UPDATE 2-Rubicon Minerals slashes gold estimate, considers sale

Mon Jan 11, 2016 3:46pm EST
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Jan 11 (Reuters) - Canadian gold miner Rubicon Minerals Corp cut the gold reserve estimate for its Phoenix mine in Ontario by 86 percent and said it was considering selling itself among other options, sending its shares down 60 percent.

Rubicon said on Monday the inferred gold reserves at the mine was now 0.3 million ounces, compared with the 2.2 million ounces it estimated in 2013.

"Not only is this a huge negative development for RMX, but is it also a huge black-eye for the industry," Mackie Research Capital analysts wrote in a note.

"We are totally shocked ... particularly after so many engineering firms have reviewed the data," the analysts wrote.

Rubicon mainly raised funds for the mine through issuing shares and through so-called "streaming agreements", which provided upfront funds in exchange for a portion of a mine's future output.

Royal Gold Inc signed a $75 million gold "streaming agreement" on the mine in January 2014.

The Canada Pension Plan Investment Board (CPPIB) provided a $50 million loan facility last May for developing the mine.

The miner said the drop in resources was due to new drilling information and changes in modeling.   Continued...