Rubicon reports Franco-Nevada acquires royalty at its Red Lake project

Rubicon Minerals (TSE:RMX) (AMEX:RBY) said Thursday that Franco-Nevada Corp has purchased all of the 2% net smelter royalty previously owned by Dominion Goldfields Corp, on a part of Rubicon's Phoenix gold project in Red Lake, Ontario.

The transaction did not trigger any rights of first refusal on the royalty, said Rubicon. However, the royalty remains subject to Rubicon's prior right to purchase 25% of the royalty, or 0.5% of the 2% net smelter returns, for US$0.675 million. The right of purchase is exercisable at any time.

Rubicon acquired the Phoenix project under option from Dominion Goldfields in 2002, and later earned a 100% interest in the project, subject to the royalty.

In exchange for the royalty from Dominion, Franco-Nevada issued 550,000 common shares of the company to Dominion, worth $23.23 million in total.

"Franco-Nevada Corporation is a recognized premier gold royalty company and we welcome their purchase of the Royalty," said president and CEO of Rubicon, David Adamson.

"We see their involvement as another strong validation by an industry leader of our Phoenix Gold Project following close on the heels of the recent purchase by Agnico-Eagle Mines of a 9.2% stake in Rubicon."

President and CEO of Franco-Nevada, David Harquail, added: "We are very pleased to have a royalty interest on Phoenix, a very high grade deposit in the prolific Red Lake camp.

"We believe Phoenix will be a long life gold mine in Canada that will add to Franco-Nevada's long term growth."

Rubicon controls over 100 square miles of exploration ground in the prolific Red Lake gold district of Ontario, which hosts Goldcorp's (TSE:G) (NYSE:GG) high-grade Red Lake Mine.