Phoenix mine on target for production mid-year

Rubicon Minerals (TSX:RMX) advanced 4.5 percent on Friday after the company released an update on its Phoenix Gold Project in Red Lake, Ontario.

According to Rubicon, construction of the mine is on track to begin production in mid-2015, with mill commissioning starting ahead of schedule.

"I am pleased to announce that the Phoenix Gold Project is now on the homestretch to projected initial production," Rubicon president and CEO Michael Lalonde said in a press release. "We have begun commissioning the mill circuit ahead of schedule. We expect commissioning to continue throughout the second quarter, including the limited processing of low-grade development material. The stockpiling of mill feed continues. We expect that all remaining underground development prior to projected initial production will be completed by the end of May."

As of April 12, 85 percent of underground development work was complete, with eight stopes in various stages of development. The company has so far stockpiled 11,600 tonnes of mineralized material.

The Phoenix mine contains between 766,000 and 1.272 million ounces of gold in the indicated category, depending on cutoff grades varying from 3 grams per tonne to 7 gpt, according to the latest resource estimate, which includes drill results up to the end of October, 2012.

Rubicon Minerals has a gold streaming agreement with Royal Gold (TSX:RGL) and a net smelter royalty agreement with Franco-Nevada Corp. (TSX, NYSE:FNV) respecting the Phoenix Gold Project. Rubicon will receive $75 million from Royal Gold, in return for Royal Gold receiving 6.3 percent of annual gold production, until 135,000 ounces has been delivered. At that point the percentage drops to 3.15 percent. Franco-Nevada will purchase the existing 2.0% NSR on Rubicon’s Phoenix Gold Project water claims, while Rubicon has the right to purchase 25 percent of the NSR (or 0.5%) for US$675,000 and the right of first refusal on the remaining 75 percent of the NSR.

Read the full project update here