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Lupin restart speeding up
Owners of the historic gold mine making moves to accelerate reopeningThandiwe Vela Northern News Services Published Monday, April 2, 2012
The merger, which will see Elgin Mining acquire all issued shares of Gold-Ore, the operator of the Bjorkdal gold mine in Sweden, will give the company the cashflow to accelerate development at Lupin, president and CEO Patrick Downey told News/North. "It really just brings the Lupin development into focus and brings it forward," Downey said. "Because we've got a stronger treasury and cash flow, we can drill faster, look at going underground to define resources and reserves quicker, and spend money on doing the mill rehab faster, so we would expect that the restart of operations could well be accelerated." Elgin acquired the mineral leases of the Lupin property last summer, complete with infrastructure including a 2,300-tonne-per-day plant, and all-year camp facilities. The company had planned to go underground and drill sufficient reserves for restart in 2013, but the merger has expedited the plan to start drilling this year, with the hopes of drilling sufficient reserves to be in restart position by spring 2014. Elgin is aiming for 250,000 to 400,000 ounces of gold in reserve to justify the restart of the Lupin mine, for a life of three to five years. More than 3.3 million ounces of gold were produced at the Lupin mine intermittently between 1982 and 2005, when Kinross Gold Corp. stopped production due to low gold prices. While the price of gold has recently weakened from peak historical highs, it is still at a price that would make the restart of Lupin "very attractive," Downey said. Elgin began discussions with Gold-Ore last December. The Vancouver-based international mining and exploration company produced 40,338 ounces of gold at Bjorkdal in fiscal 2011, and the company has a history of working in the North. "The great thing about it is a lot of the key team of Gold-Ore have worked in the North, they were responsible for the discovery of Meliadine and Meadowbank," Downey said, referring to Agnico-Eagle Mines Ltd.'s advanced exploration project and gold mine in Nunavut. "They have great Northern experience in terms of the exploration development side of things, so we're quite pleased about that." The companies have a combined treasury of $35 million, and cash flow through earnings in the region of $12 million to $15 million a year, Downey said, which can be used toward more aggressive spending at Lupin. The merger is expected to be approved by shareholders of both companies by the end of April. "We'll now be a bigger company, more financially mature, stronger treasury, cash flow, that allows us to be more aggressive on spending the money on the restart," Downey said. While the budget for the 2012 drill program at Lupin has not been finalized, Elgin currently has about 25 people working at the site, including drillers, camp helpers and geologists. Economic development officers of the Kitikmeot region have welcomed the news of the Lupin revival, including Joseph Aglukkaq of the hamlet of Gjoa Haven, who said the communities need "all the employment we can get" to battle poverty and other social issues. The acceleration of the Lupin restart may result in more employment. "It will mean that we will be hiring more people, we will be more active, particularly during the summer and fall months," Downey said. "We will be doing a fair amount of work up there both regionally and at the Lupin mine as well, so it should be a very exciting year." The company also expects to conduct a "fairly limited" regional exploration program at Lupin's sister property Ulu, located about 155 kilometres north of Lupin. Lupin is located about 285 kilometres southeast of Kugluktuk.
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