Lupin Gold Project
Lupin Mines Incorporated ("LMI"), an indirect wholly owned subsidiary of Elgin Mining, acquired the property from MMG in July 2011.
The Lupin Gold Mine ("Lupin") was in production from 1982 to December 2004, with final closure commencing in February 2005 due to low gold prices. Historic production amounted to 3.36 million ounces of gold at an average grade of approximately 9.3 grams per tonne. The mill and all associated infrastructure was properly decommissioned. The Type "A" Water License (2AM-LUP0914) has been maintained in good standing.
Property Description and Location
Lupin is located approximately 400 kilometres north of Yellowknife on the western side of Contwoyto Lake within the Kitikmeot Region of Nunavut (Figure 1). The property consists of five contiguous Crown mineral leases covering 6,757.84 hectares (Figure 2).
The original five leases were granted prior to the enactment of the Nunavut Land Claims Agreement (January 1991); therefore, activities on the leases are under the jurisdiction of the Canada Lands Act and other federal regulations. The leases are surrounded by a mix of Inuit Owned Land ("IOL") surface and subsurface rights, which are owned by Nunavut Tunngavik Incorporated; the surface rights are administered by the Kitikmeot Inuit Association. There is a corridor of open freehold land on all sides of the Lupin leases, situated interior to the IOL properties.
Accessibility and Infrastructure
The Lupin property is accessible by fixed wing or rotary aircraft from Yellowknife. There is a 1,950 metre long gravel airstrip suitable for Boeing 727, Boeing 737 as well as Hercules-size aircraft on the property. There is a floatplane facility at the edge of Contwoyto Lake. A winter road from Yellowknife, which currently operates between February and April, services the diamond mines south of Lupin. The Lupin leg, which has been inactive for several years, could be reactivated to allow for the delivery of bulk items.
Surface infrastructure at the mine site consists of mine and mill facilities, a power plant, and tailings/waste storage facilities. The 2,000 tons per day processing plant is on care and maintenance. The tailings disposal facility has sufficient capacity for a restarted operation. The bulk fuel facilities currently contain approximately 3,000,000 litres of diesel. The residential complex could accommodate approximately 250 people.
The hoist, winze, crushers, service bay equipment, and mining gear were removed from the underground workings in 2004 and 2005, and are stored in the mill warehouse or offsite.
The mine was accessed by a decline from surface and by a shaft and internal winze with hoists for ore, personnel and materials.
Lupin was a mechanized trackless mine utilizing longhole stoping and paste backfill methods. Drifts were excavated at 20 metre vertical intervals. Ore was mucked using remote-controlled scoops, and hauled to underground primary crushers before being hoisted to surface for processing. Future development and production would utilize similar methodology.
History and Past Production
The Lupin deposit was discovered in 1960 by Canadian Nickel Company Limited, and was defined and expanded until it was optioned by Echo Bay Mines Ltd. ("Echo Bay") in 1979. Echo Bay purchased the property in 1980, and continued underground delineation after driving a spiral ramp to a vertical depth of 137 metres. A three-compartment shaft excavated to a vertical depth of 366 metres was completed in October 1982. In 1990, the shaft was extended to a depth of 1,210 metres, followed by the excavation of a 290 metre winze from the 1,050 metre level to the 1,340 metre level in 2001.
Using development ore processed in a 907 tonnes per day flotation mill, the first bullion was poured in May 1982. In 1983, the mill rate expanded to 1,043 tonnes per day. After several additional expansions, the mill is currently rated at 2,086 tonnes per day.
Production stopped in January 1998 and the property was placed on care and maintenance. Re-opening of the mine was announced in November 1999 and production resumed in April 2000.
In June 2002, Echo Bay, TVX Gold and Kinross Gold Corporation ("Kinross") merged and Kinross assumed control of operations. Kinross placed Lupin on care and maintenance in August 2003, resumed production between March and December 2004, and then announced closure in February 2005 because of the prevalent low gold prices. The mine has remained on care and maintenance since that time.
From the start of commercial production in October 1982 to the end of December 2004, 3.36 million ounces of gold was produced from 11.8 million tonnes of material at an average grade of 9.3 grams per tonne. Mill recovery over the same period averaged 93.7%.
In February 2006, Wolfden Resources ("Wolfden") signed a letter of intent with Kinross to acquire a 100% interest in the property. Although the primary purpose of the acquisition was to use the available infrastructure for other projects such as Izok Lake and Gondor, Wolfden had initiated an 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, Zinifex Ltd. ("Zinifex") then acquired Wolfden. In July 2008, Zinifex and Oxiana merged to become OZ Minerals ("OZ"). In June 2009, China Minmetals, now known as MMG Resources Ltd. ("MMG"), acquired a substantial portion of the assets owned by OZ.
In July 2011, Elgin Mining purchased 100% of Lupin Mines Incorporated, which owns the Lupin Mine.
In March 2012, LMI released a mineral resource estimate for the West Zone South of Shaft ("WZSOS") based on the results from 165 historical drillholes. The inferred mineral resource for a base case scenario is estimated to be 1,110,000 tonnes at 11.32 grams per tonne gold for approximately 403,600 ounces of gold, using a cut-off grade of 5.0 grams per tonne gold. The estimation was prepared in accordance with CIM guidelines, following National Instrument 43-101 rules for disclosure. For additional information on the estimation, please consult the report entitled NI 43-101 Technical Report on the Lupin Mine Property, Kitikmeot Region, Nunavut for Elgin Mining Inc., with an effective date of December 31, 2011 and signed March 02, 2012, by G.A. Harron, P.Eng., P.Geo. of G.A. Harron & Associates Inc. A copy of the technical report may be found on the Company's website and its profile on SEDAR at www.sedar.com.