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 Venture Exchange.

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."

About Lupin


  • 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 Property

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.

Mine Development

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 materials.

About Ulu


  • 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 g/t
  • Property:  947 hectares, located 155 km. north of Lupin

The Property

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 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 southeast.


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
Tonnes* Gold (grams per
Tonnes* Gold (grams per
5.0 720,000 11.7 410,000 10.73
6.0 690,000 11.99 400,000 10.86
7.0 630,000 12.44 370,000 11.15

* Tonnes have been rounded to reflect relative accuracy of the mineral resource estimate. 
**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.

Mine Development

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:

  1. $4,465,000 payable in cash at closing; and
  2. 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.

About Elgin

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:

Brian Morales
Elgin Mining Inc.
(416) 640-1930

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Elgin Mining Inc.

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