New owner reviews future of money-losing Lupin Mine

Though Nunavut’s last working mine, the Kinross Gold Corp.’s aging Lupin Mine, is now threatened with closure, Kitikmeot residents are ready to handle the economic fall-out.

“We are prepared for it,” says Keith Peterson, the mayor of Cambridge Bay.

That wasn’t the case in January of 1998. At that time, Kitikmeot leaders were taken off-guard when Echo Bay Mines Ltd., then the owner of the Lupin Mine, announced a temporary suspension of operations at the mine after world gold prices fell.

The region lost about 50 jobs: drillers, electricians, apprentices, operators and laborers from Cambridge Bay and Kugluktuk, and some workers with Kitikmeot Caterers, owned by the Kitikmeot Development Corporation.

Though Lupin started up again, Kitikmeot residents learned from that bitter experience, Peterson says.

“I guess that you could say that the temporary closure a few years ago was kind of a wake-up call. Instead of folks waiting for mines to come along, we got more proactive and worked more closely with the companies that are developing mines and the companies that are exploring for new minerals,” Peterson said.

The Lupin Mine, which sits near the shore of Contwoyto Lake in the Kitikmeot region, has been pumping out gold and silver since 1982, when Echo Bay first brought it into production. In its heyday, Lupin once employed more than 500 workers.

Kinross acquired Lupin from Echo Bay last January, in one of a series of mergers that have turned it into the world’s seventh-largest gold-producer.

But just last week, Kinross told its shareholders that the Lupin Mine’s future is under review.

“Total cash costs at the operation are unacceptable and the company is reviewing all options with respect to the future of the mine,” Kinross officials said last week, in a note attached to its second-quarter financial statements for 2003.

Gordon McCreary, vice president of corporate affairs at Kinross, said the company isn’t ready to comment on Lupin’s future right now.

“We really have no comments to make at this point. We’re obviously assessing our options and when we have something to say we will say that publicly. But at this point in time we are assessing where to go from here,” McCreary said when contacted by Nunatsiaq News this week.

Kinross’s financial statements show the company is performing below expectations – partly because of poor results at Lupin.

In the three-month period that ended on June 30, the cost of producing gold at Lupin soared to $409 an ounce, in U.S. dollars. Kinross received only $345 an ounce, on average, for the gold that it sold in the same period, making Lupin a big money-loser for the company.

Last May, Kinross laid off 75 workers at Lupin and brought in other cost-cutting measures. McCreary says that although those measures helped reduce costs at Lupin, they were offset by the effect of a rising Canadian dollar during the same period.

But now, Kitikmeot leaders are looking to other projects to provide employment and business opportunities for the region in the future, especially after the mine’s temporary closure in 1998.

“In the temporary closure back then, there was no where to go, no work for anybody. Now you have the Dew line clean up contracts, two of them underway in the Kitikmeot, one at Lady Franklin Point and the other at Pelly Bay, and you’ve got a lot of exploration ongoing in the region,” Peterson said.

Kitikmeot residents are also looking forward to the start-up of the Jericho diamond mine, about 25 km from Lupin, and Miramar’s Doris Hinge gold mine. Both companies are now negotiating Inuit impact and benefit agreements with the Kitikmeot Inuit Association, and have submitted their projects for environmental review.

As well, Kitikmeot residents are waiting to see if the Bathurst road and port proposal will get regulatory approval and financial support from government.

“Financing still has to fall into place for some projects and the regulatory approvals, plus the road and port, there’s still no guarantee there. But we are exploring all possibilities here. I don’t think folks are sitting around waiting for the mines to come and go,” Peterson said.