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Last updated on April 19, 2014 at 7:31 EDT

Rainy River Resources’ Project Updated With Higher Grades and Lower Costs

August 29, 2012

RR.TSX

TORONTO, Aug. 29, 2012 /CNW/ – Rainy River Resources Ltd. (“Rainy River”
or the “Company” (TSX: RR)) is pleased to announce receipt of an
updated and revised positive Preliminary Economic Assessment (“PEA”)
for its 100% owned Rainy River Gold Project (“RRGP”) in western
Ontario, Canada.  The information presented below summarizes the
results of a conceptual mine and processing scenario based on the
February 24, 2012 National Instrument 43-101 (“NI 43101″) mineral
resource estimate, which includes assay data up to December 31, 2011. 
All currency amounts in this press release are expressed in Canadian
dollars ($) unless otherwise noted.

HIGHLIGHTS OF THE UPDATED PRELIMINARY ECONOMIC ASSESSMENT

First 10 Years of Production:

        --  Average annual production of 308,000 gold ounces and 478,000
            silver ounces.
        --  Average mill head grade of 1.45 g/t of gold, an increase of 50%
            over the first PEA.
        --  Average open pit grade improves by 39% to 1.25g/t of gold with
            stockpiling of low grade material compared to the November 2011
            PEA open pit grade of 0.90 g/t of gold.
        --  Average underground grade improves by 19% to 4.20 g/t of gold
            compared to the November 2011 PEA underground grade of 3.52 g/t
            of gold.
        --  Average cash costs of US$486perounce gold (including royalties
            and net of silver credits).
        --  Operating strip ratio of 2.5:1 (excluding overburden and
            capitalized waste) compared to the November 2011 PEA operating
            strip ratio of 3.3:1.
        --  Processing throughput averaging 20,000 tonnes per day (tpd).
        --  Production is anticipated for early 1H/2016 for the open pit
            and 2H/2018 for the underground.

Economics

Key Metrics

        --  Life-of-mine pre-tax net present value ("NPV", at a 5% discount
            rate) of $846 million, internal rate of return ("IRR") of 21.0%
            and a payback of 3.8 years based on US$1250 per ounce gold and
            US$25 per ounce silver.
        --  In the current metal price environment, pre-tax net present
            value (NPV 5%) of $1.986 billion, IRR of 36.6%and apayback of
            2.2 years1; Metal price sensitivities are summarized in Table
            1.
        --  Life-of-mine metal production of 3.8 million ounces of gold and
            6.8 million ounces of silver at 91.0% gold recoveries and 67.4%
            silver recoveries.

Open Pit

        --  Initial pre-production capital costs of $694 million (inclusive
            of $100 million in contingency).
        --  Open pit total sustaining capital costs of $340 million
            (tailings, overburden and waste removal, and equipment).
        --  Total capital costs in the open pit decline by $245 million
            from the November PEA.

Underground

        --  Development capital costs of $67 million, commencing in 2016,
            drawn from operating cash flows.
        --  Underground sustaining capital costs of $148 million
            (development, infrastructure and equipment).

Table 1 – Sensitivities to Metal Prices(2)


    Gold, Silver, US$/oz  Base Case
                         $1250 / $25 $1600 / $30 $1800 / $35 $2000/$40

    NPV $ millions             846       1,806       2.364      2,922

    IRR %                     21.0        34.3        41.1      47.5

    1. Discounted cash flow calculated at a gold price of US$1,667 per
       ounce
       and silver price of US$30.37per ounce, with a CDN$/US$ exchange rate
       of $1.0109.

    2. Sensitivities calculated at a CDN$/US$ exchange rate of 1.05.

Raymond Threlkeld, Rainy River’s President and CEO, stated: “Over the
last five months, our team has investigated and quantified options
ranging from a mill having a capacity of 20,000 tonnes per day to
40,000 tonnes per day, conceptual mine plans sized from 4.1 million
ounces gold to 5.7 million ounces of gold, and life spans ranging from
13 to 27 years.

Today, we have chosen the option that represents the lowest risk to our
shareholders and the strongest internal rate of return in a $1,250 per
ounce gold environment.  The resulting project plan represents one of
the highest grade open pits, and highest grade mill throughput of any
current Canadian open pit mine development story at 1.26 g/t and 1.45
g/t, respectively.

Our mine plan averages 308,000 ounces of gold annually for the first 10
years from open pit and underground, a high mill head grade at 1.45 g/t
over 10 years, and a low open pit operating strip ratio at 2.50:1.

The higher grades mined in the open pit and underground enable the cash
costs in the first five and ten years to be US$450 and US$486 per ounce
gold, respectively, placing the Rainy River Gold Project’s costs in the
second lowest quartile of cash costs for gold producers worldwide.

The underground portion of the Project, due to be in full production in
the fifth year of the open pit operations, adds over 800,000 ounces of
gold at a diluted grade of 4.20 grams per tonne for gold and 5.30 grams
per tonne for silver, which represents a gold grade increase of 19%
from the last PEA.

The Company will continue to review the potential for future operations
to be enhanced by increasing throughput or adding mine life, or both. 
This project design, with the exploration potential in our district,
makes the Rainy River Gold Project stand out in Canada as a low risk,
high return project, while retaining the option to mine more ounces in
the future.”

