MINING MARKETS AND INVESTMENTS NEWS — Investment Commentary — Cumberland deposits get nod from Wolverton

A research report by Tracy Hurley, mining analyst for Wolverton Investment Services, describes Cumberland Resources (CBD-T) as “undervalued” and a “speculative buy.”

The report focuses on Cumberland’s key projects, Meliadine West and Meadowbank, both of which are situated in the Kivalliq region of the Northwest Territories; in 1999 the region will be incorporated into a new territory, Nunavut. Hurley notes that all land-claims issues are fully settled, which removes uncertainty for mining companies working in Nunavut.

“The government and the people of Nunavut are proactive toward mining, and are enthusiastic about the possibility of renewed mining in the Kivalliq region,” the report states. “Importantly, Cumberland has maintained an excellent communicative relationship with the Nunavut government and the local Inuit people.”

Meadowbank, 100% owned by Cumberland, is now reported to host total resources of 1.5 million oz. gold contained in three zones. The bulk of this resource (85%) is classed as measured, based on 3-sided continuity of ore-grade intersections, using a 25-metre area of influence. Gold mineralization is dominantly hosted in structurally deformed iron-formation within a sequence of Archean rocks.

Based on the positive results of a recent scoping study, Hurley believes Meadowbank has potential to become a low-cost producer. The study estimates that a combined open-pit and underground operation with capital costs of US$65.5 million could produce 120,000 oz. gold annually for 10 years at a cash cost of US$156 per oz. Cumberland has budgeted $3-million for ongoing work to expand resources and bring the project to the prefeasibility stage.

This year’s spring program at the nearby Meliadine West property will involve six drill rigs. Operator WMC International, an Australian firm that holds 56% of the project, has budgeted $7.2 million for the upcoming field season, including $5.9 million on detailed evaluation of the Tiriruniak, F and nearby Wolf and Pump zones, and $1.3 million for outside targets.

Cumberland and Comaplex Minerals (CMF-T) each hold 22% of Meliadine West, which, at last report, contained a diluted resource of 2.6 million oz. gold at an average grade of 11.9 grams per tonne in the Tiriruniak zone and 630,000 oz. gold at an average grade of 7.7 grams in the F zone.

Hurley notes that while both zones are designated as primarily underground operations, “high-grade starter pits may also be feasible.” The report stresses exploration upside and notes that “mineralization in zones at both projects remains wide open for continued expansion of the total gold resource.”

Cumberland has 22.7 million shares outstanding (24.6 million fully diluted) and trades at about $2.15.