MINING NEWS update: Money not in short supply - people and equipment are

The game is afoot! The last month has seen the start of a number of field programs in Alaska, marking the beginning of the traditional "field season" in the Great Land. With demand for metals remaining extraordinarily high, Alaska's mining industry is operating at capacity but well below demand.

An acute shortage of drills and drillers, geologists and engineers and helicopters to move them all around is affecting exploration, development and production plans around the state.

For the first time in my career, money is not in short supply however the ability to spend it where, how and when warranted is keeping some projects grounded for the year and others planning winter activities in an attempt to move project's forward.

Throw in a later than normal spring over much of Alaska and you can imagine why the normally frenetic but orderly summer scramble is verging on the chaotic.

Western Alaska

Teck-Cominco's Red Dog mine saw continued strong operating profits in the first quarter of 2006 as a result of robust zinc and lead prices. Operating profit rose to $138 million vs. an operating profit of $43 million in the same period in 2005. For the quarter, the mine generated 135,400 tonnes of zinc and 29,600 tonnes of lead in concentrate vs. 136,400 and 20,700 tonnes of zinc and lead, respectively, in the first quarter of 2005.

The mine sold 114,900 tonnes of zinc and 4,600 tonnes of lead during the first quarter. Average zinc and lead grade mined was 21.7 percent and 6.6 percent vs. 22.2 percent and 4.6 percent, respectively, in the first quarter of 2005. Mill throughput of 759,000 tonnes in the first quarter was significantly up from the 711,000 tonnes milled in the first quarter 2005.

Northern Dynasty Mines announced that drilling and environmental monitoring field work have recommenced at the Pebble project after the winter break. Deeper drilling at the East zone will be the focus of exploration efforts in 2006 and will be part of a $40 million budget which will include mine and infrastructure design work and environmental baseline data gathering. Approximately $20 million of this budget will go toward exploration drilling, while $17 million will be directed at environmental baseline work.

The company indicated that it is looking to attract a major partner to the project to assist in its development. Total expenditures at the project through 2006 are expected to be approximately $110 million.

Northern Dynasty is expecting $2 billion to $3 billion in capital costs to bring Pebble to production although exact design and capacity of the project remain uncertain until the East zone is completely defined. The company reported that a total of 609 employees worked on the Pebble project in 2005 with 457 of those being Alaska residents and 112 of the total coming from communities in the immediate vicinity of the project.

St. Andrew Goldfields reported that its Nixon Fork copper-gold mine will begin production in late summer at a rate of 150 tonnes per day. Gold production for 2006 is expected to reach 20,000 ounces with annualized production expected to be approximately 45,000 ounces. The company also indicated that it expected to reprocess approximately 116,000 tons of tailings from previous mining operations that contain an average grade of 0.26 ounces of gold per tonne. Tailings reprocessing is planned for 2007 and 2008 when the new cyanide recovery circuit is on-line.

Geocom Resources announced that drilling has begun on its Iliamna copper-gold project in southwestern Alaska. The two-hole, 250 meter drilling program will target magnetic and electromagnetic anomalies below thick post-mineral overburden on the D block. Following completion of this program, Geocom will have earned its full vested interest in the D block from property owner BHP-Billiton Minerals Exploration and joint venture partner TNR Gold.

Tonogold Resources said its planned 19,600 foot core drilling program at its Nyac project will commence drilling in early June. The drilling will concentrate its efforts on the Bonanza and Shamrock prospects with lesser drilling on the Pipe, Rocky Ridge and Wallace prospects. The initial targets at Bonanza and Shamrock are both defined by gold-bismuth anomalies in soils where values up to 4.2 grams of gold per tonne were detected in previous work. In addition to drilling, the company expects to take an additional 5,000 soil auger samples in the north-central part of the project to help define additional future drilling targets.

The company also said it had staked an additional 25,600 acres of State mining claims around the original 57,600 acres of land leased from Calista Corp.

Full Metal Minerals announced acquisition from Moore Creek Mines Ltd. of the Moore Creek gold project southeast of McGrath. The company has an option to acquire a 100 percent interest by incurring US$1 million in exploration expenditures over four years and making cash payments ranging from US$25,000 in the first year to $50,000 per year until 2016, with a one time cash payment of $US650,000 upon entry into a Mining Lease after Feb 1, 2011.