AREAS OF UPSIDE POTENTIAL FOR PROJECT

        --  Potential to extend mine life
        --  Potential to increase mine/mill throughput
        --  Expansion at depth, underground
        --  District exploration upside

RAINY RIVER GOLD PROJECT – PRELIMINARY ECONOMIC ASSESSMENT

Contributors
The independent PEA was prepared through the collaboration of a number
of industry-recognized consulting firms, including BBA Inc. (“BBA”,
Montreal, QC), Golder Associates (“Golder”, Vancouver, BC), AMEC
Environmental & Infrastructure (“AMEC”, Mississauga, ON), Merit
Consultants International Inc. (“Merit”, Vancouver, BC) and SRK
Consulting (Canada) Inc. (“SRK”, Toronto, ON). These firms provided
resource estimates, design parameters and cost estimates for mine
operations, process facilities, major equipment, waste storage,
reclamation, permitting and operating and capital expenditures.  A
summary of contributors to the PEA is included in Table 2 below.

Table 2 – PEA Contributors


    Responsibility Area                          Contributor

    Geology                               Rainy River Resources

    Resource Estimate                                  SRK

    Mine Planning                                BBA, Golder

    Geotechnical, Tailings, Hydrogeology              AMEC

    Flow sheet and Plant Design                        BBA

    Tailings Management Facility                      AMEC

    Infrastructure, Power Supply                       BBA

    Construction Management                           Merit

    Environmental Baseline and Permitting             AMEC

    Financial Modeling                                 BBA

Mineral Resources
The study assumes that both open pit and underground mining methods
would be used for resource extraction.  Tables 3 (a) and 3 (b)
summarize the February 24, 2012 mineral resource estimate, which forms
the basis of the PEA.

Table 3 (a).  Mineral Resources Statement at February 24, 2012


    Area                     Tonnes   Grade  Grade      Au         Ag
                           (millions) Au g/t Ag g/t   ounces     ounces
                                                    (millions) (millions)

    Open pit (M&I)            135.93   1.12   2.33      4.92      10.16

    Open pit (Indicated,      11.48    0.81   3.37      0.30       1.24
    out-of-pit)

    Underground (M&I)          3.17    4.33   4.93      0.44       0.50

    TOTAL M&I                 150.58   1.17   2.46      5.66      11.91

    Open pit (Inferred,       22.68    0.93   2.18      0.68       1.59
    in-pit)

    Open pit (Inferred,       64.44    0.67   2.35      1.39       4.87
    out-of-pit)

    Underground (Inferred)     1.17    4.12   5.82      0.16       0.22

    TOTAL Inferred            88.29    0.78   2.35      2.22       6.68

    Mineral resources are reported in relation to an elevation determined
    from conceptual
    pit shells, and not all of the inferred resources lie within the
    optimized pit shell. Mineral
    resources are not mineral reserves and do not have demonstrated
    economic viability.
    All figures are rounded to reflect the relative accuracy of the
    estimate. All assays have
    been capped where appropriate.

    Open pit mineral resources are reported at a cut-off grade of 0.35 g/t
    gold;
    underground mineral resources are reported at a cut-off grade of 2.5
    g/t gold.
    Optimized cut-off grades are based on a gold price of US$1,100 per
    ounce, a silver
    price of $22.50 per ounce and a foreign exchange rate of 1.10 Canadian
    dollars to
    1.0 US dollar.  Metallurgical recoveries include gold recovery of 88%
    for open pit
    resources and 90% for underground resources, with silver recovery at
    75%.

    The mineral resource statement was prepared by Dorota El-Rassi, P.Eng.
    (APEO #100012348) and Glen Cole, P.Geo (APGO #1416), of SRK Consulting
    (Canada) Inc., both "independent qualified persons" as that term is
    defined in
    National Instrument 43-101.

Table 3 (b).  Mineral Resources Statement at February 24, 2012, Silver
Zone.


    Silver Zone  Tonnes  Grade  Grade   Grade     Au     Ag    AuEq
                ('000 t) Au g/t Ag g/t AuEq g/t ounces ounces ounces
                                                ('000) ('000) ('000)

    Open pit       126    0.23  48.07     1.07   3.18  654.79 14.57
    (Indicated)

    *Excluded from previous table. Mineral resources are reported in
    relation to conceptual
    pit shells.  Mineral resources are not mineral reserves and do not have
    demonstrated
    economic viability. All figures are rounded to reflect the relative
    accuracy of the estimate.
    All composites have been capped where appropriate.

    **Open pit mineral resources are reported at a cut-off of 0.35 g/t
    gold-equivalent.
    Gold-equivalent grade is based on a gold price of US$1,100 per ounce, a
    silver price
    of $22.50 per ounce and a foreign exchange rate of 1.10 Canadian dollar
    to 1.0 US dollar.
    Metallurgical recoveries include gold recovery of 88% with silver
    recovery at 75%.

    Qualified persons - The mineral resource statement was prepared by
    Dorota El-Rassi,
    P.Eng. (APEO #100012348) and Glen Cole, P.Geo (APGO #1416), of SRK,
    both
    "independent qualified persons" as that term is defined in National
    Instrument 43-101.
    Rainy River's exploration program in Richardson Township is being
    supervised by Kerry
    Sparkes, P.Geo. (APEGBC #25261), Vice-President Exploration and a
    Qualified Person
    as defined by National Instrument 43-101. The Company continues to
    implement a
    rigorous QA/QC program to ensure best practices in sampling and
    analysis of drill core.

The above section summarizes mineral resources and excludes the impact
of mining dilution, which is the incidence of waste rock extracted
together with mineralized material.

