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http://www.kaiserbottomfish.com/s/Excerpt.asp?ReportID=348085

Bottom-Fish Comment - May 15, 2009: Riverside set to rethink Sugarloaf Peak geology

Riverside Resources Inc has been given the nod by its biggest shareholder, Rick Rule, to risk its own money on the Sugarloaf Peak gold project in Arizona, at least for now. Although Riverside is supposed to adhere to the prospect generator-farmout model espoused by the master of risk aversion, it had optioned the project in April 2008 as a bet on a potentially higher gold price with the understanding that significant work would eventually be farmed out to a less clever party. The property was originally explored during the sixties and seventies by Kerr McGee and others as a copper porphyry play, which is why the property has several core holes as deep as 1,000 metres. Unfortunately, the 20 core holes were never assayed for gold, just copper, lead, zinc and molybdenum. During the eighties after gold had made its big move Sugarloaf was explored as an epithermal gold play into which 61 shallow RC holes were drilled which resulted in several historic resource estimates, including 54,430,800 tonnes of 0.6 g/t gold at an unknown cutoff grade for just over 1 million ounces. Even at $925 gold this translates into a rock value of only $18 per tonne, which is why work stopped a long time ago and Riverside was able to option it on terms that require it to pay $300,000 and spend $1.5 million (US) over 4 years. The zone of interest has a strike of 1,800 metres and widths up to 1,500 metres, and while alteration with mineralization is known to extend to a depth of 1,000 metres, the historic estimate is only to a depth of 100 metres, largely because it was viewed as a heap leach candidate similar to the Mesquite deposit to the south. But while the footprint of the system is large, and the majors were interested, John-Mark Staude was unable to secure a a farmout on decent terms, in part because the majors wanted to first see a round of core drilling that gives a more reliable estimate of grade and a portrait of structural controls. In early 2009 as gold was threatening to breach $1,000 and unleash a gold mania, with lots of other supposedly not so clever juniors chomping at the bit to option this ounces in the ground story, Staude secured support from his backers to spend Riverside's own money on the first round of work. To pay for this program Riverside completed a private placement of 2.5 million units at $0.40 in early April, of which the Rule Family Trust took down 270,000 units, boosting its position to 2,183,500 shares. Riverside plans to drill 17 angled core holes to a maximum vertical depth of 150 metres in two areas within a 1,000 metre central portion of the Sugarloaf zone. About five holes will twin existing RC holes to confirm the existing database and shed light on the theory that the RC holes may understate the grade. The primary focus of the program will be to provide supporting data for Staude's theory that past drilling was guided by an incorrect geological model. His own model is that high angle structures are the controls for the mineralization, which has made him mighty curious about how the gold grade behaves at depth where sulphides can be expected to prevail. If he is successful it should bcomee easy to farm out Sugarloaf Peak to a major on favorable terms, for the gold target will have expanded to a 5 million ounce plus system. A plan of operations has been submitted to the permitting bodies and Riverside hopes to be drilling by early July. Results will not be known until September, by which time there is a good chance gold will be at a much higher price, making Sugarloaf Peak's shallow 1-2 million ounce oxide resource attractive as a heap leach candidate regardless of the big picture implications. With 32.8 million shares fully diluted, a $0.45 stock price, and a 100% net interest, the Sugarloaf project has an implied value of $15 million, which leaves a lot of room for the upside. The good news for bottom-fishers is that Riverside for now has the green light to maintain 100% of a project which can benefit from a rise in the price of gold or from exploration results which support the bigger picture. Meanwhile the junior continues to conduct its exploration programs in Mexico.


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