TORONTO, April 10, 2012 /CNW/ - RX Gold & Silver Inc. ("RX" or
the "Company")(TSX‐V: RXE)(OTCQX:RXEXF) is pleased provide the
following update for the three month period ended March 31,
2012. The Company's full quarterly report including
consolidated financial statements and management discussion and
analysis will be issued on or before May 31, 2012. Third Quarter
Highlights -- Reported approximately 8,615 ounces of gold
equivalent production from its 100% owned Drumlummon Mine in
Montana (the "Drumlummon Mine"), consisting of 6,625 ounces of gold
and 117,635 ounces of silver production, respectively. -- 24,850
tons were milled at an estimated mill head grade of 0.28 oz./ton of
gold and 5.52 oz./ton of silver with mill recoveries for gold and
silver of 91% and 85%, respectively. -- Drilling uncovered two new
potential areas for evaluation mining in the Frankie vein and the
Sampson area of the Drumlummon vein. See "Drumlummon Mine Known
Veins" on the RX website for the location of known veins. -- In
March 2012 surface drills started testing targets in the 9 Hour
Workings area. By mid to late April 2012 drilling is expected to
begin in Drumlummon South (formerly known as the "contested
ground") from the 400 Level. See "Drumlummon Vein Long Section" on
the RX website for drill stations and targets. -- On February 22,
2012 the Company announced an updated mineral resource estimate for
the Drumlummon Mine. The related Technical Report was filed on
April 9, 2012. See "Technical Report" on the RX website. "We made
excellent progress on the mining ramp-up in our first quarter of
expanded evaluation mining at our Drumlummon Mine," commented
Darren Blasutti, President and CEO of RX Gold & Silver Inc.
"Even though our focus was on a lower tonnage rate to ensure good
grades to the mill, our Montana team delivered over 8,500 gold
equivalent ounces in the quarter." "Next quarter will also be very
exciting as we'll begin exploring Drumlummon South in a systematic
way, which has never been done. We'll be looking for the kind of
higher grade ore (over an ounce per ton) that was historically
found in the rest of the Drumlummon vein as well as exploring the
9-Hour Workings that had historic veins up to 45 feet thick."
Operations Update Production The Company continues to evaluate
mining and production procedures and techniques at its 100% owned
Drumlummon Mine and leased Philipsburg mill. The mine averaged 285
tons/day over the quarter with the majority of production coming
from the Charly vein, D Block, and Empire Stopes. At the end of the
quarter, development continued on the 700 level Charly vein access
ramp, the Pixley vein access ramp and the 400 Level rehabilitation
to allow drilling in Drumlummon South. Much of the mineralized
material that has supported the Company's evaluation mining
operations since May 2011 has been sourced from areas not included
in the new resource estimate referenced above. The Company expects
the trend to continue for the foreseeable future, with
approximately one third of production coming from areas not
included in the recent resource estimate. The ramp-up in January
was slower than expected and was the primary contributor to
underperformance against tonnage expectations for the quarter. This
tonnage underperformance was offset by greater grades and
recoveries for both gold and silver, largely attributed to
mineralized material from the Charly vein, such that the overall
recovered gold equivalent ounces met management's expectations.
Mill Agreement During the quarter, the Company finalized an
exclusive multi-year lease agreement with the owners for the
Philipsburg Mill ending in December 2014, contingent on throughput
targets of 92,000 dry tons per annum. The Company was able to
negotiate a mutually beneficial outcome with the mill owner which
provides a steady income stream for the owner and cost savings for
RX while adjusting for a disproportionate benefit to the mill owner
over the Company to rising gold prices under the previous contract.
The contract includes a flat rate per dry ton processed between
gold prices of $1500-$1800 with reciprocal gold prices adjustment
should the average gold trade price per month trade above or below
that range. Operating Permit The Company submitted its application
for a full operating permit ("Operating Permit") prepared by CDM
Smith for the Drumlummon Mine in late December (see January 17,
2012 press release). Under a new law passed by the 2011
Montana Legislature, the Montana Department of Environmental
Quality (the "DEQ") had 90 days to review the Application and
provide a comprehensive set of comments. The review process
has typically been iterative, with several rounds of applicant
submissions, reviews, and revisions until the DEQ was satisfied
that the appropriate level of consideration and analysis had been
provided on issues of concern. Under the new statute, the DEQ's
comments on the initial application are intended to define the full
range of issues that can be raised in subsequent reviews. This
positive change means that a very detailed review must be completed
on the front-end of the application process. As expected, the
result is the development of an exhaustive list of deficiencies by
the DEQ so as to not limit the ability to raise issues during later
reviews that may or may not have been immediately apparent. RX's
application was the first major project run through this new
regulatory process, the length and breadth of the DEQ comment
letter was fully expected, and the Company and the DEQ will
continue to work through this new process together. RX
expects to meet with the DEQ in order to review their comments and
develop a collaborative approach to address substantive issues.