For the PEA, open pit mining dilution is calculated as 10.23% at 0.17
g/t gold and 1.00 g/t silver. Underground mining dilution is calculated
as 10% at 0.32 g/t gold and 0.81 g/t silver.  Open pit resources have
been calculated assuming a material loss of 5%. Underground resources
have been calculated assuming a material loss of 5%.  With an open pit
cut-off grade of 0.30 g/t gold-equivalent, and an underground cut-off
grade of 2.5 g/t gold-equivalent, the resulting tonnages and grades for
the open pit and underground conceptual mine plans are shown in Table
4:

Table 4.  In-Pit and Underground Mineral Resources in PEA (diluted)


    Area                   Tonnes Grade  Grade   Au Moz    Ag Moz
                            (M)   Au g/t Ag g/t Contained Contained

    Open pit (M&I)         101.2   0.94   2.55     3.060     8.287

    Underground (M&I)       6.20   4.22   5.06     0.923     1.107

    TOTAL M&I              107.37  1.13   2.69     3.982     9.394

    Open pit (Inferred)      8.1   0.65   2.21     0.168     0.573

    Underground (Inferred)  0.60   3.95   7.92     0.083     0.168

    TOTAL Inferred          8.66   0.88   2.61     0.251     0.741

    In-pit and underground Mineral Resources are exclusive of Mineral
    Reserves. Mineral Resources that are not Mineral Reserves do not
    have demonstrated economic viability.

    In-pit Resources have been estimated using a cut-off grade of 0.30
    g/t AuEq and Underground Resources have been estimated using a
    cut-off grade of 2.5 g/t AuEq.

    In-pit Resources have been estimated using a dilution of 10.23% at
    0.17 g/t Au and 1.00 g/t Ag and Underground Resources have been
    estimated using a dilution of 10% at 0.32 g/t Au and0.81 g/t silver.

    In-pit Resources have been estimated using a mine recovery of 95%
    and Underground Resources have been estimated using a mine
    recovery of 95%.

Mining
The PEA assumes the processing of an average 20,000 tonnes per day of
material from a combination of open pit, underground and stockpile
reclaiming operations.

The open pit mine and stockpiling reclaim plan is a 16-year plan that
utilizes a stockpile strategy to maximize grade to the mill and mines
to a depth of 400 metres below surface.

The RRGP open pit is designed as a conventional surface mining operation
producing mill feed at a rate of 18,000 to 20,000 tonnes per day. The
primary equipment fleet would consist mainly of two 26 m(3) hydraulic shovels, two 30 m(3) wheel loaders, 220 tonne-class haul trucks, and a fleet of support
equipment. Production drilling will be carried out by diesel-powered
track-mounted units.  Operating bench heights of 10 metres have been
assumed for mining operations.

Over the life of the open pit, a total of 311 million tonnes of waste
rock and 72 million tonnes of overburden material would be moved. 
During the pre-production period, 19 million tonnes of overburden
material and 13 million tonnes of waste rock would be removed as part
of development work, with overburden stripping completed within the
first 4 years of mill operations.  Waste rock-to-mill-feed operating
strip ratios average 2.50 during the first ten years of operations,
after capitalizing waste material. Waste material totalling 38 million
tonnes ($65.0 million) is to be capitalized during the mine life where
the strip ratio exceeds the average waste rock-to-mill-feed ratio of
2.84 for the pit. Mined waste rock and overburden material would be
stored in nearby stockpiles or used in dyke construction activities
associate with the tailings impoundment.

Underground mining would be conducted with mechanized cut-and-fill
(MCAF) methods with 5 metre high lifts, designed to deliver 2,000
tonnes per day of feed to the processing plant.  Underground workings
would be developed from a primary 5-by-5 metre ramp access and, over
time, from the open pit, as the pit deepens.  A fleet of 5.4 m(3) scooptrams and 22 m(3 )trucks would load and haul the material to surface. Development of the
underground mine would start in Year 1 of open pit mine operations,
commence small scale production by Year 3, and begin producing at full
rates by Year 5.

Both mine areas would deliver material to a central gyratory crusher for
primary reduction and delivery to the processing plant.

Metallurgy and Processing
Metallurgical testing has been conducted over a period of almost three
years at SGS Canada Inc. in Lakefield, Ontario.  Based on the results,
BBA has developed a conventional flow sheet including:

        --  primary crushing and grinding;
        --  gravity recovery;
        --  whole-ore leaching followed by a carbon-in-pulp circuit;
        --  electro-winning and smelting to produce gold doré.

Major equipment for the processing facility includes a gyratory crusher
sized for 20,000 tpd, a 34′ x 20′ semi-autogenous (“SAG”) mill and a
24′ x 40′ ball mill.  Mill feed would be ground to a P(80 )size of 75 µm before entering a leaching circuit for final metal
recovery.

Metallurgical recoveries for gold and silver over the life of the mine
are expected to average 91.0% and 67.4% respectively. One tailings pond
is envisioned.

Infrastructure

The RRGP benefits from world-class infrastructure, services and
available labour in the immediate area.  The project site is located
only 65 km from the town of Fort Frances (population 8,000) and is
accessible year-round by a network of sealed provincial highways.

Infrastructure is anticipated to include:

        --  Plant site and haul roads, gate house, parking, bus station and
            weigh station;
        --  Separate administration building;
        --  Assay lab;
        --  Mine maintenance garage, warehouse;
        --  Fuel storage facilities;
        --  Fresh water supply and fire protection;
        --  Sewage treatment;
        --  One tailings pond;
        --  Construction camp for the project development phase. A camp is
            not anticipated during operations.
        --  Power to the project supplied by a new 17 km long 230-kV
            transmission line connecting to the provincial grid, with total
            power draw expected to be 54.2 MW at peak production.

