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If you listened to our interview with President David W. Johnston the other day, you’ll know there’s good reason to “Follow The Rainbow” very closely right now as the company’s 2012 exploration program is now underway with an intense degree of prospecting throughout its West Kootenay Big Strike Project and its newly-acquired flake graphite claims in the nearby Valhalla Metamorphic Complex.  As GoldQuest Mining (GQC, TSX-V) clearly demonstrated today, discoveries can yield huge returns no matter what the overall market environment might be.

Drilling is just around the corner for Rainbow, beginning at the Gold Viking Property (part of the Big Strike Gold-Silver Project) which could be part of the same Ottawa Mines’ system that produced Silver at an incredible average grade of 62 ounces per ton in the 1900’s.  During my Rainbow due diligence late last year, I was on the Gold Viking Property and crawled over 400 feet into one of the old adits.  The vein widths were impressive, there was an obvious smell of sulphur, and pyrite, chalcopyrite and galena mineralization was very visible in different areas.  The “oldtimers” were going for the “super high-grade” and left a lot of great material behind.  In the 1930’s, according to Moose Mountain’s 43-101 technical report, one recorded 3-tonne shipment of ore from this particular vein carried an average of 5 ounces of Gold per tonne and 41 ounces of Silver per tonne. Needless to say, Rainbow has some highly prospective structures to drill into and there’s a very good chance the oldtimers completely missed the motherlode.

Gold Viking has never been previously drilled.  Neither has the adjacent Ottawa Property which which was part of the 1.8 million ounces of Silver produced by the Ottawa Mines at an average grade of 62 ounces per ton, as mentioned above.  This is a prolific region for Gold and Silver.  Grade is “King” these days and RBW has a glorious opportunity to deliver some eye-popping results.

Rainbow is planning to drill from nine separate sites over a 500-metre distance in the central portion of Gold Viking, and multiple holes can be drilled from each site.  Interestingly, on the far western side of the property, I suspect there could be flake graphite in metamorphic rock which is why privately-held Eagle Graphite has nudged right up to the southwestern corner of Gold Viking.   What an interesting summer this will be!

But Gold Viking is just the beginning.  The International Silver Property, considered to be Rainbow’s flagship, is 70 km to the north and has returned spectacular high-grade Silver numbers from sampling and small-scale mining in the early 1900’s.  It, too, has never been drilled.

Besides the International, Gold Viking and Ottawa, Rainbow is also focusing on the Referendum Property near Nelson which has a stockwork system on the eastern side of the property that holds potential for open-pit mining.  Johnston told us in this week’s interview that the company is considering a bulk sample at the Referendum which, if carried out, could be a valuable revenue-generator for the company.

In Nevada, Rainbow is planning a drill program for the former-producing Jewel Ridge Property which returned a terrific near-surface intersection of 2.1 g/t Au over 39.6 metres several years ago.  This property has also been under-explored and is situated contiguous to Barrick’s Ruby Hill Mine to the north.  The odds of Rainbow going in there and pulling out some initial impressive results has to be considered good given the historicals on this property.

Below is John’s updated Rainbow chart after today’s action with RBW gaining 2 pennies to close at 18.5 cents.  Notice the classic “W” formation in the RSI(14) on this 6-month daily chart – very bullish.  A chart tells a thousand words, and RBW is one of the few companies on the Venture at the moment with rising 100, 200 and 300-day moving averages.

If there’s an area of Canada not on many radar screens at the moment that could really grab some exploration headlines in the near future, it’s the West Kootenays.  Rainbow, with a tight capital share structure and a current market cap of only $6 million, is the leader in this mineral-rich district.

Note: The writer (Jon) and John (chart) both hold share positions in RBW (Terry does not).