Rubicon Minerals: Rob McEwen’s Other Gem

Readers of this blog are very familiar with U.S. Gold (UXG), the company run by former Goldcorp (GG) CEO Rob McEwen. However, McEwen also owns over 32% of another junior mining company, Rubicon Minerals (RBY).

Earlier this year, McEwen invested another $10 million investment in Rubicon, purchasing 14,285,714 shares at a price of $0.70 and also receiving as part of the deal 7,142,857 two-year warrants with a strike price of $1.50. The stock price has more than tripled since then, generating phenomenal returns for McEwen and the institutional investors who joined him.

Shares have been boosted in large part by a series of positive exploration results for Rubicon’s projects in Red Lake, Ontario (and hereand here) and Alaska. I don’t know enough about the company yet to formulate an opinion, and I am hesitant to chase such a strong move. So for the time being, I will keep an eye on Rubicon from the sidelines. If you have an opinion on Rubicon, please leave a comment here or drop me an email.

DISCLOSURE: Long UXG, no position in RBY.

RBY 1-yr. chart:

Comments

[kentamick:]

The main reason the stock has outperformed its peers in recent months is the fact that, with the help of Rob McEwen, Rubicon now owns the single largest land position in the Red Lake district... some 96,000 acres. Their holdings effectively surround Goldcorp's Red Lake mine, one of the richest in the world with perhaps the lowest gold production cost in the world. Now they're exploring those new resources at Red Lake, an area in which punching a drill into the ground almost always produces golden cores, and very often has produced 'bonanza grade' assays.

In short, with the help of Mr. McEwen, Rubicon now owns and controls more potential gold resources than any other mining company in the Red Lake district, which is one of the worlds friendliest environments for mining. It's an extremely rich area and, perhaps just as important these days, it's a politically safe area.

That said, Rubicon is now also the single largest landowner in the Pogo district of Alaska with the help of Mr. McEwen.

Pogo is a relatively new and gold district in which Sumitomo and Teck-Cominco built their Pogo mine with estimated resources over 5 million ounces. Prior exploration on Rubicon's Pogo properties discovered a vast anomaly - 10km by 7km in size - and current exploration recently verified the gold presence within that vast anomaly. Their new holdings in the Pogo district surround the Pogo mine, and are considerably more expansive than the Pogo mine property. Considering the estimated resources of the Pogo mine, and also taking into account the enormous size of that anomaly on Rubicon's Pogo property at Pogo, the phrase "elephant country" very easily comes to mind.

Without any doubt, there is a distinct possibility that Rubicon's drilling at their Pogo property could turn up an "elephant" type of deposit. That's one more reason investors have been flocking into the stock.

They've recently become the largest landowners at Red Lake, an historically proven gold-rich district, and also become the largest landowners at Pogo, a fairly young but also gold-rich district. And both of those gold-rich districts are in politically safe environments.

Those fundamentals aside, there are also a flock of investors who follow closely behind Mr. McEwen, and they've been very handsomely rewarded for their loyalty to him over the years.

Rubicon is a no-brainer. Put some money in, and then just watch it grow.

Disclosure: small shareholder, not affiliated with the company in any other way, shape, or form.

2007 Jul 16 12:19 PM