Operating and Capital Costs
Total operating costs for the RRGP are summarized in Table 5 (a) as
follows:

Table 5 (a) – Average Life of Mine Operating Costs (in Canadian dollars)


    Cost Structure                         Unit          Costs per Unit

    Open pit mining (mineralized and waste C$ / t mined        $1.89
    rock)

    Underground mining (cut & fill)        C$ / t mined        $70.00

    Open pit mining (mineralized and waste C$ / t milled       $6.36
    rock)

    Underground mining (cut & fill)        C$ / t milled       $4.11

    Processing                             C$ / t milled       $8.73

    General & Administrative               C$ / t milled       $1.00

    Refining expenses                      C$ / t milled       $0.14

    Royalties                              C$ / t milled       $0.30

    Total                                  C$ / t milled       $20.64

Total cash costs for the RRGP are summarized in Table 5 (b) as follows:

Table 5 (b): Average Gold Cash Costs(1)

     _____________________________________________________________________
    |Area                      |Initial 5 Years|Initial 10 Years|   LOM   |
    |                          |   $US/oz Au   |   $US/oz Au    |$US/oz Au|
    |__________________________|_______________|________________|_________|
    |Mining (Open Pit and      |               |                |         |
    |Underground)2             |        $248   |         $295   |   $307  |
    |__________________________|_______________|________________|_________|
    |Processing                |         205   |         194    |    256  |
    |__________________________|_______________|________________|_________|
    |General and Administrative|         23    |          22    |     29  |
    |__________________________|_______________|________________|_________|
    |Refining Expenses         |          3    |           4    |      4  |
    |__________________________|_______________|________________|_________|
    |Royalties                 |          3    |           9    |      9  |
    |__________________________|_______________|________________|_________|
    |Silver Credit             |        (32)   |         (39)   |   (45)  |
    |__________________________|_______________|________________|_________|
    |Total Cash Costs          |        $450   |         $486   |   $560  |
    |__________________________|_______________|________________|_________|

Notes:

      1. Includes silver credit and royalty payments.
      2. During years with high stripping ratios (>2.84), the operating
         costs associated
         with rock waste material have been capitalized.

The breakdown of open pit and underground pre-production and sustaining
capital costs is supplied in Tables 6 and 7, respectively.

Open pit pre-production capital costs include overburden stripping,
which is necessary to expose the bedrock material to be mined, as well
as waste rock stripping.  Open pit sustaining capital costs include the
construction of a tailings dam and certain ongoing overburden stripping
to expose mineralized material as the pit expands.

Table 6 – Open Pit Capital Costs

     __________________________________________
    |Open Pit Pre-Production Capital      |C$M |
    |_____________________________________|____|
    |Overburden Stripping                 | 32 |
    |_____________________________________|____|
    |Waste Stripping                      | 27 |
    |_____________________________________|____|
    |Process Plant                        |279 |
    |_____________________________________|____|
    |Tailings and Water Management        | 21 |
    |_____________________________________|____|
    |Equipment                            | 27 |
    |_____________________________________|____|
    |Site and Mine Infrastructure         | 85 |
    |_____________________________________|____|
    |Indirect Costs                       |123 |
    |_____________________________________|____|
    |Contingency                          |100 |
    |_____________________________________|____|
    |Total                                |694 |
    |_____________________________________|____|
    |                                     |    |
    |_____________________________________|____|
    |Open Pit Sustaining Capital          |C$M |
    |_____________________________________|____|
    |Equipment Lease                      |136 |
    |_____________________________________|____|
    |Waste Stripping Costs                | 65 |
    |_____________________________________|____|
    |Overburden Stripping Costs           | 61 |
    |_____________________________________|____|
    |Tailings Dam Construction            | 88 |
    |_____________________________________|____|
    |Other: Closure and Salvage value, net|(10)|
    |_____________________________________|____|
    |Total                                |340 |
    |_____________________________________|____|
    |                                     |    |
    |_____________________________________|____|

Table 7 – Underground Capital Costs

     _______________________
    |Underground Capital|C$M|
    |___________________|___|
    |Development        |67 |
    |___________________|___|
    |Sustaining         |148|
    |___________________|___|
    |Total              |215|
    |___________________|___|

Environment
The environmental baseline assessment was initiated in 2008, and was
followed by extensive annual regional field assessments.

As noted in the November 2011 Preliminary Economic Assessment, AMEC’s
environmental study to-date suggests that ‘no fatal flaws’ are
indicated for the RRGP.

Rainy River recently commenced the project environmental assessment with
the filing of a draft Terms of Reference for the provincial process,
and the filing of the draft Project Description for the federal
process.

Community
The Company is an active member of the local community supporting a
variety of community events and initiatives. Regular public information
meetings combined with site tours are some of the ways in which the
Company continues to engage and inform the local population as to the
project’s progress.

The Company has local offices situated both near the project site in the
town of Emo, and in Thunder Bay.

In support of aboriginal engagement, the Company announced in April 2012
that it had signed a Participation Agreement (“PA”) with the six member
nations of the Fort Frances Chiefs Secretariat First Nations.
Additional consultations in support of Mine permitting are well
underway.

The peak construction workforce would total 480 during the 21-month
construction period. Employment levels at the RRGP during operations
would vary according to production requirements, but would peak at 571
employees.

