Rubicon Minerals Receives Positive Preliminary Economic Assessment for F2 Gold System, Phoenix Gold Project, Red Lake, Ontario
VANCOUVER, June 29, 2011 /CNW/ --
-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|Spot Price Case ($1,500|
| |gold)* |oz gold) |
|________________________|____________________|_______________________|
|Average mined gold grade|13.87 g/t |13.87 g/t |
|________________________|____________________|_______________________|
|Steady state annual gold|180,000 ounces |180,000 ounces |
|production | | |
|________________________|____________________|_______________________|
|Life of Mine from |12 Years |12 Years |
|production start | | |
|________________________|____________________|_______________________|
|Planned Steady State |1,250 tpd |1,250 tpd |
|Production Rate | | |
|________________________|____________________|_______________________|
|IRR Pre tax |28% |48% |
|________________________|____________________|_______________________|
|NPV Pre tax (5% discount|$433 million |$933 million |
|rate) | | |
|________________________|____________________|_______________________|
|Payback period from |3.3 Years |2 Years |
|start of production | | |
|________________________|____________________|_______________________|
|NPV Pre tax (0% discount|$739 million |$1,482 million |
|rate) | | |
|________________________|____________________|_______________________|
|Initial Capital (30% |$214 million |$214 million |
|contingency) | | |
|________________________|____________________|_______________________|
|Cash costs |$214/tonne |$214/tonne |
|________________________|____________________|_______________________|
|Metallurgical recovery |92.5% |92.5% |
|________________________|____________________|_______________________|
|Total Mined Gold to |2,006,000 ounces |2,006,000 ounces |
|Mill** | | |
|________________________|____________________|_______________________|
* 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:
1. CIM definitions were used for mineral resources
2. The cut off grade applied is 5.0 g/t Au
3. A capping value of 270g/t Au has been applied to the composites
4. Using drilling results to February 28, 2011
5. 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 |5.8 g/t gold|9.1 g/t gold|
|Weighted Average | | |
|___________________________|____________|____________|
|Milled Bulk Sample Testing |7.1 g/t gold|8.2 g/t gold|
|Results | | |
|___________________________|____________|____________|
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
$6.1 million/year respectively and would be derived from cash flows.
Operating Costs
The following average life-of-mine costs are projected for the operating
phase of the project:
___________________________________________________________________
| Items |Cost per processed|Cost per recovered ounce|
| | tonne ($) | ($) |
|_______________________|__________________|________________________|
|Mining Cost | 189 | 458 |
|_______________________|__________________|________________________|
|Processing and refining| 22 | 53 |
| costs | | |
|_______________________|__________________|________________________|
|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|NPV((5)(%)|IRR|Payback yrs -|Payback yrs -|
| | $M | )$M | | | |
| | (NPV ( | | |Project Start| Production |
| | (0%))$M) | | | | Start |
|____________|_____________|__________|___|_____________|_____________|
|Au = | 739 | 433 |28%| 5.3 | 3.3 |
|$1,100/oz | | | | | |
|____________|_____________|__________|___|_____________|_____________|
|Au = | 1,482 | 933 |48%| 4.0 | 2.0 |
|$1,500/oz | | | | | |
|____________|_____________|__________|___|_____________|_____________|
|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.
RUBICON MINERALS CORPORATION
'David W. Adamson'
President & CEO
Mineral Resources
Mineral resources that are not mineral reserves do not have demonstrated
economic viability. The estimate of mineral resources may be materially
affected by environmental, permitting, legal, title, taxation,
socio-political, marketing, or other relevant issues. The quantity and
grade of reported inferred resources in this estimation are uncertain
in nature and there has been insufficient exploration to define these
inferred resources as an indicated or measured mineral resource and it
is uncertain if further exploration will result in upgrading them to an
indicated or measured mineral resource category. The mineral resources
in this press release were reported using CIM Standards.
Qualified Persons
Phoenix Project exploration, drill work programs and all data forming
the basis of this release were supervised and verified by Terry Bursey,
P.Geo., Regional Manager for Rubicon and a Qualified Person under the
definition of NI 43-101.Drill core assays were conducted on sawn
NQ-sized half core sections. The saw blade is routinely cleaned between
samples when visible gold is noted during logging and sampling of the
drill core. All assays were conducted by SGS Minerals Services using
standard fire assay on a 50 gram sample with a gravimetric finish
procedure. Standards, blanks and check assays were included at regular
intervals in each sample batch. Check assays on 5% of samples are
carried out at a third party independent laboratory. Gold standards
were prepared by CDN Resource Laboratories Ltd.
The content of this news release, other than that pertaining to bulk
sampling, metallurgy and processing, has been read and approved by H.A.
(Bert) Smith, P. Eng., and J.M. (Mort) Shannon, P.Geo. respectively
consulting mining engineer and consulting geologist of AMC, and
independent Qualified Persons as defined by NI 43-101. Exploration
drill programs and all data forming the basis of the inferred and
indicated resource estimate described in this release were supervised
and verified by Terry Bursey, P. Geo., Regional Manager for Rubicon and
a Qualified Person as defined by NI 43-101. The inferred and indicated
resource estimation, including the block modelling was carried out
by Dinara Nussipakynova, P. Geo., and Cath Pitman, P. Geo., who
verified all data received from Rubicon in connection with same. J.M.
