Rubicon, Wabauskang First Nation reach settlement at Phoenix

As it nears first production at its Phoenix gold mine, in Red Lake, Ont., Rubicon Minerals (TSX: RMX; NYSE-MKT: RBY) has gained the support of a small First Nation band that has argued that its treaty rights to be consulted about the development have been violated.

The Wabauskang First Nation, which had contested the validity of Phoenix’s production closure plan for the past two years, has signed two agreements with Rubicon — one that will see it drop its legal challenge against Rubicon, and the other relating to exploration at Phoenix.

In late 2012, Wabauskang filed an application for judicial review related to the production closure plan for Phoenix. The 266-member community objected to the province delegating its duty to consult to Rubicon.

While the Ontario Divisional Court dismissed the application for judicial review in August, Wabauskang said in September that it would appeal the decision.

The community is still going forward with its lawsuit against the Ontario government, but under the just-reached settlement with Rubicon, Wabauskang has agreed to drop its suit against the company. The settlement also outlines the potential terms of an impact benefits agreement (IBA).

In addition, the First Nation also signed an exploration accommodation agreement (EAA) that will cover ongoing exploration at Phoenix.

In a release, Rubicon president and CEO Michael Lalonde said the agreements were a “huge step towards a respectful and mutually beneficial long-term partnership with the Wabauskang First Nation.”

The EAA includes the provision of “certain benefits” to the band based on Rubicon’s exploration spending on claims within lands used by Wabauskang.

Rubicon will also work to identify potential employment opportunities for band members, follow best environmental practices, and incorporate Wabauskang’s traditional knowledge into its environmental programs and protect culturally sensitive sites.

In return, the First Nation has agreed to support Rubicon’s application for licences and permits to conduct exploration on Wabauskang lands.

“Our community is feeling positive that we have reached an agreement,” Wabauskang Chief Martine Petiquan said in a release. “The agreement with Rubicon provides the foundation for a long-term, mutually respectful relationship that recognizes and respects our treaty rights and provides protection for our lands.”

The decision on Wabauskang’s appeal is expected shortly.

“Our lawsuit has always been about enforcing the Crown’s obligations to respect our treaty rights,” Wabauskang councillor Doug Riffel said in a release. “Now that we have an agreement with Rubicon, we can focus on what really matters — making sure that Ontario steps up and consults with us properly rather than hiding behind companies.”

Rubicon is also in discussion with the Lac Seul First Nation — which has already negotiated an EAA — regarding an impact benefit agreement.

Initial production at the fully permitted,1,250-tonne-per-day underground mine is expected in mid-2015.

According to a preliminary economic assessment released last year, the mine will produce 165,000 oz. gold per year over a 13-year mine life at all-in sustaining cash cost of US$870 per oz.

Rubicon shares traded up 2% on the news to $1.35. The stock has traded in a 52-week range of 69¢ to $1.95, and the company has 370.5 million shares outstanding.