Project Economics
The first five years of mining yields cash costs (including royalties
and net of silver credits) of US$450 per ounce of gold, placing RRGP in
the first quartile of global gold projects, based on published industry
cost curves.  In Years 1 – 10, cash costs are US$486 per ounce of gold,
placing the RRGP within the second quartile of global gold projects.
Life-of-mine cash costs, net of silver credits, after the processing of
low-grade stockpiles in years 11 to 16, are calculated to be US$560 per
ounce of gold. This life-of-mine average places the project within the
second quartile of global gold projects, based on published industry
cost curves.

Production volumes and cash costs are shown in Tables 8(a) and (b) and 9
below.

Table 8(a) – Gold and Silver Production Profile: Open Pit (1)

     ____________________________________________________________________
    |                                             OPEN PIT               |
    |____________________________________________________________________|
    |Year|   Tonnage  |Gold Grade|Silver Grade|Gold Production|  Silver  |
    |    |            |          |            |               |Production|
    |____|____________|__________|____________|_______________|__________|
    |    |000's tonnes|     g/t  |      g/t   |     000's oz  | 000's oz |
    |____|____________|__________|____________|_______________|__________|
    |  1 |     6,418  |    1.37  |      2.45  |         260   |     340  |
    |____|____________|__________|____________|_______________|__________|
    |  2 |     7,218  |    1.37  |      1.98  |         293   |     309  |
    |____|____________|__________|____________|_______________|__________|
    |  3 |     7,193  |    1.46  |      1.86  |         311   |     290  |
    |____|____________|__________|____________|_______________|__________|
    |  4 |     7,006  |    1.20  |      2.57  |         247   |     389  |
    |____|____________|__________|____________|_______________|__________|
    |  5 |     6,575  |    1.02  |      3.55  |         198   |     506  |
    |____|____________|__________|____________|_______________|__________|
    |  6 |     6,569  |    1.11  |      4.44  |         215   |     633  |
    |____|____________|__________|____________|_______________|__________|
    |  7 |     6,569  |    1.13  |      4.50  |         220   |     643  |
    |____|____________|__________|____________|_______________|__________|
    |  8 |     6,576  |    1.24  |      3.73  |         243   |     531  |
    |____|____________|__________|____________|_______________|__________|
    |  9 |     6,577  |    1.22  |      1.92  |         239   |     273  |
    |____|____________|__________|____________|_______________|__________|
    | 10 |     6,567  |    1.38  |      1.68  |         270   |     238  |
    |____|____________|__________|____________|_______________|__________|
    |112 |     6,570  |    0.56  |      1.94  |         107   |     276  |
    |____|____________|__________|____________|_______________|__________|
    | 12 |     6,570  |    0.35  |      2.01  |         65    |     286  |
    |____|____________|__________|____________|_______________|__________|
    | 13 |     6,729  |    0.35  |      2.01  |         66    |     293  |
    |____|____________|__________|____________|_______________|__________|
    | 14 |     7,300  |    0.35  |      2.01  |         65    |     317  |
    |____|____________|__________|____________|_______________|__________|
    | 15 |     7,300  |    0.35  |      2.01  |         65    |     317  |
    |____|____________|__________|____________|_______________|__________|
    | 16 |     7,300  |    0.35  |      2.01  |         65    |     317  |
    |____|____________|__________|____________|_______________|__________|
    | 17 |      196   |    0.35  |      2.01  |          2    |      9   |
    |____|____________|__________|____________|_______________|__________|
    |    |   109,232  |    0.92  |      2.52  |       2,931   |   5,968  |
    |____|____________|__________|____________|_______________|__________|

Note:

      1. Open pit material is comprised of 68.6 Mt @ 1.26 g/t Au, 2.83 g/t
         Ag material and a
         stockpile of 40.6 Mt @ 0.35 g/t Au, 2.00 g/t Ag.
      2. Stockpile material processing begins.

Table 8(b) – Gold and Silver Production Profile: Underground

     ____________________________________________________________________
    |                                          UNDERGROUND               |
    |____________________________________________________________________|
    |Year|   Tonnage  |Gold Grade|Silver Grade|Gold Production|  Silver  |
    |    |            |          |            |               |Production|
    |____|____________|__________|____________|_______________|__________|
    |    |000's tonnes|     g/t  |      g/t   |     000's oz  | 000's oz |
    |____|____________|__________|____________|_______________|__________|
    |  1 |        -   |      -   |        -   |          -    |      -   |
    |____|____________|__________|____________|_______________|__________|
    |  2 |        -   |      -   |        -   |          -    |      -   |
    |____|____________|__________|____________|_______________|__________|
    |  3 |      100   |    4.13  |      2.57  |         12    |      6   |
    |____|____________|__________|____________|_______________|__________|
    |  4 |      300   |    4.13  |      2.57  |         37    |      17  |
    |____|____________|__________|____________|_______________|__________|
    |  5 |      730   |    4.13  |      2.57  |         89    |      41  |
    |____|____________|__________|____________|_______________|__________|
    |  6 |      730   |    4.13  |      2.57  |         89    |      41  |
    |____|____________|__________|____________|_______________|__________|
    |  7 |      730   |    4.14  |     13.69  |         89    |     217  |
    |____|____________|__________|____________|_______________|__________|
    |  8 |      730   |    4.13  |      7.14  |         90    |     113  |
    |____|____________|__________|____________|_______________|__________|
    |  9 |      730   |    4.13  |      6.74  |         89    |     106  |
    |____|____________|__________|____________|_______________|__________|
    | 10 |      730   |    4.32  |      5.73  |         94    |      90  |
    |____|____________|__________|____________|_______________|__________|
    | 11 |      730   |    4.36  |      6.30  |         92    |      99  |
    |____|____________|__________|____________|_______________|__________|
    | 12 |      730   |    4.22  |      2.01  |         88    |      32  |
    |____|____________|__________|____________|_______________|__________|
    | 13 |      571   |    4.28  |      1.67  |         69    |      21  |
    |____|____________|__________|____________|_______________|__________|
    | 14 |        -   |      -   |        -   |          -    |      -   |
    |____|____________|__________|____________|_______________|__________|
    | 15 |        -   |      -   |        -   |          -    |      -   |
    |____|____________|__________|____________|_______________|__________|
    | 16 |        -   |      -   |        -   |          -    |      -   |
    |____|____________|__________|____________|_______________|__________|
    | 17 |        -   |      -   |        -   |          -    |      -   |
    |____|____________|__________|____________|_______________|__________|
    |    |     6,811  |    4.20  |      5.30  |         837   |     782  |
    |____|____________|__________|____________|_______________|__________|

