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Stock Price of Gold Explorer with Imminent PEA 'Doesn't Match Milestones Achieved'
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Expectations for the project report and speculation about recent trading activity are given in an iA Securities report.

In a June 25 research note, iA Securities analyst George Topping reported that Rubicon Minerals Corp. (RBY:NYSE.MKT; RMX:TSX) intends to release the preliminary economic assessment (PEA) on its Phoenix gold project in Q3/19.

Topping noted that much of the necessary aboveground infrastructure at the Red Lake, Ontario asset is already there, including offices, the mill, the electric substation and the tailings management facility. Underground, 14,000 meters (14,000m) are already developed along with an operational shaft descending 730 meters below the surface.

"Given all the existing infrastructure, we estimate a low CA$100 million in start-up capex to get to an 88,000 ounces of gold per year, US$860 per ounce all-in sustaining cost operation," wrote Topping. Production expansions would follow. At a gold price of CA$1,875 per ounce, the project would yield a 42% internal rate of return, or CA$2.50 per share target return, annually, according to IA Securities' base case. However, successful exploration efforts could boost that to CA$4.20 per share.

Topping highlighted that while Rubicon continues to derisk Phoenix, the stock price has not responded accordingly but, rather, has dropped. Specifically, it decreased 7% in the past seven days and 36% in the past three months.

The analyst indicated the downward movement began in April when equity holders came off restriction following the company's CA$7 million flow-through financing. Then the rumor that Newmont Goldcorp might sell the Campbell mine in Red Lake added uncertainty. As for other contributors, Topping said, "We postulate with the gold price rising, some holders, institutional and retail, may be selling their smaller cap names to reallocate capital to large caps golds, which typically move first before the junior gold companies."

Topping concluded that at a current share price of about CA$0.79, the downside risks to Rubicon are minimal, and the company has a solid management team with an advanced gold project in an established mining camp. It has capital for its 2019 exploration project, a PEA being released next quarter and the potential to restart Phoenix by late 2020.

As such, iA Securities has a Buy rating and a CA$2.50 per share price target on Rubicon.


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Disclosures from iA Securities, Rubicon Minerals Corp., Research Update, June 25, 2019

Conflicts of Interest: The research analyst and or associates who prepared this report are compensated based upon (among other factors) the overall profitability of iA Securities, which may include the profitability of investment banking and related services. In the normal course of its business, iA Securities may provide financial advisory services for the issuers mentioned in this report. iA Securities may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis.

Analyst's Certification: Each iA Securities research analyst whose name appears on the front page of this research report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analyst's personal views about the issuer and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Analyst Trading: iA Securities permits analysts to own and trade in the securities and or the derivatives of the issuer under their research coverage, subject to the following restrictions. No trades can be executed in anticipation of coverage for a period of 30 days prior to the issuance of the report and 5 days after the dissemination of the report to our clients. For a change in recommendation, no trading is allowed for a period of 24 hours after the dissemination of such information to our clients. A transaction against an analyst's recommendation can only be executed for a reason unrelated to the outlook of the stock for the issuer and with the prior approval of the Director of Research and the Chief Compliance Officer.

Company Related Disclosures:
Franco-Nevada: The analyst has visited the issuer's operations. No payment or reimbursement was received from the issuer for the associated travel costs.

In the past 12 months, Industrial Alliance Securities Inc., its officers, directors, or analysts involved in the preparation of this report has provided services to the issuer for remuneration other than normal course investment advisory or trade execution services.

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