Lupin

The Lupin Gold Mine is located in Nunavut, approximately 400 kilometres north of Yellowknife on the western side of Contwoyto Lake. The property is approximately 12 kilometres long by 7 kilometres wide and consists of five contiguous mineral leases covering 6,757.84 hectares. The mine was owned and operated by Kinross Gold Corp. which elected to cease production in January 2005 due to the prevailing low gold prices.

Infrastructure

Surface infrastructure at the mine site consists of office/mill buildings, a power plant plus tailings/waste storage facilities as well as fuel storage with over 2.0 million litres of fuel currently on site which will be used for ongoing exploration and camp operations. A residential complex provided accommodation for approximately 400 people when the mine was in production. Satellite based telecommunications were used extensively in the past.

The 2,300 ton per day processing plant is currently on care and maintenance. An associated 440 hectare tailings disposal facility exists on site and would be adequate for the needs of a restarted Lupin plant for the foreseeable future.

The property is accessible by fixed wing and rotary aircraft from Yellowknife. A 1,950 meter long gravel airstrip suitable for Boeing 727 and Hercules size aircraft is located on the property. Similarly, a facility to handle float-equipped aircraft is located on the shore of Contwoyto Lake. When Lupin was operating, the Ice Road that is constructed annually (February to April) for the nearby diamond mines and mobilizes supplies and equipment north of Yellowknife had been extended to Lupin, and Elgin would have the ability to gain access on this transportation mode if sufficient resources are identified that warrant restarting operations.

Past producer

History: The initial discovery of gold mineralization at the Lupin Gold Mine was made by Inco in 1960 and the deposit was delineated and developed until it was acquired by Echo Bay in 1979. Construction of the mine and operations began in 1980 and commercial production began in October, 1982. Initially, a vertical shaft was sunk to 360 metres vertical depth and the mine, mill, and surface plant was designed and constructed for a capacity of 1,000 short tons of ore per day (stpd). The capacity was subsequently expanded in a series of stages to 1,800 stpd in the late 1980's and further to 2,300 stpd of ore throughput in the early 1990's, when the shaft was progressively deepened to 1,210 metres vertical depth. Production was suspended in January 1998 and the operations placed on care and maintenance due to weak prevailing gold prices. Operations resumed in April 2000. In June 2002, Echo Bay, TVX Gold and Kinross Gold merged and Kinross assumed control of operations. By May 2003, operations at Lupin were reduced and subsequently suspended in August due to higher costs relative to low prevailing gold prices and the stronger Canadian dollar. Mining resumed in March 2004, but by February 2005 production ceased. No systematic exploration has been completed at the project since the early 1990's. From the start of commercial production in 1982 to the final shutdown in January 2005, the Lupin Gold Mine produced in excess of 3.3 million troy ounces of gold at an average gold head grade of approximately 9 grams per tonne.

In February 2006, Wolfden Resources signed a letter of intent with Kinross to acquire a 100% interest in the Lupin mine. Although the primary purpose of the acquisition was to use the available infrastructure for other projects, including Izok Lake and Gondor, Wolfden had initiated a geological assessment to review options to re-open the mine. By March 2007, Wolfden had planned an underground drill program to define mineral resources, to be followed by a scoping study to determine the economic potential at Lupin. However, Wolfden was then acquired by Zinifex Ltd. In July 2008, Zinifex and Oxiana announced a merger and the new Oxiana entity changed its name to OZ Minerals. In June 2009, a substantial portion of the assets owned by OZ were acquired by China Minmetals (now known as MMG). Elgin purchased 100% of the asset from MMG in July 2011.

Production statistics: 1982 - 2002
Total tons mined 12,278,606
Average mine head grade (oz/ton) 0.279
Average gold recovery 94%
Ounces produced 3,219,584
Note: a further 56,008 ounces and 66,577 ounces were produced in 2003 and 2004, respectively



Remaining Resources (NI 43-101 non compliant) - (based on MMG documents)

Underground resources, predominantly in the form of remnant resources and zones identified but not developed, are summarized below:


Geology

The main Lupin deposit is hosted within an M-folded banded iron formation (BIF) occurring within turbiditic sediments of the Archean-aged Contwoyto Formation. The Lupin BIF is overlain by phyllite and underlain by a sequence of greywacke and quartzite rock types. The mineralized zones are generally less than five meters in width, and less than 300 meters long, but have a plunge length in excess of 1,500 meters. The gold zones tend to strike N to NW, dip steeply and plunge steeply to the north. All zones remain open along strike and potentially down plunge.

Exploration

Strategy: Elgin plans a two pronged exploration program to cover both Near Mine Exploration and Regional Targets. Because of the in-place infrastructure and process facilities, the Company does not require a multi-million ounce deposit to justify a production decision. This puts the Company in a unique position relative to other Northern Canadian (and global) exploration companies. In that regard the company will focus on drilling known extensions of the main Lupin ore-body along strike with the target to outline sufficient resources to re-start operations, and in the regional potential around the main ore-body for shallow open pit targets.

