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By Claire Cudahy, Northern Sun News
A significant blow to the neighbouring community of Red Lake as Rubicon Minerals Corporation announced on Nov. 3 it is moving to suspend underground activities at the Phoenix Gold Project while it works to enhance the geological model, develop a new mineral resource estimate, and produce a project implementation plan.
“We believe in the potential of the Phoenix Gold Project,” said Michael Winship, interim President and Chief Executive Officer of Rubicon. “We have high-grade gold mineralization with extensive infrastructure, in one of the top producing gold camps in the world. Similar to other high-grade, narrow-vein, underground gold deposits, the geology can be quite challenging and requires additional analysis to be fully understood. During the trial stoping period, we have discovered that the F2 Gold Deposit is much more geologically complex compared to our understanding of it from historical drilling.”
Rubicon will work with SRK Consulting (Canada) Inc. and a team of advisors to produce the Phoenix Project Implementation Plan (PPIP), which Winship estimates will be finished in the second quarter of 2016—approximately six months.
“Our job is to maximize value for our shareholders. After conducting an initial assessment of the project following my appointment as interim CEO, we believe that we need to better define the value of the deposit with further work,” explained Winship. “Therefore, we have decided to temporarily suspend underground activities, further enhance our geological model, and create a project implementation plan with the goal of providing a better path towards profitability. We are focused on building both the right plan and the right leadership team to accomplish this goal.”
The company has initiated a cost-cutting plan, resulting in the “temporary layoff” of approximately 200 employees and 110 contractors, or 87 per cent of its workforce.
“We really regret the impact on our employees and the impact this will have on their lives and their families. I’ve lived up in Red Lake for five and a half years, and I know the effect this can have on a small community, so it’s very disappointing to me personally,” said Winship.
Most layoffs took place on Nov. 3, but approximately 30 employees will be needed through November to process the stockpile of 11,000 tonnes of mineralized material at an estimated gold grade of 4.0 g/t Au.
The Ministry of Environment and Climate Change (MOECC) gave permission for Rubicon to restart mill operations on Oct. 30 after the company successfully reduced ammonia levels and discharged treated effluent in the environment. Upgrades to the tailings management facility should be completed next week.
“Then we will have about a core of 25 or 30 people that will protect the asset in terms of security and environmental protection and maintenance if we have to quickly restart the operation in the spring if we have a positive plan,” explained Winship.
As of Oct. 31, Rubicon’s working capital balance is C$23 million, which the company believes will carry Rubicon through the PPIP development period.
“I have confidence in this deposit. I’ve been on the board for four years, and I’ve come out of retirement to help the team go forward with this project. I’m disappointed with our announcement today, but I still remain optimistic in the long-term future of this mine in Red Lake,” said Winship.
Since May 2015, Rubicon has produced 3,704 ounces of gold and sold 2,498 ounces.