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
The remainder of the funds will go toward additional mill engineering
work, the completion of the SAG and ball mill down payment, and more
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
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
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.