Alaska mining news update from Curt Freeman: Investment up significantly for 2004

The Alaska Division of Geological and Geophysical Surveys and the Department of Commerce and Economic Development have released their annual preliminary report on Alaska's mining industry for 2004. As expected, investment in all categories was up significantly over previous years. Exploration spending in 2004 was estimated at $63.7 million, up from $27.6 million in 2003.

The 2004 expenditures were the highest in the state since 1981. Development expenditures jumped to $105.6 million vs. $39.2 million in 2003, thanks largely to initiation of construction at the Pogo mine. Production value was up to $1,178.5 million vs. $1,000.7 million in 2003. This increase was largely due to an increase in the price of all metals over the course of 2004. The production value was a record for Alaska since records have been kept. Total mineral value in 2004 was $1,347.8 million, another record high for Alaska.

As good as this was, 2005 is looking like it will turn in even better numbers.

Western Alaska

NovaGold Resources announced year-end 2004 financial and operating results which included a summary of plans for their Donlin Creek deposit.

The company and joint venture partner Placer Dome indicated that efforts in 2005 will include a 20,000 meter drill program designed to increase the existing 11 million ounce measured and indicated resources by converting a portion of the 14.3 million ounce inferred resource to the indicated category.

Three drill rigs will be working on site by the end of March.

In addition detailed engineering and design studies are continuing to bring all capital and operating cost estimates up to a pre-feasibility level of confidence and preparation of environmental assessment documentation and gathering of baseline environmental data are continuing.

The 2005 budget for the program is estimated at $11 million.

The company also announced that Stan Foo has become the new project manager for Donlin Creek.

Congratulations Stan!

NovaGold also announced that is has acquired an option on the Illinois Creek gold property near Galena for an initial payment of $20,000. The company can acquire 100 percent of the property by making payments totaling $250,000 by April 30, 2009, expending $1.5 million on exploration on the property and making a further payment of $1.0 million within 30 days of completion of the payments and expenditures. Immediate plans for the property were not released.

NovaGold also announced the final feasibility study has been initiated at the Rock Creek project. The company is completing additional in-fill drilling and metallurgical test work as part of the final feasibility study. The budget of $4 million is planned for the development work in 2005 with the objective of the program to advance Rock Creek to a stage of being fully permitted and ready to construct. An additional $1.75 million drilling program is planned for the Big Hurrah project, located 45 miles from Rock Creek.

The biggest news out in March was the updated resource calculations for Northern Dynasty's Pebble copper-gold-molybdenum deposit near Iliamna.

The new resources include measured and indicated resources of 3.026 billion tonnes grading 0.28 percent copper, 0.32 grams gold per tonne and 0.015 percent molybdenum equivalent to 31.3 million ounces of gold, 18.8 billion pounds of copper and 993 million pounds of molybdenum.

An additional inferred resource includes 1.130 billion tonnes grading 0.24 percent copper, 0.30 grams gold per tonne and 0.014 percent molybdenum equivalent to 10.8 million ounces of gold, 5.8 billion pounds of copper and 361 million pounds of molybdenum using a 0.30 percent copper-equivalent cut-off grade.

Do the math - all in that's 42.1 million ounces of gold and 24.6 billion pounds of copper! Perhaps more important is the fact that higher grade resources have been increased substantially to a measured and indicated resource of 569 million tonnes grading 0.50 grams gold per tonne, 0.46 percent copper, and 0.021 percent molybdenum, or 0.88 percent copper-equivalent, with an additional inferred resource of 143 million tonnes grading 0.56 grams gold per tonne, 0.40 percent copper and 0.020 percent molybdenum, or 0.85 percent copper-equivalent above a cut-off grade of 0.70 percent copper-equivalent.

The resource estimate is based upon drill core assay results from 70,719 meters of drilling in 265 holes which were completed by Northern Dynasty during 2003 and 2004, and 19,245 meters in 118 holes completed by Teck Cominco American Inc. up to 1997.

The 2005 exploration program is budgeted at $36 million and will include delineation drilling of the East Zone discovery on the eastern flank of the deposit where substantial higher-grade gold-copper-molybdenum mineralization was discovered in 2004.

In additional the company will continue engineering, environmental, and socioeconomic evaluations designed for inclusion in a feasibility study and in permit applications.

The company also announced that it had acquired the remaining interests in the Pebble project that were held by Hunter Dickenson Inc. and Teck Cominco leaving it with 100 percent interest in the project subject to a 5 percent net profits interest held by Teck Cominco.

Eastern Interior

Golden Spirit Minerals announced plans to conduct diamond drilling on its Ester Creek project in the Fairbanks district. Details of the program, planned for the summer, were not released.

Alaska Range

Alaska newcomer Canaco Resources Inc. announced that it had acquired an option on the Macomb and Hajdukovich gold prospects on the north flank of the Alaska Range south of Delta Junction.

The properties were acquired from Teck Cominco and allow Canaco to earn a 100 percent interest in both properties by spending a total of $2,000,000 in staged commitments over the next four years.

Teck retains a back-in right and can acquire a 50 percent interest by making expenditures equal to twice Canaco's expenditures, to a maximum of $8,000,000.

The Hajdukovich property was discovered by Teck in 2000.

Gold mineralization at Hajdukovich property includes numerous areas of mineralization having been identified to date.

The Sneaker Zone is the principal exploration target on the property and is defined by sheeted, northeast trending, low-sulfide gold-bismuth quartz veins over a minimum 600 meter by 900 meter area at the eastern property boundary.

A total of 1,293 mineralized grab samples have been assayed from the property with 145 returning values in excess of 1.0 gram gold per tonne.

These samples range up to 184.46 grams gold per tonne with an average of 10.97 grams gold per tonne.

