The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Alaska Miners Association convention forum for results from Alaska's exploration, development and production properties
The month of November started off with a bang with favorable results for the mining industry from both the state and federal elections standpoint. As it closes the price of gold is flirting with $450 per ounce, the highest price for this metal since mid-1988.
The Alaska Miners Association convention was very well attended in early November and results were revealed there from many of Alaska's exploration, development and production properties.
A quick tally of spending across the state suggests exploration spending will be up almost $50 million in 2004.
Development spending is likely to be dramatically higher in 2004, primarily due to the Pogo mine construction but also significantly impacted by activities at Nixon Fork, Donlin Creek, Rock Creek and Kensington.
Production revenue is undoubtedly going to top $1 billion all by itself thanks to strong gold, silver, copper, lead and zinc prices. Not bad for Seward's Icebox!
WESTERN ALASKA
Northern Dynasty Minerals reported a summary of a recently completed preliminary economic analysis on their Pebble copper-gold prospect near Iliamna. The estimates were based on inferred mineral resources of 2.74 billion tonnes grading 0.55 percent copper-equivalent (0.30 grams gold per tonne, 0.27 percent copper and 0.015 percent molybdenum above a cut-off grade of 0.30 percent copper-equivalent).
Processing of mill feed from an open pit will produce a copper sulfide flotation concentrate with gold and silver values as well as a separate molybdenum sulfide concentrate. Estimated metal recoveries were 88 percent for copper, 76 percent for gold and silver, and 60 percent for molybdenum. Copper concentrates would be transported to a storage and dewatering port facility on tidewater on Cook Inlet via a concentrate pipeline. Molybdenum sulfide concentrate would be packaged and shipped to market separately.
The preliminary assessment examined three production rate scenarios: 100,000 tonnes per day, 200,000 tonnes per day and a phased expansion from 100,000 tonnes per day to 200,000 tonnes per day in year six.
These analyses show that at the lowest production rate considered (100,000 tonnes per day), the project has the scope to produce an annual average of 256 million pounds of copper, 365,000 ounces of gold, 8 million pounds of molybdenum, and 1.4 million ounces of silver during the first 10 years of a 62-year mine life.
At the largest scale studied (200,000 tonnes per day), the project would produce an annual average of 470 million pounds of copper, 674,000 ounces of gold, 15 million pounds of molybdenum, and 2.5 million ounces of silver during the first ten years of a 31 year mine life.
Waste-to-ore stripping ratio for all three scenarios was 0.23 to 1.
Average cash costs net of other metal credits ranged from 24 cents per pound of copper for the smallest production rate to 19 cents per pound of copper for the largest production rate.
Capital cost estimates range from $1.0 billion for a 100,000 tonnes per day facility to $1.5 billion for a 200,000 tonnes per day facility.
Life-of-mine sustaining capital estimates range from a total of $276 million for a 100,000 tonnes per day project to a total of $197 million for a 200,000 tonnes per day project.
Operating cost estimates range from $5.06 per tonne milled for a 100,000 tonnes per day production rate to $4.36 per tonne milled for a 200,000 tonnes per day production rate.
The results of financial analyses for the three production rates under consideration indicate that the project could generate an internal rate of return on capital invested of between 15.3 percent and 20.3 percent, and a net present value, discounted at 5 percent, of between $1.047 billion and $2.091 billion. At metal prices of $1.25 per pound copper, $415 per ounce gold, $7.00 per ounce silver and $15 per pound molybdenum, the internal rate of return would increase to between 33.0 percent and 40.8 percent and the net present value to between $3.511 billion and $5.972 billion.
A capital cost of $103 million was estimated for construction of the seaport and access road for the Pebble project although these numbers were not included in the preliminary economic assessment since talks are on-going with state and federal agencies regarding funding of this part of the project.
Development of a mine at Pebble will require the construction of an 86-mile road to connect the project to tidewater at Cook Inlet and a deep sea port facility.
Options for electrical power generation include connection to the state's existing power transmission grid, either through a 41-mile submarine connection to the Kenai Peninsula or an overland route on the west side of Cook Inlet.
An alternative to a transmission grid connection would involve construction of new generation facilities close to the mine or port area.
