Rubicon prepares to defend Phoenix in court

The Wabauskang First Nation (WFN) is coming after Rubicon Minerals (RMX-T, RBY-N) in a bid to get the government to listen.

After reports in the media for weeks that WFN was preparing to bring its complaints to court, the band has done just that, filing legal action against Rubicon in a move that the company says is without merit.

The legal action calls for a judicial review of the Province of Ontario’s authority to approve a production closure plan for Rubicon’s Phoenix gold project in Red Lake, Ontario.

WFN is a community of roughly 300 people that sits 100-km south of Red Lake.

The community, which is led by Chief Leslie Cameron, says while it is frustrated with Rubicon’s pace of development it is even more frustrated by both the Provincial and Federal government’s shirking of its constitutional obligation to consult with and accommodate First Nations on resource development projects.

Cameron told Northern Ontario Business that until the community’s rights and interests are respected they will oppose all of the mining company’s activities.

“We were forced to go to court. Maybe then somebody will start to listen,” Leslie told Northern Ontario Business. “We’re a small community… and people figure they’re going to just walk over us. I can’t let that happen as leader.”

Aboriginal bands in the northwest gained a greater say on resource extraction projects thanks to a 2011 Ontario Superior Court decision on a case brought forward by the Grassy Narrows First Nation near Kenora.

Rubicon already has an exploratioin agreement in place with the other First Nations community in the project’s vicinity, Lac Seul First Nation.

Rubicon says it wants to get WFN back to the negotiating table to hammer out a benefits agreement with the band, as the two sides have been in discussion since the beginning of 2009.

The company also pointed out that it has worked with an independent environmental consultant — one that was chosen by WFN and funded by Rubicon. After that environmental review was finished, Rubicon agreed to implement all the measures that were suggested.

Despite the legal threat, Rubicon is pushing ahead with construction activities, including shaft sinking and mill construction.

Phoenix hosts the F2 deposit, which has indicated resources of 1.02 million tonnes, grading 14.5 grams per tonne gold for a total of 477,000 oz. of gold, and inferred resources of 4.23 million tonnes, grading 17 grams for 2.31 million oz. of gold.

After completing a preliminary economic assessment earlier this year, Rubicon managed to raise $200 million through a bought equity financing — a deal that made the project fully funded.

The initial gold pour at Phoenix is expected to come in early 2014 and once the past-producing mine ramps up to commercial production it is expected to turn out 180,000 oz. of gold per year over a 12 year mine life, with an average head-grade of 14 grams per tonne and a recovery rate approaching 93%.

Amidst rumblings that WFN was preparing an legal case against the company, Rubicon’s shares have been on a steady decline since mid-November. On November 13 they closed at $3.34 but on Dec. 27 they were trading for just $2.37 — a 30% drop.