Doug Ashbury
Northern News Services

NNSL (Nov 09/98) - Lupin, Echo Bay's gold mine 450 kilometres northeast of Yellowknife, appears extremely unlikely to reopen next year, company spokesperson Robbin Lee said Thursday.

Gold price would need to make a healthy recovery in the next month for the company to meet the window of opportunity linked to the ice road.

Lee said if the company misses the ice road -- the cheapest way to get supplies to Lupin -- there is the option of flying supplies in.

But, don't expect that kind of move unless gold is trading at $400 US an ounce, she said.

"We are looking at a modest increase (in gold price)," she said.

"Recommissioning of the Lupin mine will only be undertaken when the company can secure a satisfactory cash margin over cash operating costs," Echo Bay said.

When Lupin went into care and maintenance in January, about 400 people were directly effected, 80 of them were Northerners, mostly from Kugluktuk and Cambridge Bay.

"This is a viable project and will reopen," Lee also said.

The mine's reserves are estimated at 543,000 ounces of gold.

Regardless of what the gold price does and how Echo Bay reacts, it will take five months to recommission the mine, according to the company's second quarter financial results.

Since Lupin was mothballed early in 1998, Echo Bay has put together a plan which evaluates every aspect of operations to determine where costs can be lowered.

Lupin's costs can be lowered to around $250 US an ounce. A year ago, production costs were $284 US an ounce.

Cheaper production costs would result from mining less ore and lower staffing numbers.

The plan calls for construction of an underground hoist system known as a wince to access ore located below the existing underground crusher at 1,130 metres.

Recommissioning would take about five months and be done when access to the mine is possible via the Lupin ice road.

Echo Bay will continue to contract a third party to construct the winter ice road.

Restarting the mine would ultimately cost $14.1 million. This includes $8.5 million in expected costs plus $5.6 million for the mechanical upgrade.

Echo Bay has hired an independent third party consultant to review the Lupin re-engineering study. The review is to be completed by year's end.

Currently, Echo Bay is spending three to four million dollars a year to keep the mine in care and maintenance.

In third quarter, Echo Bay reports a $9.2 million loss compared to a $22.3 million loss in the same quarter a year ago. In last year's third frame, Echo Bay sold 35,200 ounces of gold from Lupin.

Due to hedging, Echo Bay will realize at least $348 US an ounce for 430,000 ounces of 1999 gold production.