Not to be outdone by the engineers and metallurgists, Northern Dynasty Minerals also reported a summary of drilling results on their Pebble copper-gold prospect near Iliamna.
The project's $25 million exploration budget included infill resource definition drilling, exploration drilling, geotechnical and engineering drilling and process design drilling.
The work also included extensive environmental and socio-economic planning, data collecting and field studies.
Drilling totals include 122 holes (101,539 feet) of in-fill drilling, 26 holes (21,335 feet) of metallurgical drilling from which 85 tons of metallurgical samples have been shipped, 70 holes (32,502 feet) of geotechnical drilling and nine holes (13,815 feet) of exploration drilling.
Highlights of the 2004 in-fill and exploration drilling results include hole 4137 which returned 143.3 meters grading 0.54 grams gold per tonne, 0.52 percent copper and 0.028 percent molybdenum; hole 4142 which returned 103.6 meters grading 1.11 grams gold per tonne, 0.52 percent copper and 0.018 percent molybdenum; hole 4145 which returned 259.1 meters grading 0.68 grams gold per tonne, 0.55 percent copper and 0.037 percent molybdenum; hole 4147 which returned 100.6 meters grading 0.99 grams gold per tonne, 0.42 percent copper and 0.011 percent molybdenum; hole 4187 which returned 76.2 meters grading 0.47 grams gold per tonne, 0.86 percent copper and 0.063 percent molybdenum; hole 4189 which returned 64.3 meters grading 0.73 grams gold per tonne, 0.81 percent copper and 0.081 percent molybdenum; and hole 4199 which returned 52.3 meters grading 0.65 grams gold per tonne, 0.65 percent copper and 0.013 percent molybdenum.
Additional assays from exploration and in-fill drilling are pending.
Liberty Star Gold announced preliminary results from a four-hole, 1,329-foot, core drilling program on its Big Chunk copper-gold project near Iliamna. Drilling was conducted on the White Sox prospect where altered and mineralized sedimentary rocks cut by porphyry dikes and quartz veins were intersected. Copper and molybdenum sulfides were visible in some intervals of the core.
Induced polarization geophysical anomalies and geochemical anomalies coupled with this drilling suggest the system is more than one mile wide, three miles long and open to the northeast, east and south. Airborne magnetic highs suggest the White Sox prospect is adjacent to a large intrusive system which may be the source of porphyry dikes encountered in the drilling. The company indicated that it believes that White Sox represents a covered, previously unrecognized porphyry copper-gold system.
NovaGold Resources announced additional results from its Rock Creek project near Nome.
The 2004 work program included 5,921 meters of in-fill drilling and 1,000 meters of trenching to provide additional geologic data for an updated three-dimensional block model. The company has signed a memorandum of understanding with the state of Alaska formally initiating the permitting process at Rock Creek. This agreement outlines the requirements for permitting of the project and is anticipated to be completed by the second half of 2005.
Baseline environmental monitoring and permitting activities have been budgeted at more than US$700,000 in 2004. The company also announced that a feasibility study on the project has been initiated under the direction of Norwest Corp. Over US$1.1 million has been budgeted for engineering programs in support of the feasibility study. Other studies under way include metallurgical testing, waste rock characterization and disposal, water management and mine facilities design.
NovaGold Resources also announced exploration efforts at its Big Hurrah gold project east of Nome. The company completed 2,900 meters of both reverse circulation and core drilling to test the potential to develop a near surface gold resource. Historic work on the property has identified multiple near surface gold mineralized zones with similar characteristics to Rock Creek.
The company is targeting the potential to define an initial mineralized zone that could contain 100,000 to 200,000 ounces of gold grading between 5 to 10 grams gold per tonne beginning at surface. Assay results from the current drill program are still pending but drilling on the property did encounter mineralization which included zones of veining with coarse visible gold. The zone remains open at depth and along strike.
Full Metal Minerals Ltd. announced results from their Ganes Creek property west of McGrath. Field work during 2004 included collection of 1,316 soil samples on a 50 by 100 meter spaced soil grid centered over three placer gold-producing streams east of the main Ganes Creek channel. This work, in conjunction with prior data, has identified several northeast trending zones of anomalous (greater than 95th percentile) gold values, highlighted by a 5,500 meter long anomaly located proximal to a major fault zone.