Many of the issues raised can be readily addressed and others may
require more detailed engineering and technical analysis.
However, based on the collective team experience, management
believes that none of the issues raised present unexpected
challenges to the Drumlummon Mine. The permitting process will
require the preparation of an Environmental Impact Statement
("EIS") under the Montana Environmental Policy Act. Timeframes for
preparation of an EIS range from 18 months to several years for
completion and approval. It is important to note, that until the
EIS is complete and an Operating Permit is received, the Drumlummon
Mine is expected to continue to operate under its Small Mine
Exclusion Statement. Furthermore, we will pursue the Operating
Permit in a cost effective manner for RX shareholders. Exploration
Update During the 3(rd) quarter, the Company spent $1.4 million at
the Drumlummon Mine to identify additional resources in areas close
to existing infrastructure and on discovering new resource areas
which could provide potential longer term mining opportunities. The
underground drilling program to explore the Drumlummon South area
from underground was delayed by approximately one month as a result
of drill availability and underground power issues, slowing the 400
Level rehabilitation work. The drilling which was completed in the
quarter explored areas in the southern part of the Drumlummon vein
below previously stoped areas; also the Castletown Vein, the Empire
Vein, the Frankie Vein and the area where the Drumlummon
extension was thought to exist to the north of the mine. The
program was successful in intersecting gold mineralization in six
holes in the Frankie area, one hole in the upper Castletown area
and an additional hole in the lower Drumlummon area. The
lower Drumlummon intersection complements several intersections
obtained in previous drilling in the lower Sampson/# 1 areas to the
south of the Number 2 shaft (See Table 1). The development of a
compilation model of previous drilling and the completion of a
longitudinal section has indicated that there is potential in the
area of the Drumlummon vein below the existing Sampson, Jubilee and
Number 2 stopes (see RX website for "Drumlummon Vein Long
Section"). Further drilling will be focused in this area once an
underground drill is able to be moved to the drill station on the
eastern end of the 400 Level. Many assays for the quarter have not
been received from the commercial laboratory used by RX due to an
approximate four to six week backlog. In order to expedite the
assay process the Company is planning to return assayings to its
in-house lab in the current quarter. According to Mr. Jim Atkinson,
Vice President, Exploration, "The discovery of gold mineralization
in multiple drill holes in the area south of the existing Frankie
workings opens a new area for exploration and potential
development. This area is very close to the existing decline
and could potentially be developed from existing infrastructure if
proven to be economic." (See "Frankie Vein Drill Plan" on the RX
website). Focus for the current quarter drilling will be to
immediately commence exploration of the 9-Hour Workings and the
Drumlummon South area. The first of the two surface drills has been
moved to the 9-Hour Workings and drilling the upper levels of the
deposit has begun. It is anticipated that once the snow has melted
(it is over 10 feet deep in the upper areas) and access has
improved, the second surface drill will begin on Drumlummon
South. By mid to late April, drilling from underground is
expected to commence from the newly rehabilitated 400 Level in
order to begin testing the Drumlummon South area. A planned
airborne survey should be completed in April 2012 and this
information will be used to guide on-going exploration in the
Marysville area. The airborne survey will include magnetic,
electromagnetic, and spectrographic detectors which can be used to
located additional veins and map the geology and alteration in the
Drumlummon Mine vicinity. Once the snow has cleared sufficiently to
allow field work to commence, the previously identified soil
geochemical anomalies (see the Company's press release dated
December 15(th), 2012) will be followed up with detailed soil
sampling lines, mapping, and rock sampling. Table 1: Drilling
Highlights - Q3 2012
______________________________________________________________
|Drill Hole |From |To |Auoz. |Agoz. |Width (Ft) |
|_______________|_______|_______|________|________|____________|
|Frankie Veins | | | | | |
|_______________|_______|_______|________|________|____________|
|RXS12-004 |442 |444 |1.592 |40.51 |2 |
|_______________|_______|_______|________|________|____________| |
|450 |452 |0.632 |4.45 |2 |
|_______________|_______|_______|________|________|____________| |
|490 |498 |0.391 |1.23 |8 |
|_______________|_______|_______|________|________|____________| |
|508 |510 |0.210 |0.27 |2 |
|_______________|_______|_______|________|________|____________| |
|524 |526 |0.148 |0.17 |2 |
|_______________|_______|_______|________|________|____________| |
|564 |566 |0.184 |2.92 |2 |
