The Wabauskang First Nation is getting more forceful in opposing Rubicon Minerals (RMX-T, RBY-X) and its Phoenix gold project in Red Lake, Ont.
After weeks of media reports that the Wabauskang First Nation was preparing to launch a lawsuit to block project development, 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 Ontario’s authority to approve a production-closure plan for Phoenix.
Wabauskang is a community of roughly 300 people, 100 km south of Red Lake. Its leader, Chief Leslie Cameron, says that while the community is frustrated with Rubicon’s pace of development, it is even more frustrated by the provincial and federal governments’ alleged shirking of their constitutional obligations 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,” it would oppose all of the mining company’s activities.
“We were forced to go to court. Maybe then somebody will start to listen,” Cameron 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 after a 2011 Ontario Superior Court decision on a case brought forward by the Grassy Narrows First Nation near Kenora.
Rubicon already has a benefits agreement in place with Lac Seul First Nation, another community in the project’s vicinity. This agreement includes contracts with mining-related companies run by the community, and jobs at the site.
Rubicon says it wants to get Wabauskang back to the negotiating table to hammer out a benefits agreement, as the two sides have been in discussions since the beginning of 2009.
The company points out that it has worked with an independent environmental consultant — one that was chosen by Wabauskang and funded by Rubicon. After completing the environmental review, 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. gold, and inferred resources of 4.23 million tonnes, grading 17 grams for 2.31 million oz. gold.
After completing a preliminary economic assessment earlier this year, Rubicon raised $200 million through a bought-equity financing — which 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 could turn out 180,000 oz. 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 Wabauskang was preparing a legal case against the company, Rubicon’s shares have been on a steady decline since mid-November. On Nov. 13 they closed at $3.34, but on Dec. 27 they were trading for just $2.37 — a 30% drop.
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