Prospecting work, which included collection of 387 rock samples, revealed new gold occurrences located proximal to old workings at the Independence prospect.
A grab sample of highly altered and veined mafic intrusive rock assayed up to 49 grams of gold per tonne, with samples nearby of narrow quartz breccias exposed in trenching returning values up to 8.3 grams of gold per tonne.
At the Katz showing, 14 grab samples collected over 5 meters averaged 3.9 grams of gold per tonne from the end of a historic exploration drift while grab samples from an old dump returned up to 22.0 grams of gold per tonne.
Additionally, several subcrop and float occurrences of quartz from areas with extensive vegetation cover, assayed between 5.7 and 8.5 grams of gold per tonne, proximal to gold in soil anomalies.
The company indicated drilling was planned on the property for 2005.
EASTERN INTERIOR
Kinross Gold announced third quarter results from its Fort Knox operations.
The mine produced 84,738 ounces of gold at a total cash cost of $229 per ounce compared to 98,518 ounces of gold at a total cash cost of $249 per ounce during the third quarter of 2003.
Mill throughput for the quarter averaged 37,213 tonnes per day at an average grade of 0.79 grams of gold per tonne.
Recovery was steady at 89 percent and total operating costs were $317 per ounce.
Production was slightly ahead of forecast levels due to better grades and mill recoveries.
The year-on-year decrease in production was a result of the temporary suspension of mining from the True North pit which did not contribute to production in the third quarter of 2004.
Rising fuel and energy costs both adversely affected operating costs in the third quarter.
Teryl Resources Corp. announced results from limited soil auger sampling on its West Ridge gold prospect in the Fairbanks district.
A total of 161 power auger soil samples were collected on a small grid over the southern part of the claim block and within lands the company has leased from the State Mental Health Land Trust.
In addition to the 161 auger samples, 14 shovel soil samples were collected in the same area as previous rock sampling which returned gold values ranging up to 4.3 grams of gold per tonne.
Anomalous gold and pathfinder elements in the 2004 soil grid occur in four discrete areas of the grid and all four areas are open to expansion into lands owned or leased by the company.
Of the 175 soil samples collected, 29 returned values greater than 100 parts per billion gold with the maximum value being 981 parts per billion. An additional 32 returned anomalous gold values ranging between 50 and 100 parts per billion. Anomalous gold was associated with elevated arsenic, antimony, lead, bismuth and tungsten. The presence of anomalous bismuth (to 15 parts per million) and tungsten (to 370 parts per million) in soils suggests that gold mineralization within the sample grid may be intrusive related. Additional work is planned for 2005.
Teryl Resources Corp. also announced that two reverse circulation drill holes (587 feet) had been completed on its Fox Creek gold prospect in the Fairbanks district.
The holes were angled to the southeast and northwest from a drill pad placed adjacent to the rock sample site that returned 1.36 gold grams of gold per tonne during initial due diligence sampling.
The holes were placed approximately 150 meters east of a 1995 hole drilled by AMAX Gold that returned 30 feet grading 0.03 ounces per ton of gold.
Both holes intercepted sulfide-bearing granite along with altered quartzite and quartz mica schist.
Sulfides observed include pyrite and molybdenite.
Hornfelsing was observed in both holes.
Assays are pending.
Teck Cominco and partner Sumitomo Metal Mining announced that construction activities on their Pogo gold mine are ahead of schedule and the partners now estimate the first gold pour for December 2005 rather than the originally estimated March 2006 pour date.
The electrical power line along the 49-mile road access corridor is due to electrification in mid-December which will allow an estimated 2 megawatts of power to be drawn for construction purposes by January 2005. The twin portals used to access the ore body are due to be collared in December. Capital costs are still pegged at $284 million for the mine-mill complex. The mine's revenue generating capacity has drawn the notice of the Fairbanks North Star Borough's mayor who recently indicated his administration is looking at an option to annex the land around Pogo into the North Star Borough to allow it to tax the facility. Funny, nobody thought this land was worth much a few years ago .
Tri-Valley Corp. announced the formation of a new mining subsidiary, Select Resources Corp., as the first step toward creating a new mining company to house its 42 square mile Richardson gold project southeast of Fairbanks. The new company would provide a stand-alone vehicle for Richardson and other gold exploration projects the company may acquire in the future. Tri-Valley has discovered gold at 60 locations along a 20-mile strike on the project. Several drill targets have been identified and Select expects to drill one or more in 2005.
