In a Jan. 7 research note, iA Securities analyst George Topping reported that Rubicon Minerals Corp. (RMX:TSX; RBYCF:OTCMKTS) updated the mineral resource at its Phoenix gold project in Red Lake, Ontario.
Topping highlighted that the updated resource now contains 811,000 ounces (811 Koz) in the Measured and Indicated category, up 38% since the previous estimate of 589 Koz. The boost was driven primarily by M&I tonnage growing 34% to 3.9 million tons (3.9 Mt) from 2 Mt and Inferred ounces converted to M&I ounces. Gold grades mostly stayed the same at about 6.5 grams per ton.
The Phoenix project's total resource is now about 1.3 million ounces. Another resource update is expected in H2/20.
The new resource, Topping indicated, "underpins the feasibility study," also anticipated in H2/20. "With the updated ounces we expect the mine life and economics to improve substantially to our $2.50 per share target price," he added. For one, the ramp-up is expected to exceed the level outlined in the preliminary economic assessment, and that would lower the all-in sustaining cost. Further, the current M&I resource supports production of about 90,000 ounces per year over an eight-year mine life, but exploration work should add years.
Certainly, exploration upside exists at the property, Topping pointed out. His firm listed the Top 20 drill results from Rubicon's regional drilling since 1998. They indicated that the "limited amount of drilling done in the past on the McFinley, Island and CARZ zones yielded several high grade intercepts (e.g.,) 3 meters (3m) at 70 grams per ton (70 g/t) or 4.8m at 15 g/t," and that those zones "provide a good place to start work on satellite deposits."
Finally, Topping purported that Rubicon is an ideal takeout target. Along with its existing mine and "tightly drilled resource," it holds value in its $690+ million in tax pools, its plant with a capacity of 1,500 tons per day, its mobile equipment and its prospective, 29,000 hectare land position. "Rubicon may get taken out due to mis(under)pricing by the market as majors look to consolidate the camp," the analyst commented, noting that Evolution Mining and Anglogold are present there.
Along with its CA$2.50 per share target price on Rubicon Minerals, iA Securities has a Buy rating on the exploration company. Its stock is currently trading at around CA$1.08 per share.[NLINSERT]
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Disclosures from iA Securities, Rubicon Minerals Corp., Research Update, January 7, 2020
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Company Related Disclosures:
Rubicon Metals Corp.:
In the past 12 months, Industrial Alliance Securities Inc. has managed or co-managed a public offering of securities for the issuer.
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.