Rubicon raising $6 million in bought deal

Rubicon’s Phoenix Gold Project in the Red Lake mining camp of northwestern Ontario. Source: Rubicon Minerals Corp.

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Rubicon Minerals Corp. [RMX-TSX; RBYCF-OTC] said Friday February 7 it has arranged to raise $6 million from a bought deal private placement of flow-through shares to fund exploration at its Phoenix Gold Project near Red Lake, Ontario.

The company said an underwriting syndicate led by Cormark Securities Inc. has agreed to purchase 4.2 million common shares of the company that qualify as flow-through shares for $1.43 per share. The syndicate is buying the shares on a bought deal basis, a move that is expected to generate gross proceeds of just over $6 million.

Rubicon said the underwriters have been granted a green shoe option to purchase up to an additional 630,000 flow-through common shares at the offer price. That option expires 48 hours prior to the offering closure date, which is expected to be February 27, 2020.

Proceeds will be used to incur Canadian exploration expenses related to the Phoenix gold project, McFinley Zone, Pen Zone and other regional exploration targets in Ontario, the company said.

On Friday, Rubicon eased 7.8% or $0.09 to $1.06. The shares currently trade in a 52-week range of 62 cents and $1.35.

The Phoenix Gold Project is an underground exploration project located in the district of Red Lake, northwestern Ontario, about 265 km northeast of Winnipeg, Manitoba.

Rubicon owns 100% of the Phoenix Gold Project which consists of the high-grade F2 Gold Deposit, more than 14,000 metres of underground development, including a commissioned shaft that goes down approximately 730 metres below surface and surface infrastructure that includes a 1,250 tonne-per-day mill, a completed tailings management facility, electric power supply and substation.

The property is centred on the historical McFinley Shaft (now called the Phoenix Shaft) and hosts a 200-person camp.

Since acquiring the Phoenix Gold Project in 2002, Rubicon has conducted an extensive exploration program, which includes geological mapping, re-logging of selected historic boreholes, digital complication of available historical data, ground and airborne magnetic surveys, mechanical trenching, channel sampling, along with numerous drilling programs.

A preliminary economic assessment (PEA) for the project was announced back in August, 2019.

The company has said most estimates and costs that are included in the PEA were derived from five years of test trial mining data, including actual numbers achieved during the test trial mining and 35,000-tonne bulk sample processing program.

The PEA envisages life-of-mine production of 493,583 ounces of gold or 79,610 ounces annually over an operating lifespan of 6.2 years. The initial capital cost is expected to be $101.2 million.

Other highlights include a 40.2% after-tax Internal Rate of Return and $191 million of estimated free cash flow.

Due to the success of infill drilling in 2019, the company recently said Measured and Indicated Resources have increased by 38% from an earlier estimate to 811,000 ounces of gold. The increase also reflects a 3% increase in the average grade to 6.45 g/t gold. As a result of a successful net conversion of resource estimates to the Measured and Indicated category, the amount of Inferred Resource has dropped by 14% to 464,000 ounces of gold.

Within the Phoenix Gold Property claim boundary, the company said it has identified exploration targets within 2 km from the Phoenix shaft and surface infrastructure, which the company intends to explore in 2020. Rubicon said it believes these targets have strong mineral potential based on historical mining and exploration.

The company currently has $690 million in tax-deductible pools, tax losses and tax credits (tax loss pools) available for deduction at the potential commencement of commercial production.

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