F2 System Continues to Grow

BARRY ALLAN, Mackie Research Capital Corp. (09/01/2009)
"Additional drill results extend F2—Release of an additional 13 drill holes largely testing the lateral extent of the F2 mineralizing system. This round of drilling included the first results from underground drilling.

. . . Northeast extension is adding to the ounce count. Our compilation of the drill data suggests that recent drill data lifts the overall ounce count to ~3.3 million from ~3.0 million previously. The additional ounces come from the northeast extension to the F2 Core.

Valuation improves with more ounces. Based on drilling to date, we estimate that the F2 Zone has resource potential (diluted to 2.0 meters and high grades cut to 311 g/t) of approximately ~3.3 million ounces. Based on this resource potential and incremental ounces just added, we are moving our target price from C$4.00 to C$4.30. In our opinion, the summer drill campaign will in all probability continue to establish that the F2 Zone is in fact materially larger than what we previously believed (1.5 million ounces).

Recommendation—best-of-class exploration story. Deposits in the Red Lake camp typically have a long vertical extent, reaching >2,500 meters in some cases. Hence, for F2 it is still early days and good additional drilling results are highly probable. We continue to recommend RMX as a BUY, and believe RMX’s discovery is in the early stages of being defined."

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