S. E. Wells'  Instablog

S. E. Wells
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I'm a middle aged guy who's falling apart at the seams and trying to make a few bucks for retirement. I've had a lot of experience mining gold with artisanal methods and by dredging. I understand gold geology pretty well and can make sense of geological reports so I tend toward investing in what... More
  • An analysis of Rubicon Minerals (RBY) exploratory drilling by zone 0 comments
    May 31, 2010 9:19 AM | about stocks: RBYCF
    Rubicon has identified several zones of interest at their F2 project in Red Lake, Ontario, Canada. These zones can be seen here: http://www.rubiconminerals.com/i/maps/2010-05-17_NRM2.jpg All reported intercepts in this drilling can be found here: http://www.rubiconminerals.com/s/NewsReleases.asp?ReportID=401691&_Type=&_Title=Assay-Table

    I thought it would be interesting to see how these zones stack up against each other and in relation to the initial discovery at the F2 Core Zone. To do this, I worked from the companies news releases and figured out which intercepts were in which zones. Then, I used the drill reports to calculate how much of each intercept was at what grade expressed in grams per ton. Lastly, I took weighted averages for grams per ton and simple numerical average interval width grouped by zone.  
    You should note that figuring out which drill intercepts are in which zone is a subjective process as it is a matter of interpreting news releases from the company which are not entirely specific on this issue. Additionally, there are subjective elements in figuring out what grade to apply to each intercept in cases where a broad intercept has included intercepts. I tried to make reasonable inferences in both cases and I think I have gotten it about right. However there are subjective elements involved in the process so keep this in mind. You can see exactly how I interpreted the data in a PDF here:
    I identified 9 categories in which to classify the results of exploratory drilling at F2 to date.

    These are:
    Zone 1 – This is the Core Zone (where the initial F2 discovery was made)
    Zone 2 – The Crown Zone
    Zone 3 – The Northern Extension
    Zone 4 – The West Limb Area
    Zone 5 – The 122-10 Zone
    Zone 6 – The 122-40 Zone
    Zone 7 – The Hanging Wall Zone
    Zone 8 – This is a catch all “Zone” for all drilling hits that are in the main corridor of F2 but are not in an identified zone
    Zone 9 – This is a catch all “Zone” for all drilling hits that are outside the main corridor of F2 and not in an identified zone.

    Here's the number of intercepts analyzed  per zone

    Zone 1 - 265 intercepts
    Zone 2 - 20 intercepts
    Zone 3 - 54 intercepts
    Zone 4 - 43 intercepts
    Zone 5-  46 intercepts
    Zone 6 - 5 intercepts
    Zone 7 - 8 intercepts
    Zone 8 - 49 intercepts
    Zone 9 - 52 intercepts

    Here is the weighted average grade expressed in grams per ton and the average intercept width expressed in meters for each zone.
    Zone 1 Core zone - 15.54 GPT over 3.77 meters
    Zone 2 Crown zone - 14.22 GPT over 6.19 meters
    Zone 3 Northern Extension - 12.36 GPT over 3.37 meters
    Zone 4 West Limb Area - 11.37 GPT over 2.87 meters
    Zone 5 122-10 zone - 10.46 GPT over 4.84 meters
    Zone 6 122-40 zone - 31.95 GPT over 4.06 meters
    Zone 7 Hanging Wall Zone - 128.40 GPT over 2.5 meters
    Zone 8 In F2 corridor, no zone - 7.87 GPT over 3.15 meters
    Zone 9 Outside F2 corridor - 30.04 GPT over 1.77 meters

    The main surprise to result from this analysis for me is not the continued extraordinary drilling results Rubicon is experiencing in the F2 corridor itself. It’s been clear (at least to me) for some time that Rubicon has an extraordinary gold deposit in the main corridor of F2. I was very surprised to see that the intercepts made to date outside the main corridor of F2 are also high grade and of good extent.

    I think this bodes very well for the potential to discover more gold zones outside the main F2 corridor and it seems to me that most analysts are not reflecting the values outside the main F2 corridor in their estimates for the F2.

    I am also very encouraged to see the results coming out of the new Hanging Wall zone. There has been little drilling there yet but the grades reported so far are extraordinary.

    Disclosure: Long Rubicon Minerals via call options at varying expirations and strikes

    Stocks: RBYCF
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