Doug Ashbury
Northern News Services

NNSL (Feb 22/99) - Echo Bay's Lupin gold mine will remain dormant for most of this year, a company spokesperson said Tuesday.

"Lupin is definitely on care and maintenance for most of 1999," Robbin Lee said.

Citing poor gold prices, Echo Bay mothballed the mine, located on Contwoyto Lake -- north of the Ekati diamond mine -- in January.

The move put about 480 people out of work, about 80 of them Northerners, many from Kugluktuk and Cambridge Bay.

Echo Bay maintains that when gold price improves, the mine will be re-started.

Lee said gold spot prices will have to jump to about $310 US to $320 US for Lupin to return to operational. With a spot price this range, she adds, Echo Bay could hedge gold at about $350.

If the gold price does not improve by October, Lupin could remain in care and maintenance through 2000.

The key to restarting the mine is the ice road. If Lupin becomes operational, Echo Bay would have to start preparing in the fourth quarter to have contractors ready to ship supplies up the ice road.

Lupin's gold cash operating cost is estimated at about $250 US an ounce.

The mine's proven and probable reserves are estimated at 543,000 ounces with a possible additional 221,000 ounces. Echo Bay also has possible gold reserves of 560,000 ounces at its wholly-owned Ulu site located about halfway between Lupin and the Arctic coast.

Echo Bay recently reported a 1998 loss of $20.1 million compared to a $420.5 million loss in 1997 when the company took a $362.7 million charge. Echo Bay reports in US dollars.

Revenues were down at $232.2 million compared to $305.4 million.

Echo Bay sold 553,130 ounces of gold last year compared to 689,337 in the prior year. Lupin produced 165,335 ounces in 1997.

Echo Bay's consolidated cash operating costs were $208 per ounce, down from $249 in 1997.