Wolfden picks Lupin (March 06, 2006)

Thunder Bay, Ont., junior Wolfden Resources (WLF-T, WFDNF-O), with a significant presence in the Arctic already, has gone on a Slave Province shopping spree.

In two deals, one with Inmet Mining (IMN-T, IEMMF-O) and another with Kinross Gold (K-T, KGC-N), it has taken over three of the largest undeveloped base metal deposits in Nunavut and bought a mill and mine infrastructure to develop them with.

Inmet is selling Wolfden outright interests in the Izok Lake, Hood River and Gondor copper-zinc deposits, three large massive sulphide deposits discovered by Texasgulf in the 1970s that never justified development.

Wolfden is paying Inmet in shares for that acquisition, issuing 13.5 million shares in exchange for a 100% interest in Izok and Hood and Inmet’s 70% interest in Gondor. Falconbridge (FAL.LV-T, FAL-N) owns the other 30%. Inmet becomes the largest shareholder in Wolfden, with 18% of the company’s outstanding shares. Goldcorp (G-T, GG-N) holds another 9.8%.

Izok has an indicated resource of 16.5 million tonnes grading 11.4% zinc, 2.2% copper, 1.1% lead and 60 grams silver per tonne, with a pit design having a stripping ratio of 4:1. Gondor, discovered in 1981, has 7.3 million tonnes grading 4.8% zinc, 0.4% lead, 0.2% copper, and 0.5 gram gold per tonne, all described as “drill-indicated” in 1992.

Hood River, discovered in 1972, has three zones; Zone 10 is the largest, with 1.8 million tonnes grading 4.5% zinc, 3.4% copper, 0.3% lead, 27 grams silver and 0.5 gram gold per tonne; Zones 41 and 41A each have about a million tonnes at lower grades, and a prefeasibility study by Inmet’s predecessor company Minnova put the inferred resource of all three zones at 3.2 million tonnes with 3.6% zinc, 2.6% copper and 18 grams silver per tonne.

Wolfden already holds the High Lake massive sulphide deposit 130 km northwest of Bathurst Inlet, Nunavut. High Lake’s most recent indicated resource figure is 14.3 million tonnes grading 3.53% zinc, 2.34% copper, 76 grams silver and 1 gram gold per tonne. The company also bought the mill at the recently closed Nanisivik zinc mine on Baffin Island for re-assembly at High Lake in 2006 or 2007.

Wolfden has also acquired the Lupin gold mine and its surface furnishings from Kinross Gold and plans to use the Lupin mill and infrastructure to develop its new base metal acquisitions and the Ulu gold deposit, 155 km north of Lupin, which Wolfden bought form Kinross in March 2004. Ulu has an inferred resource of 1.4 million tonnes grading 12.9 grams gold per tonne, and there was a decline driven to the 155-metre level in earlier prefeasibility work by Kinross predecessor Echo Bay Mines. Wolfden also plans to assess the economics of reopening Lupin, which Kinross closed down in 2005.

Lupin, on the south shore of Contwoyto Lake, about 400 km northeast of Yellowknife, is about 80 km east of Izok and 35 km east of Gondor. The main winter road into the area from Yellowknife goes to Lupin by way of the diamond mines at Lac de Gras.

In exchange, Wolfden assumes Lupin’s project liabilities except reclamation work that Kinross is committed to finishing on the tailings. There are other housekeeping payments from Kinross to Wolfden.

Poor surface transportation has been the principal block to developing the base metal deposits in the Slave structural province north of Yellowknife. Feasibility studies in the early 1990s confirmed that the capital cost of roads and ports made the deposits uneconomic to mine.

Since then, Kitikmeot Corp., the local Inuit development agency, has proposed a year-round road running 210 km from the north shore of Contwoyto Lake to a harbour on tidewater, about 40 km south of Bathurst Inlet. Kitikmeot would build a port capable of handling 50,000-tonne ships, which would operate seasonally.

That project is now in a Nunavut territorial environmental review, which has reached a public consultation phase. Another 80-km road joining Lupin to Izok, with summer barge and winter ice-road connections to the Kitikmeot road, is on the drawing board.

Ulu, Izok and Lupin have gravel airstrips and Gondor is near the proposed gravel road between Izok and Lupin.

With the new concentration of base metal deposits in Wolfden, the company also plans to float a new company that will hold its Ontario and Manitoba gold assets.