TORONTO, April 25 /CNW/ - Elgin Mining Inc. (TSX-V: ELG) ("Elgin" or the
"Company") is pleased to announce that it has entered into an agreement
to acquire Bonito Capital Corp. ("Bonito"), a private company. Bonito
has entered into an exclusivity agreement with MMG Resources Inc.
("MMG") of Australia pursuant to which it has agreed, subject to
satisfactory due diligence, to negotiate an agreement (the "Acquisition
Agreement") to acquire the Lupin Gold mine and the Ulu deposit (the
"Acquisition"), located in Nunavut Territory, Canada.
Elgin is also pleased to announce that effective immediately Patrick
Downey has agreed to join the Company as a consultant. Upon closing of
the Acquisition and discharging any continuing responsibilities with
respect to his former employment (see below), Mr. Downey will assume
the role as Elgin's President and Chief Executive Officer and as a
director of the Company. Completion of the Acquisition is subject to,
among other things, the entering into of the Acquisition Agreement and
the receipt of regulatory approvals including the approval of the TSX
Robert M. Buchan, Chairman and CEO of Elgin stated: "I am thrilled to
both welcome Patrick Downey to Elgin and to announce that advanced
negotiations to acquire the Lupin Gold Mine and the Ulu deposit are
underway. The Lupin Gold Mine was closed by Kinross Gold Corporation in
January 2005 at which time the price of gold averaged approximately
US$425 per ounce. The opportunity for Elgin is to examine the property
in light of the new economics that currently prevail; to review its
resource; to explore, develop and expand this resource and indeed, to
examine the possibilities of placing the mine back into production at
some point in the next several years. The addition of Patrick Downey
as Elgin's President & CEO strengthens the Company immeasurably and I
am confident that the team that he will assemble in the coming months
will, under his leadership, advance these projects at a rapid pace."
Past producer from 1982 - 2005
Production: 3.37 million oz.
Average grade: 0.259 oz./ton
Property: 6,758 hectares
Infrastructure: 2,300 tpd plant
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 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.
Based on the press release of Wolfden Resources Inc. dated September 22,
2006, between 1982 and 2005, 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 4 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
Resource: Indicated Mineral resources of 720,000 tonnes grading 11.7
grams per tonne and Inferred Mineral resources of 410,000 tonnes
grading 10.73 grams per tonne, in each case with a cut-off of 5.0 Au
Property: 947 hectares, located 155 km. north of Lupin
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
The Ulu deposit property is situated in the southern part of the High
Lake Greenstone Belt in the Archean Slave Structural Province. The
property is underlain by a repetitive sequence of mafic volcanic rocks
and greywacke/argillite sedimentary rocks intruded by a large gabbro
sill, and folded into northwest-trending anticlines and synclines with
shallow northwest-trending plunges.
The Ulu deposit is an example of a "sulphide enrichment" gold deposit
characterized by a dominance of sulphide minerals over quartz veins,
and localized in shear zones adjacent to rheologically differing mafic
and sedimentary rocks. The deposit is located on the western flank of a
regional anticline within a shear/alteration zone; the zone strikes to
the northwest and dips steeply to the southwest. Dimensions are
approximately 500m long, from 1.5-18 m wide, and to a depth of 600
meters. The deposit is open to depth and down plunge to the northwest.
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. Resources estimated only pertain to the Flood Zone
which is situated between the two gabbroic sills that form the limbs of
the anticline and the metasedimentary fold nose located to the
The Ulu gold deposit hosts National Instrument 43-101 compliant mineral
resources as shown in the following chart.
Indicated Mineral Resources
Inferred Mineral Resources
Gold (grams per
tonne) Cut Off
Gold (grams per
Gold (grams per
* Tonnes have been rounded to reflect relative accuracy of the mineral
**Estimated as at May 5, 2006 in the independent National Instrument
43-101 technical report on the property entitled "Ulu Gold Project
Resource Estimate, Kitikmeot Region, Nunavut, Canada". The technical
report is available for viewing under the corporate profile of Wolfden
Resources Inc. on SEDAR at www.sedar.com. An updated technical report will be filed on Elgin's profile on SEDAR
in accordance with applicable securities laws.
