TORONTO, ONTARIO, March 8, 2012 -- Rainbow Resources Inc. (TSX Venture: RBW) ("Rainbow" or the "Company") is pleased to announce that it has entered into an option agreement to acquire two new gold properties in the West Kootenay region of British Columbia, increasing the size of its "Big Strike" Project by over 20% to nearly 9,000 hectares.
"This acquisition of the Referendum and Whitewater properties immediately southwest of Nelson in a highly favorable geological environment is an ideal fit for Rainbow as we continue our strategy of selectively targeting under-explored gold and silver opportunities in this prolific region and elsewhere in other friendly jurisdictions," explained President David W. Johnston. "Our prospecting and geological teams are considering fresh interpretations and potential new exploration and development options with regard to these important properties."
The 1,486-hectare Referendum Property is approximately 11 kilometres southwest of Nelson and four kilometres north of Rainbow's recently expanded Rhea Property. Minor amounts of gold, silver, lead and zinc were recovered at Referendum in the early 1900's from a shallow shaft, and some artisanal mining occurred as recently as the 1980`s, but this potential quartz-tourmaline stockwork system of sedimentary, metamorphic and volcanic rocks has never been systematically explored. Only very limited shallow drilling has historically been undertaken.
Whitewater, immediately south of Referendum, is strategically located near the head of Snowwater Creek and contiguous to claims recently acquired by Rainbow (see December 16 news release) that enlarged its Rhea Property. Gold-bearing veins were first discovered at Whitewater in the late 1800's and minor production came from short adits between 1890 and 1930. The property comprises 138 hectares. Like Referendum, Whitewater has never been aggressively explored.
Meanwhile, Rainbow Resources anticipates receipt of a technical report by early next week from Moose Mountain Technical Services, the Company`s resource consultant, covering the International, Tin City, President, Gold Viking, Ottawa and Rhea properties.
A cash payment of $25,000 and 200,000 Rainbow shares are payable to Mr. Tom Cherry (the "optionor") upon receipt of regulatory approval with the balance in cash ($420,000) and shares (800,000) payable in annual installments, on the 12-month anniversary of the agreement, over a five-year period as follows:
- 1.$40,000 in cash and 200,000 Rainbow shares after Year 1;
- 2.$80,000 in cash and 200,000 Rainbow shares after Year 2;
3. $105,000 in cash and 200,000 Rainbow shares after Year 3;
4. $135,000 in cash and 150,000 Rainbow shares after Year 4;
5. $60,000 in cash and 50,000 Rainbow shares after Year 5.
The optionor will retain a Net Smelter Royalty (NSR) interest of 1% on the properties. Rainbow will have the right to purchase the NSR at any time for $3,000,000.
Rainbow may earn its 100% interest in the properties at any time as long as it has fulfilled the total commitments with respect to cash and shares.
The option agreement is subject to the approval of the TSX Venture Exchange.
There was an error in the Company's news release February 15, 2012, announcing completion of its private placement of units and flow-through units. The Company issued 6,762,001 units, not 6,612,001 units as disclosed in the news release, resulting in total gross proceeds of $1,134,300.15. The disclosure in the original news release with regard to the flow-through units was correct.
Mr. Jim Decker, P. Eng., director of Rainbow Resources Inc. and a Qualified Person as defined by National Instrument 43-101, has reviewed the contents of this news release.
Rainbow's shares are listed for trading on the TSX Venture Exchange under the symbol RBW.V. Rainbow currently has 32,895,638 common shares issued and outstanding.
For further information: David Johnston (403) 701-2781
Visit our website at www.RainbowResourcesInc.com
Neither the 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.