MINING MARKET & INVESTMENT NEWS — INVESTMENT COMMENTARY — Rubicon’s fundamentals pass muster with analysts

Analysts following junior mining companies are painfully aware that this sector has, of late, been finding little favor with investors. The bear market and low metal prices are inducing analysts to focus more on the steak than on the sizzle.

Two Vancouver investment firms, Haywood Securities and Wolverton Investment Services, appear to be finding plenty of beef in Rubicon Minerals (RMX-V), an exploration company focused exclusively on North America.

The company’s management — geologists Garfield MacVeigh, David Adamson, Michael Gray, Douglas Forster and Craig Nelsen — have more than 50 years combined experience in the mining industry and a proven track record of exploration success.

Rubicon’s portfolio of projects ranges from grassroots prospects to drill-ready targets and cover a range of commodities, including gold, copper, lead, zinc, nickel and platinum group elements. Attracting particular interest are several massive sulphide projects (one in Alaska and two in Newfoundland) and a dark-horse nickel project in the Northwest Territories.

Haywood’s James Mustard and Wolverton’s Tracy Hurley both rate Rubicon as “a speculative buy,” while noting that the junior is currently trading at the bottom end of its 52-week range of 60 cents to $1.50. Rubicon has 10.2 million shares outstanding, or 11.5 million shares fully diluted.

Both analysts begin their reports by citing the experience of Rubicon’s management team. “They are highly respected in their field and have extensive industry contacts throughout North America,” Hurly notes.

Mustard writes that the principal strengths of the company are “management’s exceptional technical background, extensive industry contacts and key corporate finance links.”

Both analysts appear to view the newly acquired Palmer project in Alaska as a core project. This high-grade base metal target was recently optioned to Atna Resources, which can earn a 50% interest from Palmer.

Comprising 340 claims, the property is 56 km northwest of Haines, a deep-water port at the northern end of the Alaskan Marine Highway. The Haines Highway passes within 3 km of Palmer, which has active logging roads at its eastern end.

The project is described as being in “elephant country,” within rocks that are the same age as the Greens Creek silver-rich polymetallic mine (greater than 20 million tonnes)

in Alaska and the Windy Craggy copper-cobalt deposit (greater than 250 million tonnes) in northern British Columbia.

“Rubicon’s interest in the property lies in its potential to host elephant-sized massive sulphide deposits,” Hurly writes. “More than 25 high-grade base metal and/or barite showings have been discovered along a 9-km trend, suggesting the presence of a very large mineralized system.”

While the property has been worked in the past by Kennecott, Cominco and Newmont, their programs are described as “limited” and “sporadic,” with many promising areas yet to be followed up.

Rubicon will manage exploration for the first two years of its option agreement with Atna. This year’s program includes mapping, sampling, ground geophysics and diamond drilling.

While not ignoring the rugged terrain and environmental sensitivities, Mustard notes that the project is at an advantage in terms of logistics and permitting, as it is in an established placer mining district that is being logged.

Another Rubicon project attracting interest is the 49%-held Incognita joint venture on southern Baffin Island. This project was conceived in 1996 to follow up on an interpretation by the Geological Survey of Canada that the mafic-ultramafic rocks of the Meta-Incognita Peninsula are potential hosts to nickel-cobalt deposits. The land package is believed to be geologically similar to the Cape Smith belt in northern Quebec (hosting the Raglan deposit) and the Thompson nickel belt in Manitoba.

However, the poor outlook for nickel has taken its toll on the project, where exploration is expensive and time-consuming. “Although Incognita hosts numerous untested occurrences of nickel-copper showings, the partnership is not planning a 1998 field work program and is currently seeking a senior mining company to undertake further work,” Mustard notes.

Rubicon is exploring the Seal Bay and West Cleary base metal projects in Newfoundland, as well as the Red Lake gold property in the camp of the same name in northwestern Ontario.

Situated on tidewater, Seal Bay is a copper-zinc-silver-gold volcanogenic massive sulphide project in which Rubicon is earning, from Falconbridge, a 65% interest. From Falconbridge, the junior can also earn 51% of West Cleary, an open-pit, gold-enriched base metal project.

In the Red Lake camp, Mustard says success will largely depend on successful re-interpretation of existing data and the integration of newly acquired data. “Progress news is anticipated to be sporadic, driven largely by drill activity, as research and data compilation will not lead directly to a discovery,” he adds. “Additional drilling is not anticipated until early next year and will, presumably, target zones at depth.”