Rubicon raising up to $12 million for Red Lake gold project

Rubicon Minerals Corp. [RMX-TSX; RBYCF-OTC] said Friday September 20 that it is moving to raise up to $12 million from a private placement offering of common shares priced at $1 per share.  The company said proceeds of the offering will be used to fund exploration and development expenses at its flagship its Phoenix Gold Project near Red Lake, northwestern Ontario.

The company said it has signed a deal with an underwriting syndicate led by Cormark Securities Inc. in connection with the offering which is scheduled to close by October 10, 2019.

On Friday, Rubicon shares eased 3.8% or $0.04 to $1.02. The shares are currently trading in a 52-week range of 61 cents and $1.52.

News that Rubicon hopes to raise between $8 million and $12 million from the offering comes after the company recently announced a positive new Preliminary Economic Assessment (PEA) for the Phoenix Project.

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

Rubicon owns 100% of the 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 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.

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.

“The new PEA represents a significant milestone in demonstrating the free cash flow generating potential of the Phoenix Gold Project, using prudent assumptions,” said Rubicon President and CEO George Ogilvie. “We are confident that this potential can be achieved in the near term due to the very manageable project funding requirement, the new, fully functional infrastructure at site, and the realistic cost and capital estimates outlined in the new PEA, which is below the cost of a similar greenfield project,” he said.

Rubicon said it plans to release an updated mineral resource estimate incorporating drilling results from 2019 in the fourth quarter of 2019 with the goal of further increasing the measured and indicated mineral resource estimate above the current estimate of 589,900 contained ounces.

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.