KUGLUKTUK/COPPERMINE
At least one project in Nunavut has been snarled by weakened gold prices and a continued capital crisis that is hitting junior explorers the hardest.
The Lupin gold mine camp, located southeast of Kugluktuk, has been shut down by Elgin Mining Inc. because of the weakened price of gold. - photo courtesy of Elgin Mining Inc.
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Elgin Mining Inc., a Vancouver-based company which was advancing the past-producing Lupin Gold Mine toward a restart as early as next spring, announced in an April 29 news release it had shut down the Lupin camp.
The halt of its Lupin project development was among a number of steps undertaken by the company "in light of the current market turbulence and weakening of the price of gold.
"We believe that the company has taken prudent steps to reduce capital and operating expenditures in an expeditious manner in this uncertain and challenging gold price environment," stated Patrick Downey, president and CEO of Elgin. "We have taken measures to preserve our treasury and ensure that the company remains on a strong financial footing."
Downey was not available for an interview last week.
Gold prices dropped below US$1,350 per ounce in mid April, after hovering around US$1,600 per ounce throughout the first quarter of the year. By the end of April, prices had partly rebounded above US$1,400.
"It's been just a short time and we've seen pretty big volatility," said Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines, noting despite the recent volatility, some companies still have bullish long-term projections for gold prices.
"With the big drop and then for the price to recover by half again, it is saying it's not over yet. I guess the question is how long is it going to last?" Hoefer said.
The double whammy of weakened gold prices and an ongoing capital crisis characterized by risk-adverse investors has hit junior exploration companies especially hard, Hoefer said.
"We are in a very difficult time in the mining industry, with little money available for investing in new projects. The drop in gold price just adds to the complications," Hoefer stated in an email to News/North.
"It's just very challenging for junior companies in particular."
Elgin plans to continue work where necessary at Lupin to ensure all permits are kept in good standing.
The company emphasized in the release that there is "every opportunity" to re-start development of the Lupin project "should the gold price strengthen and there are more favourable capital markets."
Gold prices closed at about US$1,470 on May 2.