NORTHERN ALASKA
Little Squaw Mining Co. announced additional results from 2004 fieldwork on its Little Squaw gold project in the southern Brooks Range.
Fieldwork involved prospecting of some of the 59 favorable targets identified from a photo geologic lineament study conducted earlier in the year.
Subsequent fieldwork identified a number of high priority gold-quartz vein prospects for future exploration.
Results from the Little Squaw vein include a grab sample from a quartz vein exposed in one of the trenches which assayed 5.24 ounces of gold per ton.
Channel sampling in a tunnel below that trench yielded 19.98 ounces of gold per ton over 3.54 feet of true width.
This sample run includes a 0.84 foot interval of ribbon quartz that assays 89.12 ounces of gold per ton with 15.85 ounces of silver per ton.
Another channel sample of this ribbon quartz taken 10 feet farther along in the tunnel assayed 5.16 ounces of gold per ton over 0.85 feet.
At the Crystal vein, rediscovered this season, the old shaft and associated trenches are completely caved however a set of veins can be traced over a strike length of at least 400 feet. The main quartz vein is at least 5 to 6 feet thick and has a 0.67-foot-thick footwall of ribbon quartz that assayed 3.64 ounces of gold per ton. Additional promising results were received from the McLellan, Pioneer, Uranus, Mikado, Rock Glacier, Prospector East and Big Tobin prospects. Additional work is planned for 2005.
SOUTHEAST ALASKA
Kennecott (70.3 percent) and Hecla (29.7 percent) announced third quarter 2004 production from the Greens Creek mine on Admiralty Island.
The total cash cost per ounce of silver at Greens Creek for the quarter was $1.55, a significant increase over third quarter of 2003 costs of $1.14 per ounce.
The average grade of ore mined during the quarter was 18.05 ounces of silver per ton.
During the third quarter the mine produced 2,579,774 ounces of silver, 20,699 ounces of gold, 6,014 tons of lead and 18,668 tons of zinc.
Total production costs for the quarter were $3.58 per ounce of silver produced versus $3.35 per ounce for the third quarter of 2003.
Exploration drilling continued to advance targets west of any previous mining.
Underground access to this area should be ready for exploration drilling in early 2005.
Bravo Venture Group Inc. announced the completion of Phase II drilling at its Woewodski Island project in southwest Alaska. Five drill holes (550 meters) were completed at two of the 13 volcanogenic massive sulfide and gold prospects on the island. Three drill holes (349 meters) targeted interlayered sulfides, argillite and andesitic tuffs at the Mad Dog prospect where previous drilling returned values of up to 3.8 meters of 16.4 ounces of silver per ton, 2.8 percent lead and 22.4 percent zinc within a 17 meter intercept of 6.5 ounces of silver per ton and 11.27 percent zinc.
The other two drill holes tested induced polarization, gravity and ground magnetic geophysical anomalies on the Brushy Creek prospect. The first hole intercepted a thick mineralized horizon of sulfide-rich tuffs and sediments about 250 meters along strike from historical drilling which returned 2.3 meters of 1.25 percent zinc and 1.1 ounces of silver per ton. The second hole tested a previously untested geophysical target approximately 300 meters to the southwest of the first drill hole. Assay results are pending.
OTHER
Freegold Ventures announced initial drill results at its Grew Creek gold project near Ross River, Yukon. Two of the first three holes drilled on this epithermal gold target returned high grades over significant widths. The first drill hole returned 90.5 meters grading 2.25 grams gold per tonne including a 17.5 meter interval which returned 6.79 grams gold per tonne. The third hole returned 6.25 meters grading 22.12 grams gold per tonne. Gold is associated with distinctive pink quartz- adularia veins that are now believed to trend north-south across the property. Additional drilling is in progress.
Curt is President of Avalon Development Corporation, a mineral exploration consulting firm based in Fairbanks, Alaska. He is a U.S. Certified Professional Geologist with the American Institute of Professional Geologists (CPG #6901) and is a licensed geologist in the State of Alaska (Lic. # AA 159).
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