Rubicon set to spin off African and Newfoundland assets

It’s been a long time coming, but there is light at the end of the tunnel for Rubicon Minerals (RMX-T, RBY-X), which is in the final steps of splitting into three separate public companies, each holding a distinct asset group.

A little more than a year ago, Rubicon announced its intention to spin out its mineral exploration assets under an arrangement whereby its shareholders would become shareholders of two new publicly traded companies, as well as retaining their current positions in Rubicon. The assets comprise:

* The Red Lake, Ont., gold project portfolio (including the wholly owned McFinley project where a 2,000-metre drilling program is in progress), which will remain with Rubicon. The company will have roughly $11 million in its treasury when all is said and done.

* A 39.6% interest in Africo Resources, a private company that holds an option to acquire 75% of the Kalukundi copper-cobalt deposit in the Democratic Republic of the Congo (DRC). Africo is being spun out into a new TSX-listed company (currently named CopperCo, although it will change its name back to Africo Resources), which will hold 100% of the outstanding shares of Africo. New Africo has raised gross proceeds of $20 million at $4.00 per share (including a half-warrant), which is being held in escrow pending the completion of the plan of arrangement. A positive feasibility study of Kalukundi proposes development of multiple open pits and a solvent extraction-electrowinning plant based on ore reserves of 7.8 million tonnes grading 2.37% copper and 0.69% cobalt, part of a measured and indicated 12 million tonnes grading 2.42% copper and 0.61% cobalt. Additional inferred resources total 15 million tonnes of 2.63% copper and 0.58% cobalt.

* The Newfoundland gold and base metal exploration portfolio, which will be held in a new TSX Venture Exchange-listed company called Paragon Minerals. Paragon is sitting on $4 million in gross proceeds from a new financing priced at between 50 and 60 per share, also being held in escrow. A 12-hole, 3,000-metre program is under way on the Golden Promise property in the central part of the province. Golden Promise is under option to Crosshair Exploration & Mining (CXX-V, CXXUF-O), which can earn a 60% interest by spending $4 million over four years.

It has been management’s view that Rubicon’s share price does not reflect the value of its diverse asset base. The reorganization serves to provide more focused vehicles for the separate project portfolios in a bid to attract better market valuations.

As part of the plan of arrangement, existing Rubicon shareholders will retain their current positions in Rubicon in addition to receiving one new share of New Africo for every 10.81 shares held in Rubicon, and one new share of Paragon for every six Rubicon shares.

Since announcing on Dec. 1 that it had received final court approval and that it was awaiting regulatory approval on a few remaining listing conditions, shares in Rubicon have been trading up in anticipation that the reorganization will finally be completed early this month. Rubicon shareholders voted in favour of the corporate restructuring in August. With 76.7 million shares outstanding, or 84 million on a fully diluted basis, Rubicon shares jumped to $1.24, at presstime, in a 52-week range of 84-$1.85.