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Then in October, Rubicon announced out of nowhere that CEO Michael Lalonde was departing, and that the company had milling problems that were nearly a month old.

“You had some warning signs that things were not going well,” said Jason Mayer, a portfolio manager at Sprott Asset Management who sold his shares before the collapse.

Everything came to a head on Nov. 3, when Rubicon halted all underground work at the Phoenix project. The company acknowledged the geology of the deposit is more complex than previously thought and a new development plan is needed. The stock plunged 55 per cent, and there are now doubts about whether Rubicon will be able to finish construction without a large restructuring.

“There’s probably a deposit there they can mine and make money on,” said Brent Cook, publisher of Exploration Insights.

“But do I think the company’s salvageable? It’s nothing I would buy.”



At its peak, Rubicon was worth more than six dollars a share. It closed Monday at 16 cents. The company raised more than $700 million from investors, but is worth just $63 million today.

Rubicon’s meltdown is a cautionary tale for investors, because it didn’t come out of nowhere. Observers say there have been red flags hovering over the company for years, but they were overlooked by those who got caught in the hype of a hot gold story in a hot gold market.

Rubicon drew many high-profile investors, including the Canada Pension Plan Investment Board, entrepreneur Rob McEwen and gold mining giant Agnico Eagle Mines Ltd.