A number of secondary exploration targets also are known on the property.

The highest priority amongst these targets is stockwork quartz veining within granodiorite and monzonite at the Gert zone.

A total of 109 mineralized grab samples have been assayed from the Gert zone with 16 returning values in excess of 1.0 gram gold per tonne.

These samples range up to 19.41 grams gold per tonne with an average of 5.61 grams gold per tonne.

Rock sampling returned up to 12.62 grams gold per tonne from a target area that may exceed 300 meters across slope.

At the Macomb prospect 1999 stream sediment sampling returned values up to 3,770 parts per billion gold.

Additional stream sediment sampling identified 14 contiguous drainages on the plateau which returned greater than 100 parts per billion gold defining a 15 kilometer long southeast trend.

Prospecting and geochemical work carried out by Teck in 2000 was successful in defining several areas of anomalous gold and locally heavy metals in soils on the West and East Berry Creek grids.

Mapping and prospecting resulted in discovery of two quartz vein float samples in East Berry Creek grid area that returned assays of 17.6 grams gold per tonne and 39.2 grams gold per tonne and one float sample of granitic host rock from the same area (quartz/sericite altered) with quartz stockwork that assayed 20.5 grams gold per tonne.

Four diamond drill holes totaling 425.4 meters were completed in 2003 on the Macomb property while under option to Geologix Explorations.

Only one hole intersected bedrock with no significant gold values returned.

The results confirmed that the appreciable glacial cover hinders the process of target generation and that a detailed analysis of the local glacial geology be developed prior to additional drilling of the high grade gold float and soil geochemistry anomalies.

Immediate plans for the 2005 season were not released.

Welcome to Alaska Canaco!

Nevada Star Resources announced additional results from a six-hole 2,275 foot reverse circulation drilling program completed on the Canwell nickel-copper-platinum group element prospect in September 2004.

The drilling intersected significant thicknesses of weakly disseminated sulfide mineralization in the east central part of the major Canwell Intrusive complex.

Drill hole CAN0405 has the thickest intersection, with 550 feet of 0.27 percent nickel, 0.02 percent copper, 0.01 percent cobalt and 0.15 gram per tonne platinum group element plus gold in altered dunite starting at a depth of 50 feet.

Other intersections included 90 feet at 0.26 percent nickel in drill hole CAN0401, 120 feet at 0.20 percent nickel in CAN0403, 335 feet of 0.21 percent nickel in CAN0404, and 45 feet of 0.30 percent nickel in CAN0406.

Detailed thin-section petrographic studies indicate the presence of trace to minor amounts of sulfides (up to 1 percent), mainly pyrrhotite and pentlandite, intergrown with magnetite and chromite within and at the margins of serpentinized olivine grains.

Additional evaluations of the Canwell prospect are planned.

Golconda Resources announced that it had completed two additional holes (633 meters) at its Shulin Lake diamond project west of Talkeetna. The core obtained from these holes has been shipped for laboratory analysis but contained similar rocks that produced microdiamonds and diamond indicator minerals in their 2004 drilling program. The company is continuing to drill on the third of three circular volcanic features believed to be genetically related to mineralization.

Northern Alaska

NovaGold Resources announced plans for a $4 million drilling program at its Ambler massive sulfide project in the southern Brooks Range. The 6,000 meter drilling program is designed to advance the project to scoping level by continuing to define the project resource, complete transportation and energy studies, increase the resource base by testing possible ore zone extensions defined through deposit modeling and confirming and expanding mineralization on select outlying prospects and targets.

Hecla Mining (29.73 percent) and Kennecott Mining (70.27 percent) announced fourth quarter and year-end production results from the Greens Creek mine near Juneau.

For the year the mine produced 9,708,254 ounces of silver, 86,184 ounces of gold, 24,836 tonnes of lead and 76,182 tonnes of zinc.

Cash operating costs were 98 cents per ounce while total costs were $3.47 per ounce.

Average head grade mined for the year was 16.65 ounces of silver per tonne.

Year-end proven and probable reserves stood at 2,358,189 tons grading 0.11 ounces of gold per ton, 14.1 ounces of silver per ton, 3.9 percent lead and 10.2 percent zinc.

Inferred resources stood at 785,276 tons grading 0.14 ounces of gold per ton, 14 ounces of silver per ton, 4 percent lead and 11.1 percent zinc.

Exploration efforts in 2004 discovered mineralization west of the Gallagher fault with the longest continuous intercept of mineralization stretching over a 280 foot interval in one hole.

Assays for these holes are pending but are expected to return significant lead, zinc and silver values.

Other

All right, let's get it over with.

The annual Fraser Institute survey on mining companies has been released to less than enthusiastic response here in Alaska.

Alaska dropped to 33rd place of 64 jurisdictions measured in the policy potential index, a measure of the regulatory regime in a given political jurisdiction.

With current land use policies in effect, Alaska plummeted to 55th place in the mineral potential index, a measure of the potential of a jurisdiction.

Remove the policies and Alaska was a stellar third place behind only Tasmania and Nevada (yes, Tasmania).

A new index, measuring a jurisdiction's room for improvement, placed Alaska a dismal 62nd, ahead of only Montana and California.

In short, Alaska got hammered! How about some even more disturbing news? Turns out there is a disturbing lack of companies who are active in Alaska that have been asked to fill out a Fraser Institute survey form.

In fact, I can find nobody active in Alaska who filled out such a survey! If mining companies active in Alaska are not filling out the form, who is? Will Rogers said "Everybody is ignorant, only on different subjects." Given the amazing changes that have improved Alaska's mining climate over the last 10 years, Alaska can only blame itself for allowing mining companies to remain ignorant of superb opportunities that exist in the state.

If it feels like a glove across Alaska's cheek, perhaps it is!