Junior miner Rubicon Minerals Corp. has slashed its gold resources by an astounding 88 per cent, confirming the company will go down as one of the worst Canadian mining meltdowns in years.
The stock plunged 64 per cent on Monday, closing at 5 cents, as this news crushed any remaining investor confidence in the formerly high-flying company. Rubicon has hired financial advisors to try to salvage value for shareholders, but there is little confidence that they will succeed.
“We’re very disappointed, as management and the board, at what’s transpired,” interim chief executive Michael Winship said on a conference call.
Toronto-based Rubicon was one of the hottest junior mining stories of the past decade, but the company made fatal errors while developing its Phoenix gold project in Ontario’s Red Lake camp. Those mistakes were overlooked by many investors for years.
But there was no hiding from them on Monday, as the company released a new resource estimate for the Phoenix project that identified a mere 413,000 ounces of gold. In Rubicon’s prior estimate, released in 2013, it thought the project held 3.3 million ounces, or about eight times more.
While miners occasionally lower expectations for a project after doing more work, it is almost unheard of for resources to fall this much from one study to the next.
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