Based on several, deep, high grade intercepts, excellent potential
exists to substantially 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. All 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.
Terms of Acquisition
Elgin has agreed to purchase all of the outstanding shares of Bonito
Capital Corp. ("Bonito"), a private company that has entered into an
exclusivity agreement (the "Exclusivity Agreement") pursuant to which
it has agreed, subject to satisfactory due diligence, to negotiate and
enter into the Acquisition Agreement to acquire the Lupin Gold Mine and
the Ulu deposit and related properties and assets, by issuing 2,000,000
common shares of Elgin to the shareholders of Bonito. The entering
into of the Acquisition Agreement is expected to occur on or before May
6, 2011. Under the terms of the Exclusivity Agreement the purchase
price to acquire the Lupin Gold Mine and the Ulu gold deposit would be
payable as follows:
$4,465,000 payable in cash at closing; and
the issue on closing of $3,000,000 of convertible debentures that will
be convertible into shares of Elgin. Conversion of the convertible
debentures shall occur automatically upon Elgin completing an offering
of its shares following the closing of the Acquisition at a price per
share equal to the Offering price. If Elgin does not complete the
offering within 240 days of closing of the Acquisition, the convertible
debentures will be repayable in cash.
As a condition of closing of the Acquisition, Bonito will be required to
replace the current MMG reclamation bonds ($27.185 million) with the
Government of Canada ($25.5 million for Lupin and $1.685 million for
Ulu) which cover the reclamation liability at the Lupin and Ulu sites.
About Patrick Downey
Mr. Downey has over 25 years of experience in the resource industry and
was most recently the President and Chief Executive Officer of Aura
Minerals Inc. from April 2007 until March 25, 2011 when Aura Minerals
announced his resignation. Prior to joining Aura Minerals, Mr. Downey
held the position of President and Chief Executive Officer and Director
of Viceroy Exploration Ltd. which was acquired by Yamana Gold Inc. for
$600 million in 2006. Prior thereto, Mr. Downey served as President of
Consolidated Trillion Resources Ltd. and Oliver Gold Corporation, where
he negotiated their successful merger to form Canico Resource Corp.,
which was purchased by CVRD for approximately $876 million. Mr. Downey
has held senior engineering positions at several large-scale gold
mining operations including a number of mining projects for Anglo
American Corporation in South Africa. Mr. Downey holds a Bachelor of
Science (Hon.) degree in Engineering from Queen's University in
Belfast, Ireland. Elgin has agreed with Mr. Downey on the terms of his
employment which take effective immediately and include, among other
things, the grant as of the date hereof of 2,000,000 stock options
exercisable at a price of $1.63 per share, to be vested 25% at the end
of each calendar year commencing in 2011. A portion of the options
granted to Mr. Downey are subject to ratification by shareholders of
Elgin at its next annual meeting.
Elgin Mining Inc. has approximately $46 million in cash available to
complete the acquisitions of the Lupin Gold Mine and Ulu gold deposit
as well as to commence aggressive exploration and development programs
on each and to meet its obligations with respect to its recently
announced option agreement with Lincoln Mining Corp.
Elgin wishes to express its sincere thanks to Mr. Robert M. Buchan for
assuming the transitional roles of President and Chief Executive
Officer over the last year and a half. On closing of the Acquisition,
Mr. Buchan will step down as President and CEO of Elgin and will retain
the role of Chairman of the Board. Mr. Buchan's prior affiliation with
Kinross as its founder, Chairman, President and CEO will continue to
aid Elgin as the Company advances new acquisitions.
Richard Graham, P.Geol, is a qualified person as defined by National
Instrument 43-101, and has reviewed and approved the technical
disclosure in this news release.
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, that Patrick Downey will assume the role of
President and CEO and as a director of the Company upon completion of
the Acquisition and that the Acquisition Agreement will be entered into
within the expected time period if at all, 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.
SOURCE Elgin Mining Inc.
For further information:
Elgin Mining Inc.