Movers and shakers break ground in Alaska

Neither the heat and smoke from wildfires, nor excruciatingly low winter temperatures could deter miners from expanding their operations in Alaska this past season. Representatives of several companies described their achievements in the "Development and Mine Operations" session at the Alaska Miners Association convention on Nov. 5.

NovaGold Resources' Rock Creek

John Odden from NovaGold Resources began with a presentation on Rock Creek, which is located on the Seward Peninsula, seven miles north of Nome. Part of it is on land owned by the Bering Straits Native Corp., which will receive a royalty on gold production. The Rock Creek and nearby Saddle deposits contain a resource of greater than 1 million ounces of gold.

Production at Rock Creek is targeted to begin by 2006, with an anticipated average of 100,000 ounces of gold per year at a total cash cost of $200 per ounce.

"There is good road access from Glacier Creek, and Nome Utilities power is within five kilometers - it's an easy shot to power up the mine," Odden said.

The final feasibility study for Rock Creek is well under way and the company has initiated the permitting process. Approximately 5,400 feet of HQ triple tube diamond drilling in 20 holes has been completed, along with a 3,300-foot trench program across the main mineralized zone. A twin drill hole program of duplicate best method reverse circulation drilling has also been completed as part of the reserve definition program developed by engineering firm AMEC E&C Ltd.

A further 8,900 feet of infill drilling, to convert the remaining areas of inferred resources to indicated resources, has also been completed with 38 drill holes of both reverse circulation and core. A detailed metallurgical program is under way to determine final design parameters for the milling circuit. One of NovaGold's objectives has been to reduce gold loss from the core, and to this end they have been using new equipment: a face-discharge bit instead of a conventional bit. The ports on the face-discharge bit direct the flow of mud away from the core.

NovaGold Resources' Big Hurrah

NovaGold also owns the Big Hurrah property, 45 miles east of Nome.

Initial exploration started there in 2004 and the results are pending.

Historic work on the property has identified multiple shallow mineralized zones grading as much as 10 grams/tonne gold with similar characteristics to Rock Creek.

Among its other Alaskan properties, NovaGold owns 70 percent of the Donlin Creek deposit in the southwest of the state, in a joint venture with Placer Dome, which owns the remaining 30 percent.

The companies hope to begin construction of a hard-rock mine here in November 2007 or earlier.

Placer Dome announced the appointment of a new president and CEO last September, Peter Tomsett, who took over from Jay Taylor.

Commercial production at Pogo in early 2006

Teck Cominco will also soon have a new president, Donald R. Lindsay, the company announced in November, and he will likely take over as CEO next April.

Teck Cominco is the operator of the Pogo gold project and holds 40 percent interest in it, with Sumitomo Metal Mining holding 51 percent and Sumitomo Corp. the remaining 9 percent. Pogo has a probable resource of 7 million tonnes grading 16.12 grams/tonne, and the underground mine is expected to produce an average of 400,000 ounces of gold annually over a 10-year life.

The company aims to start commercial production early in 2006. Major progress on construction has been made at Pogo, which is 38 miles northeast of Delta Junction, Teck-Pogo's Karl Hanneman told the convention.

Capital costs for the Pogo project total $284 million, including $30 million for a 50-mile access road and site roads. Teck-Pogo began construction of a winter road in December 2003, with nine large bridges and up to 20 smaller bridges across the Goodpaster River.

"Some local guys from Delta, very hardy, wood-savvy folks, really make this kind of stuff happen, we couldn't do it without them," Hanneman said. "They get out there at 30 or 40 below (zero) and pump and blow water onto the river to make the ice-bridge crossings." Temporary wood and steel bridges were also brought in. In 1997-98 the round-trip travel time on this winter road was 14 hours; last year it was between six and eight hours.

"We ended up moving about 600 loads of fuel and supplies into the mine," Hanneman said, "most of which came in the very latter parts of the February-March period, so when all the freight did arrive it was fortunate that we had a road where we could transfer it rapidly into the site before break-up."

At the same time as building the winter road, Teck-Pogo worked on the pilot access road up to Shaw Creek Valley. The road traverses three major terrain types: sand dunes, very high alpine terrain above the tree line and heavily wooded terrain.

Video game-style GPS consoles were installed in bulldozers so their operators could see themselves without needing a survey team ahead of them in the deep snow and forest.

The access road was completed in April, but it was difficult to use during the two-month break-up period, so fuel and supplies were brought in by air, to a new 3,000-foot airstrip.

At the end of June the Camp Creek forest fire came dangerously close to the project.

"I want to acknowledge the response of DNR (the Department of Natural Resources). They quickly mobilized to help us protect the camp," Hanneman said. The company also had several water trucks keeping the woods wet.

Despite haze from fires throughout the summer, Teck-Pogo managed to build its water treatment plant and start on the mill by September.

Fort Knox: 1/3 of gold in 1 percent of rock

The Boundary wildfire forced the evacuation of the Fort Knox open pit mine, near Fairbanks, at the end of June, but it was back to normal production levels within a few days. Gold production and restoration work continues apace there, according to Paul Jensen of Fairbanks Gold Mining, a subsidiary of Kinross Gold.

"Eighty-eight percent of our wetlands have been restored," he said. "There is some very good habitat for moose, fish and ducks."

Fairbanks Gold Mining expects the mine to produce around 340,000 ounces of gold at total cash costs of $220 per ounce in 2004.

