F2 Zone Strike Extended

ANDREW MIKITCHOOK, GMP Securities (08/31/2009)
"Rubicon released additional drill results on its F2 zone Phoenix Gold property that extended the strike length by just over 20%. Five drill rigs continue to explore both at surface and underground on the 122m level. Highlights of drill results are 6.6 feet of 1.35oz/t. Notably, these are results from shallower intercepts in target areas 3 and 4 in the 9x exploration program. These results are inline with our expectations of continued expansion of the F2 discovery and the potential to discover two other F2-type zones on the Phoenix property.

This is the first shallow step out drilling to the north east which provides support for a growing F2 zone. The strike length has increased about 21% to approximately 850m and the ore body remains open to the SW, NE, and at depth. Today’s holes represent the first underground drilling results since the start of drilling from the 122m level on June 8, 2009. Hole 122-08 included an impressive 1.02oz/t over 1.6ft. As the shaft continues to be deepened simultaneously with underground and surface drilling, we expect ongoing positive results from all nine areas of the 9x drill program. Thus far, four areas remain largely unexplored, and opportunity remains for the strike to extend beyond the existing boundary of the 9x areas (1,200m length) to the SW and NE.

Potential Milestones and Catalysts
  • Deeper drill results and underground drilling—ongoing
  • Shaft deepening—ongoing (complete by year end 2009)
  • NI 43-101 resource potentially in late 2010 (TWP estimate)
Valuation and Recommendation
We continue to value Rubicon at C$800mn based on precedent trading valuations for other discoveries in Red Lake. We would highlight that our target resource for the Phoenix Gold property is 1.4-3.5mnoz, which assumes the discovery of two additional high-grade shoots other than the F2 zone. Rubicon has begun to explore underground, which should speed up the progress of ore delineation and development of the Phoenix Gold property. We reiterate out Overweight rating and US$4.00 target."

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