Rubicon Minerals Receives Positive Preliminary Economic Assessment for F2 Gold System, Phoenix Gold Project, Red Lake, Ontario
-includes first time announcement of a 477,000 ounce Indicated Mineral Resource component-
TSX:RMX | NYSE AMEX:RBY
VANCOUVER, June 29, 2011 /CNW/ - Rubicon Minerals Corporation (RMX:TSX | RBY:NYSE-AMEX) is pleased to announce the positive results of a Preliminary Economic Assessment ("PEA") for its 100% owned F2 Gold System, part of its Phoenix Gold Project located in the heart of the Red Lake, Ontario gold district. The PEA was prepared by AMC Mining Consultants (Canada) Ltd. ("AMC") with metallurgical sections prepared by Soutex Inc. ("Soutex") both of which are independent of the Company.
PRELIMINARY ECONOMIC ASSESSMENT HIGHLIGHTS
All amounts in US Dollars
Base Case ($1,100 oz gold)* Spot Price Case ($1,500 oz gold)
Average mined gold grade 13.87 g/t 13.87 g/t
Steady state annual gold production 180,000 ounces 180,000 ounces
Life of Mine from production start 12 Years 12 Years
Planned Steady State Production Rate 1,250 tpd 1,250 tpd
IRR Pre tax 28% 48%
NPV Pre tax (5% discount rate) $433 million $933 million
Payback period from start of production 3.3 Years 2 Years
NPV Pre tax (0% discount rate) $739 million $1,482 million
Initial Capital (30% contingency) $214 million $214 million
Cash costs $214/tonne $214/tonne
Metallurgical recovery 92.5% 92.5%
Total Mined Gold to Mill** 2,006,000 ounces 2,006,000 ounces
* Three-Year trailing average gold price. Tabulated results exclude NSR royalty of 1.5%. Results based on $1Can = $1US exchange rate.
** The mine plan and financial outputs are based on a mining cut off grade of 6.0 g/t and a life of mine of 12 years, utilizing 2.0 million ounces (72% recovery) of the currently identified resources.
This PEA is preliminary in nature as it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
The PEA is based on an updated mineral resource estimate containing an Indicated Mineral Resource of 1,028,000 tonnes grading 14.5 g/t gold (477,000 ounces of gold) and an Inferred Mineral Resource of 4,230,000 tonnes grading 17.0 g/t gold (2,317,000 ounces of gold); both the PEA and the resource estimate have been prepared by AMC. The mineral resource estimates were prepared by Dinara Nussipakynova P.Geo., Cath Pitman P. Geo. and J.M (Mort) Shannon, P. Geo., consulting geologists of AMC and independent Qualified Persons as defined by NI 43-101.
The table below shows a summary of the mineral resource estimates:
Summary of AMC Mineral Resource Estimates
Classification M Tonnes g/t Au M oz Au
Indicated 1.028 14.5 0.477
Inferred 4.230 17.0 2.317
Notes:
CIM definitions were used for mineral resources
The cut off grade applied is 5.0 g/t Au
A capping value of 270g/t Au has been applied to the composites
Using drilling results to February 28, 2011
The figures above are "Total" resources
Inferred resources are too speculative to have economic considerations applied to them and there is no certainty that the inferred resources will be converted to measured and indicated resources.
If the data are not capped, the totals are 1.135 M tonnes at 17.2 g/t Au for 0.634 M oz for the Indicated category and 4.129 M tonnes at 21.2 g/t Au for 2.842 M oz for the Inferred category.
"The PEA is a very good start. It indicates that the F2 Gold System is a potentially viable project capable of producing a steady state average of 180,000 ounces of gold per year and over 200,000 ounces at its peak using conventional mining and processing techniques with an initial capital investment of $214 million. The use of a 30% contingency on capital costs represents a reasonably conservative approach which recognizes the reality of cost escalation in the industry. We are also pleased to have been able to convert a significant portion of resources to the Indicated category. The deposit remains open in all directions and the PEA outlines a number of areas for potential future optimization. Management considers the range of results presented by AMC to be largely consistent with our most recent (March 31, 2011) resource estimates with the important difference of the conversion of some previously categorized Inferred Resources to a significant Indicated Resource component in the new AMC estimates," stated David Adamson, President and CEO.
Project Description
The F2 Gold System is part of the 100% owned Phoenix Gold Project in Red Lake, Ontario. The project is accessible via road. Red Lake is an established mining town with access to full services.
Mining Plan
The PEA considers development of the F2 Gold System as an underground mine at a steady state rate of 1,250 tonnes per day. The primary mining method is conventional cut and fill utilising paste fill to maximise the material returned underground. The mine plan and financial outputs are based on a two-year pre-production phase and a producing mine life of 12 years, utilizing 2.0 million ounces, representing 72% of the currently identified resources. It should be noted that, in determining the mining inventory, AMC decided to take a conservative mine planning approach in applying the average diluted resource grade to the bottom five mining horizons (bottom 305 metres of the resource) rather than use the modelled average grade of 33.8 g/t, thus reducing the total ounces on these levels. The Company aims to continually upgrade the available resource for mining through definition drilling. An opportunity may also exist to drive a ramp from surface to accelerate the production in the upper part of the deposit in the early years of the project, thus changing the cash flow of the potential mine.