Table 9 – Combined Open Pit and Underground Production, Cash Costs

     _____________________________________________________________________
    |Year|    Tonnes  |Gold |Silver|   Gold   |  Silver  |   Cash Costs1  |
    |    |    Milled  |Grade|Grade |Production|Production|                |
    |____|____________|_____|______|__________|__________|________________|
    |    |000's tonnes| g/t |  g/t | 000's oz | 000's oz |       US$/oz   |
    |____|____________|_____|______|__________|__________|________________|
    |  1 |     6,418  | 1.4 |  2.5 |     260  |     340  |$            415|
    |____|____________|_____|______|__________|__________|________________|
    |  2 |     7,218  | 1.4 |  2.0 |     293  |     309  |$            379|
    |____|____________|_____|______|__________|__________|________________|
    |  3 |     7,293  | 1.5 |  1.9 |     323  |     295  |$            367|
    |____|____________|_____|______|__________|__________|________________|
    |  4 |     7,306  | 1.3 |  2.6 |     284  |     406  |$            495|
    |____|____________|_____|______|__________|__________|________________|
    |  5 |     7,305  | 1.3 |  3.5 |     287  |     547  |$            606|
    |____|____________|_____|______|__________|__________|________________|
    |  6 |     7,299  | 1.4 |  4.3 |     305  |     674  |$            573|
    |____|____________|_____|______|__________|__________|________________|
    |  7 |     7,299  | 1.4 |  5.4 |     310  |     860  |$            533|
    |____|____________|_____|______|__________|__________|________________|
    |  8 |     7,306  | 1.5 |  4.1 |     332  |     644  |$            544|
    |____|____________|_____|______|__________|__________|________________|
    |  9 |     7,307  | 1.5 |  2.4 |     328  |     380  |$            511|
    |____|____________|_____|______|__________|__________|________________|
    | 10 |     7,297  | 1.7 |  2.1 |     364  |     329  |$            441|
    |____|____________|_____|______|__________|__________|________________|
    |112 |     7,300  | 0.9 |  2.4 |     199  |     376  |$            663|
    |____|____________|_____|______|__________|__________|________________|
    | 12 |     7,300  | 0.7 |  2.0 |     152  |     317  |$            825|
    |____|____________|_____|______|__________|__________|________________|
    | 13 |     7,300  | 0.7 |  2.0 |     135  |     313  |$            859|
    |____|____________|_____|______|__________|__________|________________|
    | 14 |     7,300  | 0.3 |  2.0 |      65  |     317  |$         1,206 |
    |____|____________|_____|______|__________|__________|________________|
    | 15 |     7,300  | 0.3 |  2.0 |      65  |     317  |$         1,206 |
    |____|____________|_____|______|__________|__________|________________|
    | 16 |     7,300  | 0.3 |  2.0 |      65  |     317  |$         1,206 |
    |____|____________|_____|______|__________|__________|________________|
    | 17 |      196   | 0.3 |  2.0 |      2   |      9   |$         1,206 |
    |____|____________|_____|______|__________|__________|________________|
    |    |   116,043  |1.11 |  2.7 |   3,768  |   6,750  |$            560|
    |____|____________|_____|______|__________|__________|________________|

Note:

      1. Cash costs are inclusive of Royalties and net of silver credits
      2. Stockpile material processing begins.

The updated PEA study returns a 21.0% IRR and a pre-tax NPV of $846 M,
at a 5% discount rate. Parameters are provided in Table 10 below with
sensitivities in Table 11.  The PEA assumes that capital costs commence
upon the initiation of construction.

Table 10 – Economic Parameters and Summary of PEA Results


    Economic Parameter                             Units      PEA Base Case
                                                               Assumptions

    Metal price - Au                             US$ / oz        $1250.00

    Metal price - Ag                             US$ / oz          $25.00

    Currency exchange rate                       C$ / US$           $1.05

    Discount Rate for NPV                             %               5%

    Development Capital - Open Pit             $ millions           $594

    Contingency                                $ millions           $100

    Sustaining Capital - Open Pit              $ millions           $340

    Development Capital - Underground          $ millions            $67

    Sustaining Capital - Underground           $ millions           $148

    5 year cash cost / oz Au1                   US$/oz Au           $450

    10 year cash cost / oz Au1                  US$/oz Au           $486

    Net Present Value, pre-tax        $ millions, 5% discount       $846

    Internal Rate of Return                           %             21.0

    Payback period                                 Years             3.8

1. Including royalties and net of silver credits.

All scenarios in the Preliminary Economic Assessment are preliminary in
nature and include Measured, Indicated and Inferred Mineral Resources.
Inferred Mineral Resources are considered too speculative geologically
to have the economic considerations applied to them that would enable
them to be categorized as Mineral Reserves. There is no certainty that
the Preliminary Economic Assessment will be realized.

