Rubicon Minerals – Crossing the Rubicon
Rubicon Minerals underwent restructuring under bankruptcy protection three years ago. But today with the Phoenix Gold Project they are rising from the ashes.
When it comes to assets, Rubicon Minerals has, quite literally, struck gold. The company controls approximately 28,000 hectares of land in Red Lake, Ontario, which includes, among other potential sites, the Phoenix Gold Project.
“It’s been worked for the last three years and we are now at the stage where it is about to produce its first preliminary assessment during my tenure,” explains Rubicon’s CEO, George Ogilvie. “The mine already has a significant sunk cost, for example, a 1,800 tonne per day mill. We have a permitted 730-metre-deep, fully functional shaft with full hoisting capabilities that will hoist 3,000 tonnes per day of rock, and within the mine, we have 14,000 metres of development already established within the mine.”
This is a foundation that Ogilvie believes he can build an extremely profitable mining enterprise from, and in a relatively short time.
“If we can show positive economics over the next six to twelve months, assuming project financing is there, timelines to commercial production will be relatively short, and small compared to our peer groups,” he says.
However, while Rubicon Minerals has a great deal of potential right now, this wasn’t always the case. It turns out that the name “Phoenix Gold Project” is appropriate.
From the Ashes
“This project, in particular, has an infamous past in that the company went through a CCAA process (bankruptcy protection in Canada) in the second half of 2016,” Ogilvie tells us. This was when his involvement with the company began. “I joined the company as CEO to negotiate with secured and unsecured creditors and get the courts to approve the plan of arrangement under CCAA. The plan was to completely restructure the company to give us a strong basis to build the company up from.”
That difficult history has laid a strong groundwork for Rubicon’s future.
“I would say the significant sunk cost already involved in the project is a strong unique selling point,” Ogilvie says. “It means we have much of the infrastructure that a mine requires already in place. The other caveat is we have 690 million Canadian dollars in tax-loss pools, which means we won’t be paying tax on income or profits over the life of the mine. We control 28,000 hectares of exploration land which is one the most prestigious gold mining camps in North America, if not the world. We possess 40% of all exploration claims and concessions within Red Lake Camp, and we believe there is a strong possibility there might be a consolidation of the camp at some future juncture.”
As well as the challenge of rebuilding Rubicon following the restructuring under CCAA, there are also more practical challenges ahead.
“The other challenge is a technical one,” Ogilvie points out. “That is understanding the geological structural model and resource model for this deposit. The level of detail of the old management team’s models is not particularly in-depth, so we have completed more than 60,000 metres of orientated diamond drilling to allow us to put together a new structural model.”
Talking with Ogilvie, it is clear he is excited for the future of the mine, which is nearing a critical juncture in its development.
“The game plan is to put out a preliminary economic assessment in the coming weeks. Once that’s out people will see the Project’s commercial potential,” he says. “Up until the end of July we have completed an additional 12,000 metres of orientated drilling and we want to pull the trigger on an updated NI 43-101 mineral resource estimate. We would expect to see an upgraded resource classification of our inferred resources, sometime before yearend. Currently, we have approximately 590,000 ounces in Measured and Indicated classification, and we would like that number to increase to 750,000 ounces or above. Our next objective would be to begin work on a feasibility study. Given the mine is substantially built and the costs are sunk, we think it could be completed within six to nine months, meaning by the middle of 2020 we could have a Feasibility Study with it financed.”
From there, it is only a short time journey until the mine is actively producing.
“We are envisaging timelines from when we put a shovel in the ground of 8-10 months before the conceptual mine is producing,” Ogilvie says.
Of course, it is going to be pretty hard to get the conceptual mine producing without people to run the mine, and Ogilvie is working to make Rubicon an appealing prospect for potential employees.
“Obviously we have to offer a competitive remuneration package to attract people to Red Lake,” he says. “That is something we have done in the past and currently. In addition to that, we invested in a 200-person camp on the mine site to house and accommodate workers from out of town. It’s not currently active, it was closed when the first iteration of Rubicon went through the bankruptcy protection process. If we were to recommission the camp, we would ensure the cook and the cookhouse we have is going to provide good food and conditions for our workers which is very important. We have a small labour force at the moment but we invest in our workers and send them on various training courses both regulatory and to improve their skillset.”
While Phoenix is in many ways the flagship operation for Rubicon Minerals, it is by no means the only project that they are investing in.
“Beyond Phoenix we have that massive land package with four close-proximity targets to the mine and the mill,” Ogilvie says. “McFinley is a formerly producing mine producing 68,000 ounces in the 1980s. It is only 500 metres away to the west of a full production shaft at Phoenix, with excess capacity. To the north-east, within 2km of Phoenix, we have the Peninsula and Island zone which had been drilled by the old management, and we have the ability now to drill those targets from underground at the Phoenix deposit. By 2020, with Phoenix further de-risked and feasibility being complete we would like to focus our resources on those close-proximity targets. I think beyond that we would like to focus on the regional land package. It needs to be explored, and if there is going to be a shake-up of the camp within 24 months then there will be options for that too.”