Rubicon jumps on Agnico investment

TORONTO (miningweekly.com) – Shares in Canadian junior Rubicon Minerals surged on Thursday morning after Agnico-Eagle Mines said after the close on Wednesday that it would buy a 9.2% stake in the company.

Rubicon's main asset is the Phoenix deposit in Ontario.

The company has been touted as a potential takeover target, given the 2.8-million ounce resource established at Phoenix, but its shares have come under pressure after resources were revised downwards in March from an initial four-million ounces, and more recently after the company published a preliminary economic assessment for the F2 gold system last month.

A 1 250 t/d operation could produce an average of 180 000 oz/y for 12 years, with capital costs estimated at $214-million, including a 30% contingency, Rubicon said at the time.

The Phoenix project is located in the historic Red Lake gold district, and includes existing underground infrastructure and surface facilities from past operations.

Goldcorp, Canada's number-two gold producer, is the main operator in the Red Lake camp. The company bought Gold Eagle Resources, which had a project in the area, in July 2008, a month after Agnico took a 7.16% position in the junior company.

Agnico-Eagle, which has six mines in Canada, Mexico and Finland, said on Wednesday evening it had agreed to buy 21.67-million Rubicon shares, at C$3.23 apiece, for a total of about C$70-million.

The company will also sign a technical services agreement with the smaller firm, Agnico CEO Sean Boyd said on Wednesday.

Rubicon shares were up 24.18%, at C$3.80 each, by 10:40 in Toronto. The stock traded as high as C$3.90 earlier in the morning.

Agnico fell 5.24%, to C$54.03 a share.