Moore Creek Mines retains a 1.5 percent net smelter returns royalty on all commercial mineral production. State records indicate that Moore Creek has produced more than 60,000 ounces of placer gold, some of which was coarse grained with attached quartz vein. Very limited lode gold exploration has been performed in the area.

The company believes the placer gold at Moore Creek may be related to the Late Cretaceous Moore Creek monzonite. This intrusion hosts the Broken Shovel prospect which hosts a steeply dipping quartz-dolomite sulfide vein. The vein averages five feet in width and can be traced for at least 660 feet along strike. A grab sample contained 16.2 ounces of gold per ton of silver and 1.6 parts-per-million gold. Visible gold, arsenopyrite, scheelite, and lead-antimony sulfosalts have been identified in hand specimens.

Gulches converging on the intrusion have all been mined for placer gold. Gold-bearing gravels are only three to four meters thick on the property, suggesting a recently weathered bedrock source. Widespread amorphous silica is present in the stream gravels, along with cinnabar, native gold and native silver. Many of the large gold-quartz specimens have monzonite attached, suggesting a source within the intrusive, however, others have attached volcanic material suggesting additional potential for gold-bearing veins within the volcanics surrounding the monzonite intrusive.

An active placer mine is in operation on the property along with a recreational mining business where large gold-quartz specimens are found with metal detectors. A surface exploration program of additional soil sampling and mapping will commence in June to be followed by trenching and possibly diamond drilling.

Full Metal Minerals announced that Fury Explorations has terminated its option on the Ganes Creek project near Ophir. Full Metal is searching for a joint venture partner to assist in further exploration of the property.

Eastern Interior

Kinross Gold Corp. announced first quarter 2006 results from its Fort Knox operations near Fairbanks. The mine produced 79,677 ounces of gold in the first quarter of 2006 at a cash cost of $318 per ounce vs. 73,953 ounces of gold in the first quarter of 2005 at a cash cost of $246 per ounce. The company indicated that improved mill throughput more than offset lower mill recoveries and a 23 percent increase in the cost of fuel, energy and other consumables. During the quarter the mine processed 3,183,000 tonnes of ore grading 0.91 grams of gold per tonne with a mill recovery of 85.3 percent.

The mine reached a noteworthy milestone on May 10 when it poured its 3 millionth ounce of gold since production began in late 1996. Congratulations Fort Knox Gold Mining Inc.!

Freegold Ventures Ltd. announced plans for additional trenching in June on its Golden Summit project near Fairbanks. Approximately 1,500 feet of trenching will be conducted near the historic Beistline shaft where previous drilling by the company intercepted 25 feet grading 0.161 ounces of gold per ton starting 25 feet below surface.

Chip channel samples along the Beistline shaft walls by prior operators graded 0.61 ounces of gold per ton for the first 109 feet of the shaft, with the top 46 feet grading 1.25 ounces of gold per ton.

In addition, 1,000 feet of trenching will be completed on the Colorado and Wackwitz veins 1,000 feet to the south of the Cleary Hill Mine.

These two veins exhibited the longest identified strike length and the best overall grades from earlier trenching programs.

Channel sample assays across these veins include five feet of 1.0 ounce of gold per ton (with a grab sample of 1.9 ounces of gold per ton) and five feet of 0.83 ounces of gold per ton (with a grab sample of 4.1 ounces of gold per ton).

Results from the trenching will be used to guide the next phase of work, which may include the bulk sampling of vein material along strike or drilling to test the depth extent of mineralization.

Teck Cominco and partner Sumitomo announced the first-ever quarterly production results from the commissioning Pogo mine. Although the mill and mine are still in the process of working all of the bugs out of the system, the mine produced 7,000 ounces of gold during the first quarter of 2006.

The grinding and floatation systems have reached design levels but the underground conveyor system remains under construction and the filtration plant has not operated as expected and is in the process of being upgraded to allow operations to reach full design capacity. At present the mine is operating at 50-60 percent of capacity.