NEAR MINE EXPLORATION
  • The focus here will be to drill known extensions to the main Lupin Dome structure that remain open along strike both east and west of the main Lupin ore body.
  • There are several known extensions of the main Lupin ore body (see Figure 1) the key ones being:
    • West South of Shaft Zone (WSOS)
    • McPhearson M1 and M2 Zones
    • L19; L20 and Far East Zones
  • The West South of Shaft Zone (WSOS) (Figures 2 & 3)
    • This is the continuation of the West zone south of the Lupin shaft which has had limited drilling and development. Based on a review of historical data the zone was drilled at three levels at depth and two exploration drifts were driven to determine thickness and grade. (Figure 4). Based on the above the zone is open from the 490m elevation to over 1000m and would also appear to extend to surface. Average grades appear to reflect the main ore body at 10g/t with an average true thickness of 2m. The strike extent is yet to be determined. Elgin plans to drill this zone from surface and if successful the next stage would be to develop exploration drifts underground to prove out the zone.
  • The McPhearson M1 and M2 zones (Figure 5 & 6)
    • These zones are separate iron formations within the main Lupin Dome and were discovered late in the mine life from underground exploration drilling. They appear to be "cigar" shaped iron formations of limited stike extent and are open both up and down dip. Grades also reflect that of the main Lupin zones at 9 g/t.
    • The zones have never been fully explored up dip and offer good potential to add both tonnes and grade. One exploration hole at the 1090m level intercepted 7.32g/t over 3.22m some 175m along stike from the M2 zone indicating either a new iron formation or a possible extension of the M2 zone.
  • L19/L20 Far East Zone (FEZ)
    • These zones are a continuation of the main Lupin orebody to the east. Exploration in the past was sporadic but there have been sufficient high-grade thick intercepts to provide strong indication that these zones have the potential to host significant tonnes at similar grades to those historically mined. Select historical intercepts include.
      • 9.4 g/t over 15 metres (FEZ)
      • 20.83 g/t Au over 5.8 metres (L20)
      • 15 g/t Au over 6.5 metres (L19)
    • There is also several surface drill holes that indicate that these three zones have a combined strike extent of over 1000m.
REGIONAL EXPLORATION (Figure 7)
  • A regional exploration program to develop and drill test targets proximal to the Lupin ore body along the regional Banded Iron Ore Formation (BIF).
Since the original discovery of Lupin in the early 1960's by Inco there has been significant exploration in the region around the Lupin ore body. Several targets had been identified and drilled by both Inco and subsequently by Echo Bay. Systematic regional exploration ceased in the mid-1990's and although there were several discoveries, none were a size to warrant extensive development and mining. Mapping and sampling of surface outcrops are very extensive, however, Elgin is of the opinion that, based on the first pass review of the data, some of the most prospective areas on the property are covered by overburden. Furthermore, the exploration techniques for banded iron formations have improved and changed considerably since Lupin was last explored and Elgin believes there is excellent opportunity to discover new ore zones on the belt. Prior exploration generally focused on magnetic high signatures from HLEM and coincident magnetometer surveys. However, it has been subsequently shown that the Lupin discovery outcrop gives a low to moderate signature and the Lupin West zone gave no signature. Elgin is currently completing a review of all historical exploration and have also identified several un-tested targets that will be drill tested in 2012. Targets are generally ranked based on magnetic signature, proximity to felsic dykes, and complexity of folding.

Based on a detailed review of historic data, Elgin identified several targets for exploration. A detailed ground magnetic survey was then completed in late August 2011 with additional mapping of these zones and, Elgin now plans to drill test the following targets during late 2011 into 2012.
  • Lupin Outer Ring BIF (Figure 8) The BIF on the interpreted outer ring will be drilled where it contacts the Lupin shear on trend with the Lupin West Zone. The magnetic trace of the 'nose' is 150 m along strike of a West Zone shear extension. If mineralized, grades could mimic the distribution of grades through the main Lupin orebody, as deformation is most intense proximal to the West Zone Fault.
  • Boot Lake: West Limb (Figure 8) The buried four to six meter-wide western limb in the Boot Lake dome appears to abut the West Zone shear. A surface sampling program and a remapping program will be undertaken. In addition, more of the West Limb could be uncovered once permits are secured to expose it. A battery of 80m spaced 100-150m long drill holes will test the West Limb of the Boot Lake structure.
  • Sep Lake Area The Lori South claim around Sep Lake contains solid evidence of intense hydrothermal activity, high-grade surface mineralization, good strike extent and a proximal isograd. Despite these indicators, 1980's geophysical tools have left the area a virtual unknown. Elgin considers this to be an excellent green-fields target.
  • Occurrence L22 L22 and its surface extension represent a deeper drill target. Ubiquitous arsenides and solid indications of gold mineralization in historic near surface drilling are indicators that better mineralization may exist in deeper, hotter BIF. Drilling will be from 200 to 400 m below surface to determine evidence of improving tenor with depth.
  • Occurence 26 and 27 Occurence 26 and 27 have been drilled and resulted in the highest gold concentrations in drill core of any prospects except Occurence 8. The location is interesting as it is mostly covered and may have been drilled on the periphery of higher gold concentrations similar to that reported from Sabina's Goose Lake to the west. An aeromagnetic survey should reveal any adjacent targets.
  • Occurence 8 The bottom of the Occurrence 8 pit is probably the most easily available tonnage at significant grade on surface. Elgin plans additional drilling at this zone. Furthermore the area north of Occurence 8 contains elevated sulphides in frost heaves, and may have potential for ore body extensions.
Airborne geophysics Elgin believes that one of the most important tools for exploration will be detailed geophysical base map. Modern aeromagnetics will be flown at 25m spacing over the 9x12 km property in 2012 which will be a significant aid in tracing subsurface BIFs to structural targets