|_______________|_______|_______|________|________|____________|
|RXS12-007 |238 |242 |0.148 |1.10 |4 |
|_______________|_______|_______|________|________|____________| |
|272 |274 |0.404 |3.44 |2 |
|_______________|_______|_______|________|________|____________| |
|322 |324 |0.112 |0.85 |2 |
|_______________|_______|_______|________|________|____________| |
|410 |416 |0.064 |0.67 |6 |
|_______________|_______|_______|________|________|____________| |
|539 |541 |0.036 |0.16 |2 |
|_______________|_______|_______|________|________|____________| |
|568 |570 |0.916 |1.60 |2 |
|_______________|_______|_______|________|________|____________|
|RXS12-010 |565 |568 |0.35 |1.79 |3 |
|_______________|_______|_______|________|________|____________|
|RXS12-012 |515 |517 |0.124 |0.44 |2 |
|_______________|_______|_______|________|________|____________| |
|610 |612 |0.124 |1.28 |2 |
|_______________|_______|_______|________|________|____________| |
|616 |624 |0.24 |28.42 |8 |
|_______________|_______|_______|________|________|____________|
|RXS12-014 |322 |326 |0.48 |5.29 |4 |
|_______________|_______|_______|________|________|____________| |
|586 |588 |0.11 |1.31 |2 |
|_______________|_______|_______|________|________|____________| |
|669 |671 |0.36 |0.86 |2 |
|_______________|_______|_______|________|________|____________| |
|675 |677 |0.08 |0.54 |2 |
|_______________|_______|_______|________|________|____________|
|RXS12-016 |232 |236 |0.361 |3.15 |4 |
|_______________|_______|_______|________|________|____________| |
|240 |244 |0.582 |5.62 |4 |
|_______________|_______|_______|________|________|____________|
|Drumlummon | | | | | |
|_______________|_______|_______|________|________|____________|
|DDH12-517 |442 |446 |0.06 |0.02 |4 |
|_______________|_______|_______|________|________|____________| |
|450 |452 |0.334 |1.246 |2 |
|_______________|_______|_______|________|________|____________| |
|460 |466 |0.11 |0.41 |6 |
|_______________|_______|_______|________|________|____________|
|Castletown | | | | | |
|_______________|_______|_______|________|________|____________|
|RXS12-017 |19 |25 |0.243 |0.17 |6 |
|_______________|_______|_______|________|________|____________|
True Widths: Since these drill holes were completed from
different drill stations and intersect the veins at various angles
the recovered intersections may not reflect true widths.
QA/QC: RX maintains a QA/QC Program for all assays, whether
completed at the Drumlummon laboratory or at a contract laboratory
including the use of standards, blanks, duplicates. All QA/QC
results are evaluated using a program of QA/QC monitoring.
Both the contract laboratory and the internal laboratory maintain
programs of QA/QC as well. 43-101 Resource Estimate and Technical
Report Update On February 22, 2012, the Company announced an
updated mineral resource estimate that was completed and approved
by Tetra Tech Wardrop ("Tetra Tech"). Subsequent to the
February 22, 2012 press release, assumptions of the spatial
continuity of mineralization were reviewed and revised by Tetra
Tech. Consequently, the mineral resource estimate has been
revised and is reported in the technical report entitled Technical
Report and Resource Estimate on the Au-Ag Drumlummon Mine Project,
Montana, USA (the "Technical Report") which was filed on SEDAR by
RX on April 9, 2012. A number of drill holes which could be
included in each resource category were affected and some drill
hole intersections were rejected by the model which reduced the
"inferred" resources. That is to say, that due to broader
spaced drill hole sampling, the inferred resource category was more
sensitive to changes in the grade continuity resulting in inferred
gold equivalent ounces being reduced depending on the reported
cut-off used. Using the 0.1 ounce per Ton (oz./T) (3.42 gram
per tonne (g/t)) gold equivalent cut-off grade cited in the
February 22, 2012 press release, an illustrative reconciliation
against the mineral resource estimate of gold equivalent ounces
supported by the Technical Report is approximately: -- 52,500 gold
equivalent ounces comprised of 166,063 Tons (150,650 tonnes)
grading 0.316 oz./T (10.83 g/t) versus 52,743 gold equivalent
ounces comprised of 175,356 tons (159,080 tonnes) grading 0.30
oz./T (10.28 g/t) as adjusted "Measured and Indicated" category;
and -- 50,500 gold equivalent ounces comprised of 170,505 Tons
(154,680 tonnes) grading 0.296 oz./T (10.15 g/t) versus 45,307 gold
equivalent ounces comprised of 164,371 tons (149,084 tonnes)
grading 0.276 oz./T (9.46 g/t) as adjusted in the "Inferred"
category. Please see the Company's website for the full resource
estimate table and supporting technical report. Financial Position
Update As of March 31, 2012, the Company had cash of approximately
$1.4 million, accounts payable of $1.2 million and the line of
credit balance was approximately $8.4 million; the line of credit
remains at that level today. The Company also had gold and silver
concentrate with a market value of approximately $10 million as at
March 31, 2012 that is either at smelters or refiners, waiting to
be processed or in our warehouse waiting for shipment. The market
