Mineral Resources

2016 SRK Mineral Resource Statement of the Phoenix Gold Project

The updated mineral resource model is based on a revised geological model that considers new information acquired by Rubicon since October 31, 2012 (the cut-off date for the previous mineral resource evaluation), including underground infill core drilling (94,575 m), underground development exposing the gold mineralization extensively for geological investigations, and test stopes. This new geological information has confirmed the complexity of the controls on the distribution of the gold mineralization, its grade and its continuity.

2016 Mineral Resource Statement1, Phoenix Gold Project, Ontario, SRK, January 6, 2016 at 4.0 g/t Au cut-off grade

Resource Category Quantity
(000' tonnes)
Grade
(g/t Au)
Contained Ounces Au
(000)
Indicated 492 6.73 106
Inferred 1,519 6.28 307

Source: SRK

The SRK 2016 Mineral Resource estimate should be read in conjunction with the tables and figures included in the body and presented at the end of the news release dated January 11, 2016. Mineral resources are not mineral reserves and have not demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimate. Samples have been capped where appropriate. Underground mineral resources reported at a cut-off grade of 4.0 g/t Au of gold per tonne assuming a gold price of US$1,125/oz. and a gold recovery of 92.5%. There is no certainty that the inferred resources will be converted to the measured and indicated categories, that the indicated resources will be converted to the proven and probable mineral reserve categories and there is no certainty that the updated mineral resource statement will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability; the estimate of mineral resources in the updated mineral resource statement may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues

Mineral Resource Estimate – Further Details

The mineral resources were evaluated using a geostatistical block modelling approach constrained by 71 explicit gold mineralization wireframes interpreted using a 3 g/t gold cut-off grade (HG) and enclosed in 19 explicit gold mineralization wireframes derived using a 0.5 g/t gold cut-off grade (LG). The HG domains were constructed as explicit wireframes using interval selections of assay data while the broad LG domains were constructed with polylines on vertical sections. The domains were not modelled as grade interpolants. Assay statistics were assessed for each domain separately and capping was applied to samples prior to compositing. Capping values were chosen based on a combination of probability plots, decile analysis, capping sensitivity plots, and three-dimensional visualization to determine the capping values. Capping in the HG domains range from 10 to 120 g/t gold, and in the LG domains range from 5 to 45 g/t gold. Gold and capped assay data were composited to a 1.0 m length and extracted for geostatistical analysis and variography. SRK evaluated the spatial distributions of the gold mineralization using traditional semi-variograms and traditional correlograms of composited data as well as the normal score transform of the composited data. A block model was generated with a block size of 2.5 by 5 by 5 m with subcells at 0.5 m resolution used to honour the geometry of the modelled mineralization. The block model was populated with a gold grade using ordinary kriging. Three estimation runs were used, each considering increasing search neighbourhoods and less restrictive search criteria. A spatial restriction was applied to high grade composites to restrict further their influence during estimation.

In the F2 gold system, higher grade gold mineralization is associated with crosscutting D2 structures and the plunge of the gold mineralization within a given domain is controlled by the line of intersection between the domain and the crosscutting structure. Using the dynamic anisotropy function in Datamine Studio 3, polylines were used to assign an estimated dip and dip direction for each cell of that HG domain in the block model based on those intersections.

Based on specific gravity measurement on core samples, a mean specific gravity value for the domain type and lithology were assigned to blocks to convert volumes into tonnages. The specific gravity of lithology and mineralization domains varies from 2.76 to 2.90.

SRK considers that blocks within the HG domains estimated during the first estimation pass, informed from composites from at least three boreholes from five octants and located within the full range of the variogram for that domain can be classified in the Indicated category within the meaning of the CIM Definition Standards for Mineral Resources and Mineral Reserves (November 2010). SRK considers that for those blocks the level of confidence is sufficient to allow the appropriate application of technical and economic parameters to support mine planning and to allow the evaluation of the economic viability of the deposit. Conversely, all other modelled blocks were classified in the Inferred category as the confidence in the estimates is insufficient to allow for the meaningful application of technical and economic parameters or to enable an evaluation of economic viability.

SRK considers that the gold mineralization at the Phoenix gold project is amenable to underground extraction. SRK considers that it is appropriate to report the Phoenix gold project mineral resources at a cut-off grade of 4.0 g/t gold. The Mineral Resource Statement for the Phoenix gold project is presented in Table i. The mineral resources may be affected by further infill and exploration drilling that may result in increases or decreases in subsequent resource estimates. Mineralization excavated by underground development, stoping blocks and in a 40-metre crown pillar below the lake bottom has been excluded from the Mineral Resource Statement.

The technical report documents a new Mineral Resource Statement prepared by SRK Consulting (Canada) Inc. (SRK) for the Phoenix gold project. This technical report was prepared following the guidelines of the Canadian Securities Administrators’ National Instrument 43-101 and Form 43-101F1 and supersedes all prior technical reports prepared for the Phoenix gold project.