Worst Is Likely over for Junior Mining Sector

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“Any sustainable recovery in the junior mining space will depend on the perception that an overall recovery in global demand for metals is imminent.”

The small-cap mining sector has just been through its worst, most precipitous decline in modern history. While 2009 could be another difficult year for the junior mining sector, we believe the worst is likely behind us. Any sustainable recovery in the junior mining space will depend on the perception that an overall recovery in global demand for metals is imminent. A turnaround in global demand for metals will likely depend on the efficacy of the government stimulus packages being implemented around the globe.

Banro Corporation (AMEX :BAA; TSX:BAA) is focused on the advancement of four wholly owned gold projects on the 210-kilometre-long Twangiza–Namoya gold belt in eastern Democratic Republic of Congo (DRC), where it has been advancing its key projects for 12 years. The company has a unique arrangement with the government of the DRC that grants Banro 100% ownership with no royalties and a 10-year tax holiday.

Among Banro’s three main projects, it has identified 9.55 million ounces of gold but is trading at US$3.68 enterprise value per ounce—a significant discount to the average of US$22.35 per ounce for exploration and development peers.

Rubicon Minerals’ (RMX:TSX, RBY:AMEX) F2 zone was discovered in March 2008. The discovery hole intersected 6.8 g/t gold over 11 metres. Subsequent results include: 891.1 g/t Au over 2.0 metres, 24.4 g/t Au over 17.0 metres, 42.4 g/t Au over 11.0 metres, 28.7 g/ t Au over 15.5 metres and 361.7 g/t Au over 1.8 metres. Rubicon indicates that intercepts from 35 holes released to date average 16.25 g/t gold over 5.7 metres.

The company is currently in the process of applying for permits to dewater the shaft, which could commence as early as Q4/08. Following this, Rubicon intends to extend the shaft to a depth of 350 metres and drift 250 metres southeast to facilitate drilling of the F2 zone from underground. The company indicates that this shaft development and drifting will take four to six months and is expected to be completed in early H2/09.

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