Feb 13 2014
Rubicon Minerals Corporation ("Rubicon" or the "Company") is pleased to announce that it has entered into a US$75.0 million gold streaming agreement with RGLD Gold AG, a wholly-owned subsidiary of Royal Gold Inc. ("Royal Gold").
Stream Transaction Details
- Royal Gold will provide Rubicon with a deposit of US$75.0 million to be used entirely towards the construction of the Phoenix Gold Project ("Project");
- Rubicon agrees to deliver 6.30% of the projected annual gold production from the Project until 135,000 ounces have been delivered and 3.15% thereafter;
- Royal Gold's cash purchase price per ounce will be 25% of the spot price(1) at the time of delivery.
(1) London PM gold fixing price for one ounce of refined gold on the date of delivery.
"We believe we have removed a good portion of the financing risk associated with the Phoenix Gold Project with this agreement," said Michael A. Lalonde, President and Chief Executive Officer of Rubicon. "This deal represents a significant piece of the funding needed to complete the Project. We also believe this agreement with Royal Gold is an endorsement of the Phoenix Gold Project and the Rubicon management team. The deal terms validate the quality and the upside potential of our high-grade asset. We look forward to our long-term partnership with Royal Gold, as we transform Rubicon into Canada's next potential high-grade gold producer."
"The Phoenix gold stream is Royal Gold's first significant investment in the Red Lake District," commented Tony Jensen, President and Chief Executive Officer of Royal Gold. "This area is known for its high-grade gold deposits and long-lived assets. Rubicon's management team has a history of success in this district, and we are pleased to assist them in securing the financing necessary to complete the construction of the Phoenix Gold Project."
Summary of Gold Stream Agreement
The gold stream agreement covers the Phoenix Gold Project and certain ancillary claims. Royal Gold will provide the Company with a US$75.0 million deposit. The deposit will be provided over five installments: US$10.0 million upon the signing of the agreement, US$20.0 million on closing and then three equal installments of US$15.0 million estimated to be payable between March 15, 2014 and September 15, 2014. Rubicon's receipt of the closing payment and subsequent installment payments is subject to the terms and conditions of the agreement, including the receipt of committed financing sufficient to complete the Project. The Company will use the proceeds towards the construction of the Phoenix Gold Project. Rubicon has agreed to deliver 6.30% of the annual projected gold production from the Project to Royal Gold for up to 135,000 ounces, and 3.15% thereafter. Royal Gold will pay Rubicon in cash 25% of the spot gold price(2) for each delivered ounce.
(2) London PM gold fixing price for one ounce of refined gold on the date of delivery.
Royal Gold's deposit is secured on the assets of the Phoenix Gold Project. Rubicon can raise up to US$100 million of debt that would rank senior to the gold stream deposit. In the event that Royal Gold's interests are subordinated to more than US$50 million of debt, Royal Gold's per ounce cash purchase price will be reduced by the product of 5.4% times the amount of the senior debt outstanding and drawn in excess of US$50 million, divided by US$50 million.
Rubicon's financial advisors with respect to the gold streaming transaction were TD Securities Inc. and GMP Securities L.P.
Phoenix Gold Project Additional Funding Requirements
Rubicon enjoys a strong balance sheet with approximately C$78 million in cash and temporary investments and no debt, as at December 31, 2013. This transaction further strengthens the balance sheet, and provides the Company with the flexibility to take a disciplined approach to raising the balance of the funds required to bring the Project into production.
We estimate that we will require approximately US$100 million of additional financing to complete the construction of the Project, inclusive of corporate expenses and working capital requirements. Rubicon is currently evaluating financing alternatives with a strong focus on minimizing the Company's cost of capital. Management will continue to preserve our strong balance sheet and plans to resume full mill construction activity once the balance of the remaining financing has been secured.
Conference Call Details
The Company's senior management team will host a conference call today, Tuesday, February 11, 2014 at 10:00 am ET (7:00am PT) to discuss the gold streaming deal and Project update.
Participants in Canada and the United States may join the conference call by dialing toll free +1 (800) 319-4610 or +1 (604) 638-5340 for calls outside Canada and the United States or via webcast on the Company's website at www.rubiconminerals.com.
A recorded playback of the conference call can be accessed after the event by dialing +1 (800) 319-6413 or +1 (604) 638-9010 for calls outside Canada and the United States. The pass code for the conference call playback is 7856#. The archived audio webcast will also be available on the Company's website at www.rubiconminerals.com.
About Rubicon Minerals Corporation
Rubicon Minerals Corporation is an advanced stage gold development company, focused on responsible and environmentally sustainable development of its Phoenix Gold Project in Red Lake, Ontario. Gold production is projected to commence 12-14 months following the completion of the remaining financing. Rubicon's flagship Phoenix Gold Project is fully permitted for initial production at 1,250 tonnes per day. In addition, Rubicon controls over 100 square miles of prime exploration ground in the prolific Red Lake gold district which hosts Goldcorp's high-grade, world class Red Lake Mine. Rubicon's shares are listed on the NYSE.MKT (RBY) and the TSX (RMX) Exchanges.
RUBICON MINERALS CORPORATION
Mike Lalonde, President and Chief Executive Officer
Qualified Persons
The content of this news release has been read and approved by Daniel Labine, P.Eng., Vice President of Operations and Mark Ross, B.Sc., P.Geo., Chief Mine Geologist, for Rubicon. Both are Qualified Persons as defined by NI 43-101.