Alaska mining news and trends from geologist Curt Freeman

While the noisy debate continues over ANWR, the gas pipeline possibilities and the ever-increasing cost of gasoline, the Alaska mining industry has quietly made the seasonal transition from winter to summer.

The sound of drills and rock picks on outcrops is beginning to echo across the state.

By all accounts the number of feet drilled, the number of geologists and engineers employed and the number of dollars spent around the state this year will be down significantly compared to the last several years.

That said, several areas of the state will see significant activity including eastern Interior Alaska, the Seward Peninsula, the central Alaska Range and southeast Alaska.

No single commodity looks like it will dominate the scene as gold did for the last ten years. Commodities of interest include base metals, platinum group metals, gold and rare metals such as tantalum, niobium and cesium.

The Alaska mining industry is in the process of a major sea change and I for one am anticipating a year full of new opportunities for new metals in new places.

Western Alaska

Cominco American's Red Dog mine turned in another strong showing in the first quarter of 2001 but overall operating profits for the mine were down compared to last year's first quarter due to a 10 percent drop in the price of zinc. The mine generated 229,100 tonnes of zinc concentrate and 42,600 tonnes of lead concentrate while earning a $21.8 million operating profit.

NovaGold Resources announced that it had acquired the option from Placer Dome to acquire a 70 percent interest in the Donlin Creek gold deposit in southwestern Alaska.

Calista Corp., the property owner and Placer Dome's partner, approved the agreement with NovaGold.

NovaGold must spend $12 million over 10 years to earn their interest.

Once NovaGold is vested at 70 percent, Placer Dome would have the option to remain as an active 30 percent partner, convert their interest to a 5 percent net proceeds interest or buy back a 70 percent interest in the venture by paying NovaGold three time what NovaGold has spent, conduct a feasibility study and approve a mine production schedule of not less than 600,000 ounces per year within 5 years.

The Donlin Creek property currently has published measured and indicated resources of 70.1 million tonnes grading 3.06 grams of gold per tonne (6,895,000 ounces) and inferred resources of 66.2 million tones grading 2.83 grams of gold per tonne (6, 009,000 ounces).

NovaGold has indicated that it will concentrate work in 2001 toward improving its understanding of a higher grade core area which carries resources of 5.5 million ounces at a grade of 5.1 grams of gold per tonne.

While all this was going on, NovaGold added two new company directors, one of which was Alaska-grown Cole McFarland, former president of Placer Dome U.S. Old timers in the Innoko District remember Cole as a kid working at placer operations in the district.

Eastern Interior

Kinross Gold announced first quarter results from its Fort Knox operations.

The mine produced 100,347 ounces of gold at a total cash cost of $186 compared to 77,551 ounces of gold at a total cash cost of $238 per ounce during the first quarter of 2000.

Total production costs decreased to $270 per ounce versus $328 per ounce for the first quarter of 2000.

During the first quarter the mill processed 3.3 million tonnes of ore grading 1.09 grams of gold per tonne compared to 3.4 million tonnes milled at a grade of 0.82 grams of gold per tonne during the first quarter of 2000.

Gold recovery was unchanged at 87 percent and mine site cash expenditures were $7.9 million, most of which was for construction of the haulage road connecting the True North satellite open pit to the Fort Knox mill.

Alaska Range

Alaska newcomer Golconda Resources Ltd. said it had acquired approval to purchase a 40 percent interest in the Shulin Lake diamond project from Shear Minerals. The company also negotiated the right to acquire an additional 11 percent interest by expending an additional $C150,000 on property exploration. Three exploration holes recently completed on the project contained rounded fragments of schist and phyllite in a finer grained matrix which may be derived from pipe-like intrusions. Samples are being analyzed for indicator minerals and macro diamonds at Kennecott Canada's Thunder Bay laboratory. Welcome to Alaska Golconda!

Grayd Resources announced that Placer Dome has acquired an option to earn a 51 percent interest in the White Gold property in the Delta District. Placer Dome can earn their interest by expending $3.1 million on property exploration over four years. Placer Dome can increase their position to 70 percent by completing a bankable feasibility study on the project. Placer Dome has committed to spend $350,000 on exploration in 2001 with Grayd acting as operator for the venture.

Southeast Alaska

Quaterra Resources reported that it has entered into a joint venture with International Freegold Mineral Development on its Union Bay platinum group element property in the Alexander Platinum Belt in southeast Alaska.

Quaterra has the option to earn a 50 percent interest in the property by spending US$ 1.0 million on exploration and development and making staged cash payments to International Freegold totaling US$100,000 over the next four years.

Quaterra will also issue International Freegold 200,000 shares of its common stock.

The joint venture encompasses previously staked lands as well as recently staked placer and lode claims which cover most of the prospective ground within the Union Bay zoned Ural - Alaska complex.

The Union Bay complex has been mapped as a western, subhorizontal lopolith covering an area of three miles by five miles and an eastern vertical pipe about one mile in diameter composed predominately of dunite.

The target area covers over 13 square miles that contain pan concentrate samples with platinum values in excess of 1,000 parts per billion platinum.

Preliminary petrographic analysis (SEM and microprobe) of a few North zone samples indicates the presence of several PGE minerals and sulfides, some of which are hosted in stratiform horizons.

These platinum group element-enriched horizons contain elevated platinum, iridium, osmium and rhodium.

No palladium or ruthenium has been noted in samples examined by SEM/microprobe.

Quaterra is planning to conduct detailed mapping and sampling on the North zone in preparation for a summer diamond drilling program.

In addition, reconnaissance mapping and sampling will be conducted over previously unexplored portions of the claim block.

Other News

Teck Corp. and Cominco Ltd. recently entered into a merger agreement that will combine two of Canada's premier mining companies into a single entity to be known as Teck Cominco Ltd. While this merger has been in the making for some time, it will have a significant impact on Alaska since the Red Dog zinc-lead-silver mine and the Pogo gold project will be owned and operated by the same company.

If you think Alaska has not felt the pinch of reduced exploration dollars that the rest of the world has suffered through for the last few years, talk to Erik Hansen, land status guru in Fairbanks. His preliminary research indicates that last fall the Alaska Department of Natural Resources sent out rentals bills on 41,054 state mining claims. Of that total, 4,855 claims, or about 12 percent of the total, were abandoned. Many of these claims were at the top of the rental cost curve and a surprising number of the claims were over 25 years old.

The Journal of the Alaska Miners Association recently ran an article on the Alaska Centennial Nugget. This gold nugget, the largest ever found in Alaska, weighs 294.1 troy ounces and was recovered by miner Barry Clay on his claims in the Ruby District. Alaska's previous top-dog nugget was a 155-ounce clunker found in Anvil Creek in the Nome District in 1903.

On a more personal note, geologist extraordinaire Stan Foo recently became the mining section chief for the Alaska Division of Mining, Land and Water in Anchorage. Congratulations Stan!