Midas Resources Ltd. announced preliminary results from its Uncle Sam gold project in the Richardson District. The program comprised 831 meters of drilling in eight drill holes (USR051-USR058) with drilling targeting soil auger defined gold and pathfinder anomalies and prior drilling results up to 6.1 meters grading 10.61 grams of gold per tonne.

Geophysical interpretation of magnetic data indicates the presence of at least three possible granitic intrusive bodies at depth adjacent to the target areas. Preliminary results from six of the 2006 holes included 12.2 meters grading 1.47 grams of gold per tonne in hole USR055 and 6.1 meters grading 1.15 grams of gold per tonne in hole USR056.

The current drilling program returned anomalous gold from a zone of quartz stockwork in sericite altered quartz-mica schist accompanied by pyrite-arsenopyrite-stibnite and pyrrhotite.

The mineralized alteration zone is coincident with a shallow (40 degree) southwest dipping structure which has been intersected in five of the current drill holes.

Previous drilling intersected 6.1 meters grading 10.61 grams of gold per tonne hosted by this structure and its associated alteration zone.

Alteration and shearing form a cohesive zone which has been intersected over a strike extent of 110 meters and to a vertical depth of 100 meters.

Additional magnetic modeling is planned prior to follow-up drilling.

Alaska Range

Nevada Star Resources announced that diamond drilling has begun on its MAN copper-nickel-platinum group element project being operated by joint venture partner Anglo American Exploration USA. Four high-ranking targets have been selected for drill testing. The targets are closely associated with strong multi-element geochemical anomalies and predicted down-plunge extensions of surface nickel-copper sulfide showings.

The first hole will be a 700 meter deep hole approximately 200 meters south of 2005 drill hole 8. This hole tested a strong multi-element geochemical anomaly associated with a sulfide gossan measuring 1,000 meters long by 150 meters wide in the centre of a large interpreted footwall embayment feature along the base of the Fish Lake Complex. The drill hole encountered massive iron-nickel-copper sulfide mineralization within ultramafic rocks approximately 70 meters upsection of the footwall contact.

Two other drill holes are planned for the Tres Equis area. They are to be less than 250 meters deep. One hole will be drilled approximately one kilometer east of the Tres Equis massive sulfide showing, in order to test overlapping geophysical and geochemical anomalies. The other hole will be drilled to the west of Tres Equis to test mineralization down-plunge of the surface showing.

Full Metal Minerals announced that two diamond drills have commenced coring at its 100 percent owned Lucky Shot project north of Anchorage. The company plans to drill a minimum of 10,000 meters in approximately 60 diamond drill holes.

The primary objectives for the 2006 program are to delineate the Lucky Shot shear on 25 meter centers in the vicinity of the 2005 drilling with the objective of producing a resource estimation and to expand the extent of mineralization to the west and northwest. Additionally, other structures will be drill tested, including: the Dewitt Vein, Hope Vein and Nippon Vein. The company also will commence environmental baseline, metallurgical and engineering studies.

Southeastern Alaska

Kennecott (70.3 percent) and Hecla (29.7 percent) announced first quarter 2006 production from the Greens Creek mine on Admiralty Island. The total cash cost per ounce of silver produced at Greens Creek for the quarter was $1.28 per ounce. The average grade of ore mined during the quarter was 15.53 ounces of silver per ton, down significantly from the average grade of 21.42 ounces per ton that was mined in the first quarter of 2005.

During the first quarter the mine produced 2,065,570 ounces of silver, 15,903 ounces of gold, 5,432 tons of lead and 15,260 tons of zinc. Total production costs for the quarter were $1.95 per ounce of silver produced vs. $3.35 per ounce for the first quarter of 2005.

Assay results from approximately 25 percent of the 130 holes drilled into the recently discovered West Gallagher zone indicated that a significant ore-grade resource exists at West Gallagher. A large, lower-grade mineralized area surrounds the ore-grade resource. The resource remains open to the west and south. Geophysical work shows a large conductor to the west, indicating additional mineralization.

Kennecott believes potential is good for a mineable resource typical in size to the other productive ore zones at the mine.