Gil advances: production decision by 2006

Kinross Gold and Teryl Resources are advancing their Gil Joint Venture Project from exploration to the development stage in hopes of identifying a viable source of new high-grade gold ore for production.

The joint venture plans to permit the deposit once sufficient baseline data has been collected. A $793,800 budget has been approved this year for permitting and engineering work. A full feasibility study is expected to be completed by the end of the year, and a production decision by Kinross, which holds an 80 percent interest in the Gil JV, is expected in 2006.

The Gil property is located 19 miles northeast of Fairbanks and a few miles east of Kinross' Fort Knox gold mine, where daily production currently exceeds 1,000 ounces of gold.

The Fort Knox mine is nearing the end of its life and has about five years of estimated reserves left to produce, and the nearby True North gold mine is closing. This means Kinross is keenly interested in identifying new sources of higher grade gold ore to feed the Fort Knox mill.

It bodes well for the Gil property, which has a main zone ranging up to 80 feet thick, trends over 2,500 feet and is open along strike and at depth. Several new high grade quartz vein targets recently have been identified on the property in the Intersection Area, east of the North Gil and northeast of the Main Gil and on Sourdough Ridge, east of the Main Gil. A gold deposit on West Ridge contains two gold zones with mineralization similar to that at Kinross' True North deposit.

Gil still mostly unexplored

Though only 10 percent explored, the Gil property, currently has a drill-indicated resource of 400,000 ounces of gold, according to John Robertson, president of Teryl Resources.

"Gil is considered to have higher-grade gold ore, which could be good for Kinross," Robertson said July 18. "With Fort Knox in the final phase of production and the fact that True North is being closed down, it's nice to have another source of higher grade gold ore nearby. The Gil property is only six miles from the Fort Knox mill."

Kinross officials could not be reached for comment.

This year Kinross will perform extensive engineering and airborne geophysical surveys to fill out the partners' database on the Gil property. The goal is to produce a more detailed structural and lithologic base map of the Fort Knox Trend. The survey may pinpoint drill targets on the Gil - and, if they are lucky, another 4 million ounce Fort Knox-type deposit, according to Robertson.

Permitting activities will consume most of Kinross' 2005 development budget. More than $500,000 will be spent on the process of obtaining required permits including a plan of operations, solid waste disposal, storm water discharge, wetlands and plans for monitoring, reclamation and closure.

A cultural resource survey was completed last year and surface and ground water hydrology data, begun in 2000, is nearly complete. Once the U.S. Army Corps of Engineers completes a required environmental assessment, the permitting process can be completed.

Since 1991 when Kinross joined the project, the partners have spent some $10 million to define a resource on the Gil project. The resource of 400,000 drill-indicated ounces of gold (10 million tons grading 0.04 ounces gold per ton) is expected to grow upon completion of the feasibility study this year.

New drilling planned for Gil, Fish Creek

In addition, the partners are planning to start drilling new zones in the Gil JV this summer as part of ongoing exploration, Robertson said. The companies expect to spend up to $250,000 on the drilling work, depending on results, he said. "If we like the results we're getting, we'll spend more."

Exploration efforts have examined only a fraction of the Gil property so far.

An estimate of proven reserves for the Gil property hasn't been completed yet, said Robertson who declined to speculate about the total size of the Gil resource.

Teryl also plans to explore the Fish Creek property, which adjoins the Gil prospect, this season.

"We're going to start drilling there, and it has excellent targets as well," Robertson said.

Teryl has budgeted $50,000 for the Fish Creek drilling. "We've got one big geophysical anomaly we want to test," he added.

The Fish Creek claims, in which Teryl owns 50 percent interest by option, contain a promising placer deposit and Fort Knox-type intrusive.