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Even before its meltdown, investors watching Rubicon Minerals Corp. could see some troubling warning signs.
Everything seemed fine on the surface. The company said in April that it was on track for first gold production at its Phoenix project in Northern Ontario in mid-2015. And in June, it did indeed pour its first gold.
Yet at the same time, Toronto-based Rubicon was saying very little in what should be a busy period. Its second quarter financials, which were filed to SEDAR in August with a press release, showed the company spent tens of millions more than expected in the quarter, leading some analysts to wonder what was going on. Sources said they had trouble getting detailed answers from the company.
Then in October, Rubicon announced out of nowhere that CEO Michael Lalonde was departing, and that the company had milling problems that were nearly a month old.
“You had some warning signs that things were not going well,” said Jason Mayer, a portfolio manager at Sprott Asset Management who sold his shares before the collapse.
Everything came to a head on Nov. 3, when Rubicon halted all underground work at the Phoenix project. The company acknowledged the geology of the deposit is more complex than previously thought and a new development plan is needed. The stock plunged 55 per cent, and there are now doubts about whether Rubicon will be able to finish construction without a large restructuring.
“There’s probably a deposit there they can mine and make money on,” said Brent Cook, publisher of Exploration Insights.
“But do I think the company’s salvageable? It’s nothing I would buy.”
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