Rubicon Minerals provides Phoenix gold drilling update

Rubicon Minerals (TSE:RMX) Monday released an update of exploration activities at its F2 Gold System, part of the Phoenix gold project, located in the Red Lake, Ontario gold district.

The company is carrying out a 12-month, $82.8 million program designed to optimize certain aspects of its preliminary economic assessment (PEA), accelerate site infrastructure and expand on current engineering studies.

Last June, the company received the results of the PEA on its F2 Gold System 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.

Currently, Rubicon said there are 32,000 metres planned to be drilled by the end of the third quarter of 2012, with room to expand this amount should results warrant.

Highlights from the West Limb Basalt 2 (WLB2) zone revealed 152.4 g/t gold over 1.5 metres, including 437.8 g/t gold over 0.5 metres in hole 305-03-167.

Additional results from the WLB2 zone show 156.9 g/t gold over 1.7 metres, including 221.6 g/t gold over 1.2 metres in CZD-2012-33, and hole 305-03-170 yielded 8.0 g/t gold over 5.5 metres including 44.7 g/t gold over 0.5 metres, and 8.2 g/t gold over 12.8 metres including 30.6 g/t gold over 2.0 metres, with vertical depths of 1112 metres and 1176 metres, respectively.

New assay highlights from the Crown Zone include 4.7 g/t gold over 16.4 metres in CZD-2012-04.

At CZD-2012-15, new results showed 28.8 g/t gold over 5.0 metres including 134.97 g/t gold over 0.9 metres, and CZD-2012-26 returned new intercepts of 4.1 g/t gold over 17.4 metres including 21.4 g/t gold over 1.0 metre.

Rubicon said follow up drilling in this area has shown continuous WLB2 style mineralization at the northern extents of the F2 Gold System.

Additional highlights from recent drilling include 4.9 g/t gold over 6.3 metres in CZD-2012-34.

The company said this program was successful in discovering a shallow zone of strong gold mineralization in the northeastern portion of the 9X block which is an area that previously had been the subject of limited drilling.

Rubicon noted that continued follow-up infill drilling will be conducted in this area.

Infill and deep expansion drilling is ongoing in the vicinity of the 122-10 zone, said Rubicon.

A robust mineralized interval containing multiple, separate intercepts over a 250 metre core length was returned from underground drill hole 305-03-164. 

Highlights from this hole include 33.6 g/t gold over 3.0 metres, including 118.9 g/t gold over 0.8 metres, 22.3 g/t gold over 4.0 metres including 71.6 g/t gold over 1.0 metre, and a wide interval of 4.8 g/t gold over 27.0 metres including 14.3 g/t gold over 2.3 metres, and also including 10.2 g/t gold over 2.8 metres.

The company said these results were intersected between vertical depths of 853 to 1107 metres below surface.

Rubicon reported that since the PEA, four new intercepts have been returned at the Sub 1,200 metre area, all of which are gold bearing and developed within typical altered host basaltic sequences.

Hole F2-2012-03-W2 returned 4.2 g/t gold over 5.1 metres including 10.7 g/t gold over 1.1 metres. 

This intercept, at a depth of 1546 metres below surface, is now the deepest intercept at the F2 gold system, said the company. Drilling of this sub 1,200 metre level target area is ongoing.

"Our infill drilling near surface to date has been successful and has added to our geological confidence in these areas as well as identifying extensions to known zones," said Rubicon's president and CEO David Adamson.

"Drilling of expansion target areas continues."

According to the AMC study, the F2 System is expected to 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.

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.