Rubicon begins PEA for Phoenix

After a 20,000-metre drill program last year at its Phoenix project in Red Lake, Ont., Rubicon Minerals (TSX: RMX; US-OTC: RBYCF) has increased measured and indicated resources by 110% to 589,000 oz. gold compared with the earlier estimate of 281,000 oz. gold, while gold grades fell 2% to 6.26 grams gold per tonne from 6.37 grams gold.

Inferred resources fell 28% to 540,000 oz. gold compared to the previous estimate of 749,000 oz. gold, while grades increased 9% to 6.53 grams gold from 6 grams gold, previously.

The company has started a preliminary economic assessment (PEA) which it expects to complete by year-end.

Rubicon plans further infill drilling to expand the measured and indicated resources to a threshold of more than 650,000 oz. gold, a level the company says is required to advance the project to the feasibility stage. The company plans to drill another 20,000 metres this year.

The company says its 35,000-tonne test trial mining and bulk sampling work at the end of 2018 validates its current geological model.

Exploration target areas with greater than 80-metre centres have the potential of between 0.9 million and 1.2 million tonnes of mineralized material grading between 5 grams and 7 grams gold, mostly at depth, the company says.

The updated mineral resource model covers a strike length of about 1,200 metres and depths down to 1,403 metres, and remains open along strike and at depth. It excludes the crown pillar and depleted resources from test trial mining.

At a base case cutoff grade of 3 grams gold per tonne, Phoenix contains 2.93 million measured and indicated tonnes grading 6.26 grams gold for 589,000 oz. gold and a further 2.57 million inferred tonnes grading 6.53 grams gold for 540,000 oz. gold.

Rubicon says that it has boosted measured and indicated resources by a total of 456% over the last two years.

In addition, surface infrastructure is ready for operations, the company says, including a fully operational hoist, civil and earthworks, an electric substation, upgrades to a 200-person camp, a tailings management facility and a water treatment plant.

Underground, more than 14,000 metres of development are also in place, including an operational shaft down to 730 metres below surface.

Rubicon is the second-largest property holder in the Red Lake gold camp of northwestern Ontario, with more than 280 square kilometres.

Trial mining of the project was called off in late 2015, when the company, under a previous management team, realized the geology was more complex than it had thought, and a new resource estimate revealed that contained gold ounces in the indicated resource category had plunged 91% from a 2013 resource estimate, while contained gold ounces in the inferred category had fallen 86%. The company halted all work and spent the rest of the year and much of 2016 staving off bankruptcy.

The company hired mining engineer George Ogilvie in July 2016 to restructure Rubicon and turn the Phoenix project around.

Ogilvie began his career in 1989 with AngloGold in South Africa working in the ultra-deep, high-grade gold mines in the Witwatersand basin. Before joining Rubicon, Ogilvie was the CEO of Kirkland Lake Gold (TSX: KLG; US-OTC: KLGDF) from 2013 to 2016, where his management team improved operations at the company’s Macassa mine and guided its acquisition of St. Andrew Goldfields. Before joining Kirkland, Ogilvie was the CEO of Rambler Metals and Mining (TSXV: RAB; LON: RMM), where for over seven years he guided the company from grassroots exploration to a profitable junior producer.

Rubicon shares are trading at $1.18 in a 52-week range of $1.00 to $1.73. The company has an $83-million market capitalization.