Metallurgy and Processing
Rubicon extracted one approximately 1,200 tonne bulk sample from the top of the F2 Core Zone and a second approximately 1,000 tonne bulk sample to the west from the WLB2 zone. The purpose of these samples was to establish the metallurgical performance of the two zones. Soutex was retained to conduct the mill design and engineering and manage the laboratory work required to ensure the mill design criteria were understood. Two ten (10) tonne sub-samples were sent to G&T Laboratories for further process analysis. The remainder of the material was shipped to SMC McAlpine Mill. During milling, the material was sampled and tested at Swastika Laboratories Ltd. under the supervision of Soutex. The samples were taken at periodic intervals from the mill stream (float concentrate, gravity concentrate and tailings) and combined to provide a metallurgical balance for the total gold content of the bulk sample.
Results of processing work indicate processing will be straightforward and will be a combination of gravity followed by a conventional carbon-in-leach process. Gold recoveries are estimated to be 92.5% with potential for further optimization. Estimated gravity recoveries are 50%.
The results of the bulk sample testing to date (which does not include final refining of gold) are compared in the table below to the results of delineation drilling which intersect the respective bulk sample zones:
WLB2 F2 Core
Delineation Drilling
Weighted Average 5.8 g/t gold 9.1 g/t gold
Milled Bulk Sample Testing
Results 7.1 g/t gold 8.2 g/t gold
Note: Delineation Drilling Weighted Averages utilise a cap of 270 g/t gold as utilised in the AMC resource estimates and are diluted by 17.9% (AMC used 17.9% dilution outside the nominal 2m mining width in its PEA).
Although the bulk sampling is located in part of the deposit that is lower grade than the overall resource average grade, it successfully confirms that the capped, diluted delineation drilling weighted average grade in this area is a reasonable determinant of recovered grade.
Tailings Management Facility
The Tailings Management Facility ("TMF") design incorporates engineered features to manage the chemical and physical stability of the deposited tailings in accordance with current best-in-class practices. Approximately 55% of the tailings will be converted to paste fill and deposited underground to minimize the amount of tailings that will be deposited on surface and also to provide a suitable backfill for the underground mine. The remaining tailings will be thickened to greater than 75% solids prior to deposition in the TMF, which has a capacity of approximately 25 years (based on a deposition rate of 190,000 tonnes of tailings per year following the ramp-up period) with the potential for optimization and expansion.
Capital Costs
The initial capital costs (including a 30% contingency or approximately $50 million) are estimated to be $214 million. Sustaining capital and capital development for the life-of-mine average $4.3 million/year and $6.1 million/year respectively and would be derived from cash flows.
Operating Costs
The following average life-of-mine costs are projected for the operating phase of the project:
Items Cost per processed tonne ($) Cost per recovered ounce ($)
Mining Cost 189 458
Processing and refining costs 22 53
G&A 2 4
Reclamation 1 2
Total 214 519
*Numbers may not add up due to rounding.
Closure and Rehabilitation Costs
Rehabilitation measures have been designed to ensure the long-term physical and chemical stability of the site in accordance with Ontario's closure plan approval process. The rehabilitation measures will return the site to a productive land use that will not require long-term care and maintenance. The rehabilitation cost is estimated to be approximately $6 million in total.
Sensitivity Analysis
Net Cash Flow $M
(NPV (0%)$M) NPV(5%) $M IRR Payback yrs -
Project Start Payback yrs -
Production Start
Au = $1,100/oz 739 433 28% 5.3 3.3
Au = $1,500/oz 1,482 933 48% 4.0 2.0
Au = $900/oz 368 183 16% 7.5 5.5
Resource Estimation Methodology
AMC prepared updated resource estimates which utilized the block model approach with Datamine ™ software and included the results from all drilling carried out on the project by Rubicon up to February 28, 2011. The estimates are in-situ and undiluted.
Constrained wireframes for the mineralized domains were created by AMC using a 0.1 g/t Au threshold which was locally further expanded to incorporate all significant mineralized zones. A total of 10 mineralized domains were created and utilized for the resource estimation. Sample composite length of 1.0 metre was used and grades were capped at 270 g/t Au after compositing (a 270 g/t Au cap was selected based on cumulative frequency plot analysis).
The block model parameters are as follows:
Item Dimensions Samples Used
(Min and Max)
Parent Block Size 2 X 8 X 12 metres
Search Ellipse 1 8 X 24 X 36 metres 3 and 10
Search Ellipse 2 16 X 48 X 72 metres 1 and 10
Search Ellipse 3 24 X 72 X 108 metres* 1 and 10
*Compares to block model validation figures in previous NI 43-101 resource estimate published on March 31, 2011
Bulk density used was 2.90 tonnes per cubic metre and the estimation method was inverse distance cubed
The resource is constrained by the base of overburden at surface, and no allowance is made for any crown pillar. There is no lower elevation constraint to the estimate. The cut off applied to the resource is 5 g/t Au which is the same as used in previous estimates.
Permitting and Continuing Consultations
The Company has all material permits in hand required for the development and construction stage for potential production, except for the following. The Company intends to re-submit the Closure Plan as soon as practicable. The Company expects to receive approval of the final three material permits, the Consolidated Amendment to Air Certificate of Air Approval 9500-7NGTTC, the amendment to the Permit to Take Water 2342-7LWRQU and the new Industrial Sewage Certificate of Approval before the end of Q3, 2011. The Canadian Environmental Assessment Agency has confirmed that the Project does not involve a trigger for a federal environmental assessment.
The Company is continuing its consultations with First Nations and the Métis Nation of Ontario.
Preparation of PEA
The PEA has been prepared by AMC (all sections except metallurgy) and Soutex (metallurgy). AMC is an international geology and mining engineering consultancy group with extensive experience in resource estimation, mining studies and provision of assistance to mining development projects and operating mines. Soutex is a Canadian based consulting firm specializing in mineral process evaluation. A NI 43-101 Technical Report for the PEA, including a new resource statement, will be filed on SEDAR within 45 days of the date of this news release.
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