Table 11 – Sensitivities to Metal Prices(1)


    Gold, Silver, US$/oz  Base Case
                         $1250 / $25 $1600 / $30 $1800 / $35 $2000/$40

    NPV $ millions             846       1,806       2.364      2,922

    IRR %                     21.0        34.3        41.1      47.5

1. Assumes constant exchange rate of 1.05 C$/US$.

Comparison Table
Table 12 below compares metrics from the new PEA against the November
2011 PEA.

Table 12 – PEA Comparison


    Parameter                        Units    November 2011    August 2012

    Mine Life                        years           13.3             16

    Open Pit Depth                      m             500            400

    Mill Throughput                   ktpd            32              20

    Mine plan - open pit                      143.9Mt @ 0.9  68.6 Mt @ 1.26
                                             g/t Au, 1.9 g/t  g/t Au, 2.83
                                                   Ag            g/t Ag

    Mine plan - stockpile                                    40.6 Mt @ 0.35
                                                              g/t Au, 2.00
                                                      --         g/t Ag

    Mine plan - underground                   6.36Mt @ 3.5   6.81 Mt @ 4.20
                                             g/t Au, 5.7 g/t  g/t Au, 5.30
                                                   Ag            g/t Ag

    Contained gold                     Moz            4.3            4.2

    Waste                              Mt             586            311

    Overburden                         Mt             91              72

    Waste+Overburden/Mineralized
    Material                     Strip ratio          4.7           3.50

    Waste/ Mineralized Material  Strip ratio          4.1           2.84

    Waste-Capitalized Waste
    (Operating)/ Mineralized
    Material                     Strip ratio          3.3           2.50

    Recoveries - gold                   %            88.5           91.0

    Recoveries - silver                 %             65            67.4

    Year 1 - 10 mill Au grade          gpt           0.97           1.45

    Year 1 - 10 Au production        koz/y            311            308

    Year 1 - 10 cash costs        USD/oz Au           569            486

    Open pit, Pre-production
    capital                           C$ M            681            694

    Open pit, Sustaining capital       C$M            598            340

    Underground, Development
    capital 1                          C$M            67              67

    Underground, Sustaining
    capital 1                          C$M            110            148

    Pre-tax NPV @ 5%                   C$M            786            846

    Pre-tax IRR                         %            19.4           21.0

    Payback                          Years            3.4            3.8

1. Funded from free cash flow.
2. Including royalties, net of silver credits.

Opportunities and Risks
Opportunities to improve RRGP project economics include the following:

        --  The PEA is based on the February 24, 2012 mineral resource
            cut-off date and does not include subsequent infill drilling
            completed to date in 2012.  The next resource update is planned
            for Q3/2012 and is expected to include assays from metreage
            drilled in the first half of 2012. New data will be
            incorporated into the upcoming feasibility study and is
            primarily expected to increase confidence levels of existing
            ounces. Potential impacts are to mining grade, which improves
            with confidence levels, and the possible conversion of waste
            material to mineralized material.

Risks requiring mitigation strategies include:

        --  Management of construction/engineering and procurement costs,
            and cost containment.
        --  Operating risks related to recruitment and training of open-pit
            and underground workforces
        --  Currency risk relating to equipment purchases denominated in US
            currency.

Next Steps
Technical:

        --  Updated NI 43-101 resource estimate;
        --  Initiate Basic Engineering.

Exploration

        --  Focussed exploration of district targets;

Community and Environment:

        --  Ongoing community engagement programs and consultation with the
            First Nations to continue;
        --  Begin development of the Project Environmental Assessment
            report in support of Mine permitting.

The full NI 43-101 Technical Report for the PEA will be filed on SEDAR
within 45 days, and will be posted to Rainy River Resources’ website at
www.rainyriverresources.com
at that time.

Rainy River will hold a conference call on Thursday August 30, 2012 at
9:00 a.m. Eastern Daylight Time.  During the call, senior management
will be available to discuss the study and respond to questions from
analysts and investors.  To join the call, please dial:

        --  1-800-319-4610 in Canada and USA toll-free
        --  1-604-638-5340 outside Canada and USA

The conference call will be recorded and available until September 28,
2011. Playback details are as follows:

        --  1-800-319-6413 in Canada and USA toll-free
        --  1-604-638-9010 outside Canada and USA
        --  Passcode: 5589 followed by the # sign.

Independent Qualified Persons (“QPs”)
Independent QPs from BBA, Golder, AMEC and SRK who have prepared or
supervised the preparation of the technical information relating to the
Preliminary Economic Assessment include:

        --  David Runnels, Colin Hardie (BBA)
        --  Donald Tolfree (Golder)
        --  David Ritchie, Sheila Daniel (AMEC)
        --  Glen Cole, Dorota El-Rassi (SRK)

The mineral resource statement was prepared by Dorota El-Rassi, P.Eng.
(APEO #100012348) and Glen Cole, P.Geo (APGO #1416), of SRK, both
“independent qualified persons” as that term is defined in National
Instrument 43-101.

