By IAN ROSS
Thunder Bay’s Wolfden Resources is spinning out its northwestern Ontario gold properties to concentrate on gold and base metal projects in the Canadian Arctic.
Their Bonanza and East Bay projects in the Red Lake mining district are being transferred to a newly created company, Premier Gold Mines Ltd., along with some other mineral properties, plus $2 million cash.
Wolfden president Ewan Downie wants to focus their efforts in Nunavut and the Northwest Territories where they are fast developing their High Lake and Izok copper-zinc properties and Ulu gold deposit.
With $35 million in its exploration and development budget, Wolfden is launching an aggressive program in Nunavut aiming at opening up the Ulu gold mine before starting up the two base metals ventures into production.
“What we’ve put together in Nunavut, I think is going to end up being one of North America’s largest mining development projects. We have six deposits we’re going to put into production up there,” says Downie.
“Red Lake is a bit of a distraction for us and most shareholders value us entirely on what we’re doing up North. The only way to unlock value for our shareholders is to spin out (the gold properties) so it doesn’t take up management time and effort to advance Red Lake at the same time we’re in our main project.”
The proposed spinout needs two-thirds approval from Wolfden shareholders along with receipt of an income tax ruling from the Canada Revenue Agency and other regulatory and third party consents.
“We’re gunning for Aug. 1 to be the effective date,” says Downie, who will serve as Premier’s interim president until a permanent head is named.
The company claims their Izok project is one of the world’s highest-grade, undeveloped base metal deposits. A recent resource estimate of Izok revealed an indicated resource of 14.4 million tonnes grading 2.52 per cent copper, 12.94 per cent zinc, 1.28 per cent lead and 71 grams per tonne silver.
“It’s a very rich deposit and that’s going to be the cornerstone of our company,” says Downie.
Most of the deposit can be mined by a low-cost open pit method.
Downie expects Izok and High Lake will be in production by 2008 and 2009 respectively.
At Ulu, the company has gone underground developing 400 metres to test vein and grade continuity of its three largest gold-bearing veins. “We’re drifting and doing a test mining program this summer that, if successful, we’re hoping to start (mining at) Ulu next year.
The mineral resource for Ulu is estimated at 720,000 tonnes of indicated mineral resource at 11.7 grams per tonne (g/t) and 410,000 tonnes of inferred resource at 10.73 g/t.
Downie was expecting to close a deal this month with Kinross Gold to buy the Lupin gold mine and mill, 155 km south of Ulu. The company was applying to the Nunavut Regulator to re-open a winter mining road to truck ore from Ulu down to Lupin for processing.
The mine and mill was closed by Kinross in early 2005 when gold was $380 US per ounce. The mine had historically produced three million ounces of gold at an average grade of 9.0 grams per tonne.
“We’re hoping by this time next year we might have two gold mines running up there,” says Downie.
Last December, Goldcorp acquired a 10 percent stake in Wolfden which raised $21.6 million to advance the Thunder Bay junior’s exploration efforts in Nunavut. Goldcorp is assisting in arranging financing for their High Lake project and other acquisition opportunities through a sister company, Silver Wheaton Corp.
