Rubicon Minerals increases Phoenix gold budget to end of Q3 to $82.8 mln

Rubicon Minerals (TSE:RMX) said Tuesday that the budget for its Phoenix gold project in Red Lake, Ontario to the end of the third quarter this year has increased by $27.8 million, to $82.8 million.
The gold explorer controls 100 square miles of premium exploration ground in the Red Lake gold district, which hosts Goldcorp’s (TSE:G) prolific Red Lake Mine. Rubicon’s focus is on its high-grade gold discovery at the Phoenix gold project.
Roughly 60% of the budget increase is concentrating on the acceleration of mill foundation work, and the fabrication of the mill building, estimated to cost $16.6 million, including 20 percent contingency.
The remainder of the funds will go toward additional mill engineering work, the completion of the SAG and ball mill down payment, and more diamond drilling.
All capital expenditures are included in the company's current preliminary economic assessment (PEA) on the project.
Last June, the company received the results of the PEA on its F2 Gold System, part of the Phoenix project, indicating a cash cost as low as US$214 per tonne of processed material.
The report, prepared by AMC Mining Consultants, estimated the F2 System will produce 180,000 ounces of gold per year in the base case scenario over a life of 12 years, with a production rate of 1,250 tonnes per day.
This, according to the study, would yield a net present value of $433 million, at a five percent discount rate, and a pre-tax 28 percent internal rate of return, with a payback period of 3.3 years from the start of production.
These base case results were calculated using a gold price of $1,100 per ounce, the company said, and increase when using a higher, spot gold price.
Indeed, using a gold price of $1,500 per ounce, net present value, using the same discount rate, would jump to $933 million, while the pre-tax internal rate of return would climb to a whopping 48 percent.
Rubicon is carrying out a 12-month $55 million program with the impetus to optimize some aspects of its preliminary economic assessment.
This program, according to Rubicon, contemplates a total of 68,000 metres of drilling, of which, as of late March, 41,000 metres remained to be drilled before the third quarter this year.
As of March 31, Rubicon estimated that it had working capital of $235 million.