Lodes of Gold at Phoenix

BARRY COOPER, CIBC World Markets (04/13/2009)
"Rubicon discovered near-surface, high-grade gold during drilling under the F2 zone, a part of the Phoenix Gold project. Drilling 310 meters west-southwest of the zone has led to the discovery of intercepts of up to 91.91 oz./t gold over 1.6 feet (3,151.1 g/t over 0.5 meters). Rubicon has earmarked a $25 million exploration budget for 80,000 meters of diamond drilling to expand the tested area in the F2 zone to six times its current size.

In the core of the F2 zone, over 35,000 meters of drilling completed to date has identified numerous high-grade gold-bearing zones extending from surface to 1,101 meters below surface. The current exploration is being conducted by two drill rigs from the ice of East Bay. The 67 drill intercepts from the zone average 10.66 g/t gold over 2.0 meters. New drilling in this area has returned 2.01 oz./t gold over 13.1 feet (68.8 g/t gold over 4.0 meters), including 10.76 oz./t gold over 1.6 feet (368.9 g/t gold over 0.5 meters) plus 1.01 oz./t gold over 3.3 feet (34.6 g/t gold over 1.0 meter). Recent acquisitions in the Red Lake region, such as the takeover of Gold Eagle by Goldcorp (GG–SO), show the importance of making high-grade discoveries in established camps.

The project has a major advantage in terms of existing infrastructure, which includes a 142-metre shaft, a hoist, a headframe, a mill and a tailings pond. Rubicon management has estimated capital requirements to existing infrastructure at around $25 million–$30 million and two to three years of construction time. This shaft is 450 meters from the F2 zone and the company has received approval for deepening the shaft to 350 meters and drifting it to bring it within 200 meters to 250 meters of the F2 mineralization zone. Once the shaft is deepened, it will allow the deployment of four underground rigs to drill further into the F2 zone.

Another major project is DMC, also in the Red Lake Camp, which comprises local high-grade gold mineralization. The project has ultramafic rocks spread over 5 km underpinned by a regional scale structure, the main characteristic of the key Red Lake mines.

The company has been on a cash-raising spree lately, raising $10.2 million in November 2008 and another $40 million in March 2009 through private placements. As of April 2009, Rubicon had cash and cash equivalents of $55 million. These funds will be sufficient for the company to meet its working capital requirements till 2010."

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