"One-third of our gold is in 1 percent of our rock," said Jensen.

For the future the company plans Fort Knox pit expansion, near mine exploration, district exploration and to look at outside acquisition and discovery opportunities.

Mystery Creek Resources working Nixon Fork area

The first 400 tons of gold were shipped from the Nixon Fork area, 35 miles northeast of McGrath, in 1919, but Mystery Creek Resources only acquired a lease on the mine here in February 2003. The company is a subsidiary of St. Andrew Goldfields, Mystery Creek's president, Paul Jones, told the convention. This particular underground mine started production in 1995, under the ownership of Consolidated Nevada Gold Co., but stopped when that company went into receivership in mid-1999 due to "some happenings in Mexico," Jones said. Mystery Creek took the mine over from Mespelt & Almasy Mining Co.

Indicated resources at the property are estimated to be 69,000 tonnes at 32.4 grams/tonne gold, and inferred resources total 76,000 tonnes at 26.4 grams/tonne gold. The company plans to revise the estimate in January to upgrade most of the indicated to reserve status and most of the inferred to indicated, and add what has been found in this year's drilling. "You get some spectacular grades - you also get some that are not so spectacular, but they all work out," said Jones.

An underground drilling program started in 2004 and Mystery Creek has drilled 13,000 meters (42,650 feet) to date. It has also conducted environmental permitting studies, hydrological studies and metallurgical studies for the redesign of the milling process, and designed a new metallurgical circuit. In 2005 it hopes to complete the permitting process, renovate and modify the milling facility, treat the existing tailings material from the previous operation in the summer, and begin the mining of new ore in the late fall.

Mystery Creek's predecessor, Consolidated Nevada Gold, shipped a bulk sulfide concentrate to Japan via Seattle for smelting. To avoid this expense, Mystery Creek will do flotation and make a high-grade copper concentrate. "We may actually do some scrubbing of that flotation product before we clean it," Jones said. The tailings from the flotation process will then be leached with cyanide to make a doré. The company expects to get about 25 percent of the total gold out with the gravity circuit. About 35 or 40 percent of the gold will come out in the cyanide leach process, and the rest of it will be with the copper material.

Kensington Gold moving ahead

In southeast Alaska, Coeur Alaska is moving forward with its Kensington Gold Project.

"You guys might think Juneau is the hardest place in the world to mine, but it's not, it's been a very welcoming community," said Tim Arnold, vice president and general manager of Coeur, who came to Alaska in April. Coeur has been involved with Kensington for more than 15 years and is currently in the last stages of permitting the current mine plan. The company has spent around $150 million on Kensington, $25 million in environmental studies alone. It hopes to begin production in summer 2006.

Kensington is about 45 miles north of Juneau. Coeur plans to build a two-mile road extension and a port facility to shuttle its workers back and forth from Alaska's capital, a five-mile ferry trip.

"All the workers will do a daily commute to Juneau in the new plan, which has not been a part of the previous plan," Arnold said. The Jualin camp is another five miles away, on the other side of a mountain. At present it is "not much more than a very coarse exploration camp," Arnold said, but most facilities will be based there once the mine is in operation.

During pre-production, the majority of the development will take place on the Kensington side.

The tailings management facility will be at Lower Slate Lake, a 20-acre lake that is 51 feet deep in the middle. Coeur will expand it to about 50 acres and reduce the average depth to 20 feet, so it will be shallow enough for about 800 Dolly Varden from Upper Slate Lake to live in.

"Our tailings are very clean, as a matter of fact they're cleaner than what's at the bottom of Slate Lake right now," Arnold said. "We have a high quality of reclamation standards," he added. "We feel as though there's going to be a very small impact. It's a nice underground mine."

Usibelli: state's only coal mine

Usibelli Coal Mine could be called the black sheep of Alaska's mining industry, as it is the state's only coal mine, but it has proved there is nothing wrong with standing out from the crowd. Usibelli has been exporting coal to South Korea since 1985, and this year sent its first test shipment to Chile, Fred Wallis told the convention.

The company has been mining near Healy for 60 years and opened its Two Bull Ridge mine in July 2003. This is now its main mining area - it has five altogether. "We have some pretty good coal that's not too far down under the ground," Wallis said. A total of 2,500 acres are permitted there.

Like other mining companies, Usibelli is having difficulty recruiting younger employees. It currently has 90 full-time employees, almost one-third of whom have been with the company for more than 20 years. The average age of Usibelli employees is 47.

It is considerably easier to obtain new equipment. A CAT 992C 1988 model with more than 49,000 hours of service was retired this year and replaced with a CAT 992G. Usibelli also owns a 2,100-ton BE 1300W Walking Dragline, the only one in Alaska, purchased in 1977. "It attracts a lot of attention in the area," Wallis said. Usibelli recently bought a Gamma-Metrics Elemental Crossbelt Analyzer, which will "make a better blended product for our customers," according to Wallis.

Usibelli's customers include Aurora Energy, Fort Wainwright, Eielson Air Force Base, the University of Alaska Fairbanks and Golden Valley Electric Association. The Alaska Railroad hauls all the coal off-site that is not delivered to the mine-mouth power plant: 750,000 tons of coal north to Fairbanks and 400,000 tons south to Seward annually. Reclamation has been taking place at the closed Poker Flats mine and Usibelli estimates that it planted more than 20,000 trees last summer.