm. The 2009 drill campaign totaled 2,508 metres (8,225 feet) of reverse circulation drilling and 557 metres (1,826 feet) of core drilling in 29 drill holes. Core hole, LRC-002, returned 21.19 g/t gold and over 7.0 metres starting at 25.3 metres which continues to show the high-grade nature of the Lincoln Hill area.
       In addition to the high gold and silver values, drilling is showing the quartz stockwork zone has promise for bulk-tonnage gold and silver at Lincoln Hill. Using a gold equivalent grade of 0.34 g/t Aueq, the halo mineralization in the Lincoln Hill target ranges between 10 metres and 79 metres in thickness and has gold and gold equivalent grades ranging between 0.5 g/t Aueq to 2.30 g/t Aueq over an area of 600 metres by 300 metres.
       The first ever NI 43-101 resource estimate will be completed on the Lincoln Hill project once all assays have been integrated into the drill hole database. The Company believes that Lincoln Hill will become its fourth gold resource and will add to Rye Patch’s growing gold inventory in Nevada.

Investment Considerations

       Rye Patch Gold’s potential as a significant player in the resource sector was recognized last year when the Toronto Exchange elevated the company to Tier 1 status just months after it began trading.
       By the end of this year, Rye Patch Gold anticipates again upgrading its resource estimate based on completion its current Phase 3 drilling program. At that time, Rye Patch also will have met, a year early, Newmont’s $3-million spending requirement to earn a 100% interest in the Wilco Project. Newmont can earn back a 70% share by spending $20 million in development work at the project.
       Rye Patch Gold also is looking to add to its mineral property portfolio by acquiring additional gold resource projects from cash- and resource-rich juniors operating in Nevada. By keeping a tight focus on Nevada, and building its resource base through exploration and acquisitions, the company should soon become irresistible to majors such as Newmont and Barrick, who are facing depletion oftheir existing mineral resources in as little as seven years.
       Since it takes about four years to permit a new mine, this suggests the optimal time for a takeover bid for Rye Patch lies only a few years in the future. At that point, the company’s present $10 million market cap should jump significantly – especially when you consider that U.S. Gold’s market cap of $302 million is based on a gold resource inventory that is only a few hundred thousand ounces larger than that of Rye Patch Gold.
       “The major players are already in Nevada. Rye Patch Gold is building up a critical inventory of gold,” says Howald. “We are becoming a gold and silver supermarket for gold producers.”