|July 08, 2011|
Elgin Mining Acquires Lupin Gold Mine and Ulu Gold Deposit and Appoints Patrick Downey as President and Chief Executive Officer
|TORONTO, ON, July 8, 2011 - Further to its press releases dated April 25, 2011 and May 9, 2011, Elgin Mining Inc. (TSX-V: ELG) ("Elgin" or the "Company") is pleased to announce that it has completed the indirect acquisition (the "Acquisition") of the Lupin gold mine and Ulu gold deposit (collectively, the "Properties"), located in Nunavut Territory, Canada by paying C$4,815,000 in cash and issuing an aggregate of 3,800,000 of its common shares. The Company has also replaced certain reclamation bonds in the approximate amount of C$27 million with the Government of Canada which post security for the reclamation liability at the Properties.|
Upon closing of the Acquisition, Patrick Downey assumed the role as Elgin's President and Chief Executive Officer. Mr Downey stated" I am very excited with this opportunity to explore and develop the Lupin and Ulu deposits. Lupin is situated in essentially the same Banded Iron Formation as the George and Goose Lake deposits to the West that has yielded significant results over the past 2 years and we believe that with a focused exploration team we can unlock the same potential at Lupin which has had little exploration focus for the past 20 years. Furthermore, with the extensive infrastructure and Water License we are in a great position to advance the project to production. Similar potential exists at the Ulu deposit to the North. Ulu is located in a classic Archean Greenstone belt that hosts several world class deposits . There is excellent potential to add to the existing resources at Ulu as well as explore the 14 other known gold targets in the area."
Over the next two months the Company expects to complete the winterization of the work camp at Lupin. Winterization of the work camp would allow the Company to drill late into the year. The Company plans to complete a detailed geophysics program during the summer months and mobilize drills in the fall to complete Phase 1 drilling later this year. This drill program will re-commence early in 2012 with the focus on drilling several near surface targets that were identified by previous owners and to test new targets identified during the 2011 exploration program. Work at Ulu will be limited to detailed mapping and sampling with the plan being to commence an extensive drill program early in 2012. After Acquisition related costs, the Company has approximately C$13 million available to fund activities at 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.
The deposit is hosted within an M-folded banded iron formation occurring within turbiditic sediments of the Archean-aged Contwoyto Formation. The Lupin banded iron formation 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. These zones remain open.
Documentation obtained through the due diligence process in connection with the Acquisition shows that there are several zones remaining that have not been mined and furthermore there are at least five additional zones that were intercepted from underground drill stations that warrant follow up exploration. Elgin will plan to follow up on this exploration in 2012 once underground access is re-established.
Based on publicly available information, from the start of commercial production in October 1982, the Lupin Gold Mine produced more than 3.37 million ounces of gold at an average grade of 0.259 oz./ton gold.
Mining was conducted from four primary zones known as the West, Central, East and McPherson zones. Some limited production also came from the West Zone South of Shaft zone.
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 an estimated 7 million litres of fuel currently on site. A residential complex provides accommodation for approximately 450 people. Satellite based telecommunications are used extensively.
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 737 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. During winter an ice road has been constructed from Yellowknife to Lupin (531 km) and points further north, which generally operates between February and April allowing for the delivery of bulk items, such as food, fuels, cement, reagents, explosives and building materials.
The Ulu deposit is located approximately 155 kilometers north of the Lupin Gold Mine. The property consists of a renewable 21 year mineral lease with an area of 947 hectares and measures 3.2 kilometers by 3.2 kilometers.
The Ulu deposit property is situated in the southern part of the High Lake Greenstone Belt in the Archean age Slave Structural Province. The High Lake Greenstone Belt comprises three north trending geological/metallogenic domains of volcanic and sedimentary rocks, with obscure boundaries. The Ulu property lies within the Central Domain, which contains intermixed clastic sedimentary and volcanic rocks dated from about 2616 to 2612 Ma, and is characterized by gold‐arsenic mineralization controlled by secondary structures. The other two domains are older than the Central Domain and contain significant quantities of felsic volcanic rocks and volcanogenic base metal massive sulphide deposits.
The Ulu deposit property cover a 2‐km‐ to 3‐km‐wide lobe of greenschist to amphibolite facies mafic volcanic and sedimentary rocks, surrounded on three sides by granitic stocks. The supracrustal rocks consist of a sequence of basalts, graywackes, and gabbroic sills, all folded into a 5‐km‐long anticlinal structure. Late‐stage feldspar porphyry, quartz diorite, and diabase dikes intrude this sequence.
A number of historic gold showings have been identified and are indicative of the wide extent of gold mineralization present on the Ulu Gold Property.
The Ulu gold deposit hosts NI 43-101 compliant mineral resources as shown in the following chart.
* Tonnes have been rounded to reflect relative accuracy of the mineral resource estimate.
**Estimated as at June 27, 2011 in the NI 43-101 technical report on the property entitled "NI 43-101 Technical Report on the Ulu Gold Property, Kitikmeot Area -- Nunavut Territory, Canada" by Richard A. Graham, P.Geol. and G. H. Wahl, P. Geo. The technical report is available for viewing under the corporate profile of Elgin on SEDAR at www.sedar.com. Both authors are independent of the Company as such term is defined in NI 43-101.
Based on several, deep, high grade intercepts, excellent potential exists to increase the gold resource at depth. Additionally, there are several surface showings of interest.
Approximately 1.7 kilometres of underground development already exist; although, no production mining has occurred at Ulu. Most of the surface and underground equipment necessary to proceed towards production is present at Ulu.
The facilities at Ulu consist of a 60-man Weather-haven camp with sleeping, dining and recreation quarters, a vehicle repair shop, power house, warehouse, cold storage, office and change rooms. Also at the site are a fuel storage tank farm, fresh water and sewage systems, garbage incinerator and an ore storage area.
The property is accessible by fixed wing and rotary aircraft from Yellowknife, a distance of 530 kilometers to the south. Both wheel and float equipped aircraft can land near the site. A 1,200 meter long gravel airstrip suitable for Hercules size aircraft is situated 3.5 kilometers south of the camp.
Richard A. Graham, P.Geol., Consulting Exploration Geologist with Graham's Geological Data Ltd. is a Qualified Person and Independent of the Company in accordance with NI 43-101. In addition, he has reviewed and approved the technical and scientific information contained in this release.
Elgin Mining Inc. has approximately $13 million in cash available to commence exploration and development programs on the Properties and to meet its obligations with respect to its announced option agreement with Lincoln Mining Corp.
Certain information set forth in this press release contains "forward-looking statements" and "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which include management's assessment of Elgin's future plans and operations and are based on Elgin's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "expects" "anticipates", "believes", "projects", "plans", and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Elgin's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Elgin undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further Information, please contact:
President and Chief Executive Officer
Chief Financial Officer
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