TORONTO — Rubicon Minerals Corp. is at risk of collapse after breaching a debt covenant and halting its high-profile Ontario gold project due to technical problems.
The junior miner announced Tuesday that there is “significant doubt” it can continue as a going concern because of its debt, and may have to seek creditor protection.
To stay onside with the terms of its loan facility, Toronto-based Rubicon needed to have its Phoenix mine up and running by now. That has not happened. Rubicon had to halt development work at the Red Lake-based project last year after getting underground and realizing that the geology was far more complex than it initially thought.
In January, the company cut the gold resources at Phoenix by a shocking 88 per cent, noting the mineralization was “less continuous” than expected.
Rubicon’s financial situation is ugly. It has just $22.3 million of cash, $70 million of debt and a working capital deficit of almost $180 million. The company is in discussions with its secured lender, the Canada Pension Plan Investment Board, but said there is no guarantee that CPP will not exercise its rights in the loan agreement following the breach.
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