Forward Looking Statements
This news release contains “forward-looking information” as defined in
applicable securities laws (referred to herein as “forward-looking
statements”). Forward looking statements include, but are not limited
to, statements with respect to the cost and timing of the development
of the Rainy River project, the other economic parameters of the
project, as set out in its preliminary economic assessment; the success
and continuation of exploration activities; estimates of mineral
resources; acquisitions of additional mineral properties; the future
price of gold; government regulations and permitting timelines;
estimates of reclamation obligations that may be assumed; requirements
for additional capital; environmental risks; and general business and
economic conditions. Often, but not always, forward-looking statements
can be identified by the use of words such as “plans”, “expects”, “is
expected”, “budget”, “scheduled”, “estimates”, “continues”,
“forecasts”, “projects”, “predicts”, “intends”, “anticipates” or
“believes”, or variations of, or the negatives of, such words and
phrases, or statements that certain actions, events or results “may”,
“could”, “would”, “should”, “might” or “will” be taken, occur or be
achieved. Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the Company’s actual
results, performance or achievements to be materially different from
any of its future results, performance or achievements expressed or
implied by forward-looking statements. These risks, uncertainties and
other factors include, but are not limited to, the assumptions
underlying the preliminary economic assessment not being realized,
decrease of future gold prices, cost of labour, supplies, fuel and
equipment rising, changes in equity markets, actual results of current
exploration, changes in project parameters, exchange rate fluctuations,
delays and costs inherent to consulting and accommodating rights of
First Nations, title risks, regulatory risks and uncertainties with
respect to obtaining necessary surface rights and permits or delays in
obtaining same, and other risks involved in the gold exploration and
development industry, as well as those risk factors discussed in the
section entitled ” Description of Business-Risk Factors in Rainy
River’s 2011 Annual Information Form and its other SEDAR filings from
time to time. Forward-looking statements are based on a number of
assumptions which may prove to be incorrect, including, but not limited
to, the availability of financing for the Company’s exploration and
development activities; the timelines for the Company’s exploration and
development activities on the Rainy River Property; the availability of
certain consumables and services; assumptions made in mineral resource
estimates, including geological interpretation grade, recovery rates,
and operational costs; and general business and economic conditions.
All forward-looking statements herein are qualified by this cautionary
statement. Accordingly, readers should not place undue reliance on
forward-looking statements. The Company undertakes no obligation to
update publicly or otherwise revise any forward-looking statements
whether as a result of new information or future events or otherwise,
except as may be required by law.

For additional information with respect to the key assumptions,
parameters, risks and other technical information underlying to the
mineral resource estimates and the preliminary economic assessment
discussed in this news release, refer to: (i) the technical report
entitled “Technical Report for the Rainy River Gold Project,
Northwestern Ontario, Canada”, dated April 9, 2012, with respect to the
mineral resource estimates, available at www.sedar.com; and (ii) the technical report entitled “Preliminary Economic
Assessment of the Rainy River Gold Property, Ontario, Canada”, with
respect to the preliminary economic assessment, to be filed at www.sedar.com.

This new release uses the terms “measured resources”, “indicated
resources” and “inferred resources”. The Company advises readers that
although these terms are recognized and required by Canadian
regulations NI 43-101, the United States Securities and Exchange
Commission does not recognize them. Readers are cautioned not to assume
that any part or all of the mineral deposits in these categories will
ever be converted in to reserves. In addition, “inferred resources”
have a great amount of uncertainty as to their existence, and economic
and legal feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher category.
Under Canadian rules, estimates of inferred mineral resources may not
form the basis of feasibility or pre-feasibility studies, or economic
studies, except for a Preliminary Assessment as defined under NI
43-101. Investors are cautioned not to assume that part or all of an
inferred resource exists, or is economically or legally mineable.

Non-GAAP Measures
Cash cost per ounce has no standardized meaning under IFRS.

Qualified Persons

Rainy River’s engineering assessment in Richardson Township is being
supervised by Garett Macdonald, P.Eng. (PEO #90475344), Vice-President
Operations and a Qualified Person as defined by National Instrument
43-101. Garett Macdonald, P.Eng. (PEO #90475344), is also the person
responsible for the content of this news release. Rainy River’s
exploration program in Richardson Township is being supervised by Kerry
Sparkes, P.Geo. (APEGBC #25261), Vice-President Exploration, a
Qualified Person as defined by National Instrument 43-101.

About Rainy River
Rainy River Resources Ltd. is a Canadian precious metals exploration
company whose key asset is the Rainy River Gold Project, a large gold
system centred in Richardson Township (part of Chapple Township). As of
June 30, 2012, the Company had approximately $81 million in cash and
cash equivalents, and remains well funded for its 2012 plans to 1)
commence a feasibility level study on the RRGP; 2) continue growing the
existing resource through exploration; 3) conduct a condemnation
program in areas identified for potential mine facilities; and 4)
continue regional exploration. RRGP is very well located in the
southwestern corner of northern Ontario, near the U.S. border. It is
accessed by a network of roads and is close to hydro-electric
infrastructure. The Rainy River district has a skilled labour force and
is one of the lowest-cost areas for mineral exploration and development
in Canada. The Company is working to advance the early-stage
discoveries at its TPK Joint Venture Property, also in Ontario, where
it can earn a 51% interest in the property from Northern Superior
Resources Inc. Ontario has low political risk and, according to the
annual Fraser Institute global survey of the mining industry, has
consistently ranked as one of the top jurisdictions embracing mineral
development.

RAINY RIVER RESOURCES LTD.

Raymond W. Threlkeld
President & CEO

SOURCE Rainy River Resources


Source: PR Newswire