Rye Patch To Acquire Florida Canyon Gold Mine

VANCOUVER - Rye Patch Gold Corp. has signed a definitive agreement to acquire 100% ownership of the Florida Canyon gold mine located in Pershing County, Nevada, for total consideration of US$15 million in cash and 20,000,000 common shares of the Company payable at closing, subject to adjustment for outstanding liabilities, plus certain contingent payments . The Company has also signed a commitment letter for a US$27 million credit facility with Macquarie Bank Limited to fund the proposed redevelopment of the Florida Canyon mine.  The Company has engaged Macquarie Capital Markets Canada Ltd. and Canaccord Genuity Corp. with regard to a proposed equity financing to fund the cash portion of the purchase consideration.

The Florida Canyon gold mine is fully permitted, has been in continuous production since 1986 and is currently producing gold from its existing leach pad facilities.  The Company proposes to redevelop the mine, including constructing a new heap leach pad and waste storage facility as well as mining a planned expansion of the Florida Canyon ore body.  Rye Patch expects Florida Canyon to achieve commercial production from the new leach pad in Q1 2017.

Mine Development Associates (MDA) completed a Preliminary Economic Assessment for the Company with an effective date of March 16, 2016, (the "PEA") for the Florida Canyon gold mine. The PEA was completed based on a US$1,000 per ounce gold price for the first two years and a US$1,150 per ounce gold price for the remaining life of mine. 

The Company's decision to place the Florida Canyon mine into production is not based on a feasibility study of mineral reserves demonstrating economic and technical viability, and the Company cautions that historically such projects have a much higher risk of economic or technical failure.

All mining and ancillary equipment required to operate the Florida Canyon mine is in place together with a team of high quality experts experienced in mining a low‑cost operation with a successful 30‑year history.

Following the restart of Florida Canyon, Rye Patch will have cash flow from both a producing mine and from its existing NSR royalty along with a pipeline of nearby, advanced-stage projects to ensure future growth. Significant operational synergies exist with Florida Canyon and the nearby Lincoln Hill and Wilco resource projects.  Oxide resources at Lincoln Hill and Wilco represent additional volume that would contribute to increasing future gold output.

William Howald, the company's President and CEO, commented, "This is truly a unique and transformational opportunity that has fantastic synergies with our existing projects at Lincoln Hill, Gold Ridge and Wilco located 30 kilometers to the south.  We are creating a new and exciting company with anticipated initial annual production of 75,000 ounces gold expected to begin in 2017 with the potential to expand the existing Measured and Indicated Resource of 1.1 million ounces.  Florida Canyon provides Rye Patch with a solid foundation from which to grow and significant exploration upside in and around the mine and throughout the district."