(Mort) Shannon, P. Geo. supervised the resource estimation process.
All are consulting geologists of AMC and independent Qualified Persons
as defined by NI 43-101. The mill sample testing results were prepared
by Swastika Laboratories. The bulk sample process was conducted under
the supervision of Eric Hinton, P. Eng., Project Manager for Rubicon
and Qualified Person as defined by NI 43-101 and the laboratory work
and mill processing was supervised by Pierre Roy, P. Eng. of Soutex
Inc. (Quebec City, Quebec) who is an independent Qualified Person as
defined by NI 43-101.
The PEA has been prepared by AMC with metallurgical and processing
contributions from Soutex. Individual contributing authors are H.A.
(Bert) Smith, P. Eng. and J.M. (Mort) Shannon, P. Geo. of AMC, and S.
Caron, ing. of Soutex. All are independent Qualified Persons as defined
by NI 43-101.
Cautionary Note to U.S. Readers Regarding Estimates of Measured,
Indicated and Inferred Resources
This press release uses the terms 'indicated resources' and 'inferred
resources.' We advise U.S. investors that while these terms are
recognized and required by Canadian regulations, they are not
recognized by the SEC. 'Inferred resources' have a great amount of
uncertainty as to their existence, and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or any
part of an 'inferred' or 'indicated resource' will ever be upgraded to
a higher category. Under Canadian rules, estimates of 'inferred
resources' may not form the basis of a feasibility study or
prefeasibility studies, except in rare cases. The SEC normally only
permits issuers to report mineralization that does not constitute
'reserves' as in-place tonnage and grade without reference to unit
measures. U.S. investors are cautioned not to assume that any part or all of an
indicated or inferred resource exists or is economically or legally
mineable.
Forward Looking Statements
This news release contains statements that constitute 'forward-looking
statements' within the meaning of Section 21E of the United
States Securities Exchange Act of 1934 and 'forward looking
information' within the meaning of applicable Canadian provincial
securities legislation (collectively, 'forward-looking statements') .
Forward-looking statements often, but not always, are identified by the
use of words such as 'seek', 'anticipate', 'believe', 'plan',
'estimate', 'expect', 'targeting' and 'intend' and statements that an
event or result 'may', 'will', 'should', 'could', or 'might' occur or
be achieved and other similar expressions. Forward-looking statements
in this document include statements regarding estimates of mineral
resources, estimates of gold grades and in-place ounces, estimates of
costs, estimates of mine development and construction, estimates of
economic potential and returns, projections of future optimization, the
preparation and timing of a final amended technical report in respect
of the inferred and indicated resource estimates and the timing and
nature of future exploration programs. The description of the extent of
mineralized zones is not intended to imply that any economically
mineable estimate of reserves exists on the Phoenix Project. Similarly,
although geological features of the F2 Gold System are interpreted to
show similarities to nearby gold producing mines owned by third
parties, this should not be interpreted to mean that the F2 Gold System
has, or that it will generate similar reserves or resources.
The forward-looking statements that are contained in this news release
are based on various assumptions and estimates by Rubicon and involve a
number of risks and uncertainties. As a consequence, actual results
might differ materially from results forecast or suggested in these
forward-looking statements. Forward-looking statements involve known
and unknown risks, uncertainties, assumptions and other factors that
may cause the actual results, performance or achievements of Rubicon to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements.
Factors that could cause the actual results to differ include; risks
relating to fluctuations in the price of gold; the inherently hazardous
nature of mining-related activities; uncertainties concerning reserve
and resource estimates; results of exploration, availability of capital
and financing on acceptable terms, inability to obtain required
regulatory approvals, unanticipated difficulties or costs in any
rehabilitation which may be necessary, market conditions and general
business, economic, competitive, political and social conditions. These
statements are based on a number of assumptions, including assumptions
regarding general market conditions, timing and receipt of regulatory
approvals, the ability of Rubicon and other relevant parties to satisfy
regulatory requirements, the availability of financing for proposed
transactions and programs on reasonable terms and the ability of
third-party service providers to deliver services in a timely manner.
Although Rubicon has attempted to identify important factors that could
cause actual results to differ materially from those expressed or
implied in forward-looking statements, there may be other factors which
cause actual results to differ. Forward-looking statements contained
herein are made as of the date of this news release and Rubicon
disclaims any obligation to update any forward-looking statements,
whether as a result of new information, future events or results or
otherwise, except as required by applicable securities laws. There can
be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ materially
from those anticipated in such statements. Accordingly, readers should
not place undue reliance on forward-looking statements.
_______________________________________________________________________________________________________
The Toronto Stock Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
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For more information, contact Bill Cavalluzzo, VP-Investor Relations, Toll free: 1.866.365.4706
E-mail: bcavalluzzo@rubiconminerals.com | www.rubiconminerals.com