value of the test shipments still to be received by the Company was
approximately $5.4 million gross as at March 31, 2012. The Company
also had approximately $4.5 million of concentrate from evaluation
mining in its warehouse. Also, as stated in fiscal Q2, 2012
MD&A, the Company entered into a relationship with a global
metals trading company in order to more effectively manage its cash
collection cycle. Management continues to anticipate that no
additional capital will be required in the short term to continue
current operations at the Drumlummon Mine and reminds shareholders
of our remaining undrawn line of capital. About RX and the
Drumlummon Mine: RX is a gold and silver mining company focused on
growth in North America. Currently RX is concentrating on
continuing test mining and expanding development at its 100% owned
Drumlummon Mine. The Drumlummon Mine is a bonanza style low
sulphidation epithermal gold and silver deposit with historic
production of approximately one million ounces of gold equivalent.
The mine has never been fully exploited or explored and material
that was once considered waste is now potentially economic. In
addition, the Company has discovered a series of entirely new
high-grade gold and silver veins that remain open for expansion in
three directions. For further information on the Drumlummon Mine,
please refer to the Technical Report, available on the Company's
website and at www.sedar.com. Mr. Jim Atkinson, Vice President,
Exploration and a Qualified Person under Canadian Securities
Administrators guidelines has approved the contents of this news
release. Some of the potential quantities and grades disclosed in
this news release are conceptual in nature. At the current stage of
exploration, there is insufficient drilling to determine the extent
of continuity of the mineralization required to define a mineral
resource for all mineralization at the Drumlummon Mine. It is
uncertain if further exploration will result in certain exploration
targets being delineated as a mineral resource. Quarterly
Conference Call On April 10(th) at 4:30 EDT, the company will be
hosting a conference call to discuss these results. To register
please go to: https://cc.callinfo.com/r/1apz2746uttp1 Dial-in and
webcast login information will be provided by email once
registration is completed. Please submit questions in advance to
inbox@rxgold.com. A recording of the conference call and
presentation materials will be accessible on this website.
Cautionary Statement Regarding Forward Looking Information: This
news release contains "forward‐looking information" within the
meaning of applicable securities laws. Forward‐looking information
includes, but is not limited to, the Company's expectations
intentions, plans, and beliefs with respect to, among other things,
the Drumlummon Mine. Often, but not always, forward‐looking
information can be identified by forward‐looking words such as
"anticipate", "believe", "expect", "goal", "plan", "intend",
"estimate", "may", and "will" or similar words suggesting future
outcomes, or other expectations, beliefs, plans, objectives,
assumptions, intentions, or statements about future events or
performance. Forward‐looking information is based on the opinions
and estimates of the Company as of the date such information is
provided and is subject to known and unknown risks, uncertainties,
and other factors that may cause the actual results, level of
activity, performance, or achievements of the Company to be
materially different from those expressed or implied by such
forward looking information. This includes the ability to develop
and operate the Drumlummon property, risks associated with the
mining industry such as economic factors (including future
commodity prices, currency fluctuations and energy prices), failure
of plant, equipment, processes and transportation services to
operate as anticipated, environmental risks, government regulation,
actual results of current exploration activities, possible
variations in ore grade or recovery rates, permitting timelines,
capital expenditures, reclamation activities, social and political
developments and other risks of the mining industry. Although RX
has attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward‐looking information, there may be other factors that cause
results not to be as anticipated, estimated, or intended. Readers
are cautioned not to place undue reliance on such information. By
its nature, forward‐looking information involves numerous
assumptions, inherent risks and uncertainties, both general and
specific, that contribute to the possibility that the predictions,
forecasts, and projections of various future events will not occur.
The Company undertakes no obligation to update publicly or
otherwise revise any forward‐looking information whether as a
result of new information, future events or other such factors
which affect this information, except as required by law. 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. RX Gold & Silver Inc. CONTACT: Darren
BlasuttiPresident and CEONicole RichardInvestor Relations416 848
9503www.rxgold.com
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