The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
The trials and tribulations of Alaska's mining industry continued in the last month with one challenged mine given the green light to proceed, the other halted in midstride by the same legal system. In the background, exploration programs quietly began at several locations across the state as the busy 2007 mining season started in earnest.
Alaska's global rank dropped from 13th to 24th position in the most recent Fraser Institute survey of mining jurisdictions worldwide. At the same time, recent discoveries across the state caused Alaska's mineral potential ranking to increase to 10th place from a surprisingly low 34th place last year. And if you want to see what political and fiscal uncertainty can do to an otherwise well-endowed piece of real estate, one need only look at Chile's dismal performance, dropping to 34th place from its perennial position in the top five mining destinations worldwide.
Alaska and Alaskans should take note how quickly foreign investment seeks safer harbors when the horizon turns gray.
Western Alaska
NovaGold Resources announced that the U.S. Army Corps of Engineers reinstated its contested wetlands permit for its Rock Creek project near Nome. The company indicated that construction efforts at the plant were not affected by the corps review which halted proposed wetlands disturbances in December 2006. The company indicated that plans are still on track for initial production at Rock Creek in the third quarter of 2007.
NovaGold also announced additional 2006 drilling results for its Donlin Creek project. Results have been received for approximately 45,000 meters from the 2006 drill campaign. Final assays are still pending from an additional approximately 37,000 meters of drilling.
Highlights from the Acma area include hole DC06-1129 with 13 mineralized intervals totaling 174 meters grading 3.07 grams of gold per tonne gold; hole DC06-1130 with 13 mineralized intervals totaling 214 meters grading 2.83 grams of gold per tonne gold; hole DC06-1131 with 12 mineralized intervals totaling 169 meters grading 4.23 grams of gold per tonne gold; and hole DC06-1133 with 14 mineralized intervals totaling 257 meters grading 3.82 grams of gold per tonne gold.
Highlights from the Lewis area include hole DC06-1255 with seven mineralized intervals totaling 109 meters grading 7.89 grams of gold per tonne gold; hole DC06-1283 with 13 mineralized intervals totaling 102 meters grading 4.10 grams of gold per tonne gold; hole DC06-1287 with 15 mineralized intervals totaling 126 meters grading 3.62 grams of gold per tonne gold; and hole DC06-1376 with 12 mineralized intervals totaling 104 meters grading 3.46 grams of gold per tonne gold.
Limited drilling outside the current resource pit confirmed and extended mineralization north of the Akivik zone. DC06-1369, collared 500 meters north of the current resource pit, intersected 36 meters grading 3.68 grams of gold per tonne gold in five intervals hosted by northeast-trending intrusive dike.
In addition, drilling in the East Acma area intersected 164.7 meters grading 3.68 grams of gold per tonne gold and extended mineralization well beyond the current pit limit at depth and to the east of the main Acma deposit. This intercept may represent a new discovery where mineralized dikes and sills intersect, a setting similar to that which hosts the main Acma and Lewis deposits.
Additionally, a geotech hole (DGT06-1158) drilled in the south high-wall of the resource pit encountered 15.5 meters grading 12.67 grams of gold per tonne gold. No follow-up drilling has been done on any of these intercepts. The geologists are smiling while the engineers are cursing!
Northern Dynasty announced a new resource estimate for its already giant but growing Pebble porphyry copper-gold-molybdenum deposit. At a 0.60 percent copper equivalent cutoff, the estimated inferred mineral resources in the Pebble East deposit are 3.379 billion tonnes grading 0.57 percent copper, 0.36 grams of gold per tonne and 0.036 percent molybdenum which is equivalent to a 1.00 percent copper equivalent grade containing 42.6 billion pounds of copper, 39.6 million ounces of gold, and 2.7 billion pounds of molybdenum.
The 2006 drilling program at Pebble East expanded the north-south length of the deposit to over 7,000 feet. The deposit remains open to the north and south. Perhaps more significant, high-grade copper mineralization containing bornite was intersected during 2006 in the northern most holes drilled and also in holes near the southern limit of drilling. The presence of significant bornite mineralization suggests additional mineralization may exist both north and south of the resource area.
St Andrew Goldfields Ltd. announced the first shipment of copper and gold concentrates from its newly recommissioned Nixon Fork mine north of McGrath.
Concentrates are being back-hauled by air to Fairbanks from the mine site where they are placed in rail cars for transport by rail and barge to Xstrata Copper Canada's Horne Smelter in Rouyn-Noranda, Quebec.
Proven reserves at the mine currently stand at 47,000 tonnes grading 34.05 grams of gold per tonne (51,500 ounces).
Probable reserves stand at 137,500 tonnes grading 18.6 grams of gold per tonne (82,230 ounces).
Measured resources total 23,400 tonnes grading 36.8 grams of gold per tonne (27,700 ounces).
Probable resources total 126,000 tonnes grading 21.6 grams of gold per tonne (87,700 ounces) while possible resources total 93,000 tonnes grading 15.5 grams of gold per tonne (46,300 ounces).
Pacific North West Capital announced that it had entered into a joint venture agreement with Stillwater Mining Co. to explore Calista Corp.'s Goodnews Bay platinum project.
Under the terms of the agreement, Stillwater will need to spend $4 million by Dec. 31, 2010, to earn 50 percent interest in the project.
Stillwater may elect to increase its interest to 60 percent by incurring an additional $8 million in exploration expenditures within an additional two year period or upon completion of a feasibility study, whichever occurs first.
Stillwater may increase its interest to 65 percent by arranging for 100 percent of the project financing required to place the property into commercial production within an additional three years.
Based on the results of the 2006 field program as well as synthesis of previous work at Goodnews Bay, a series of soil, rock and pan concentrate sampling programs followed by surface trenching and/or diamond core drilling have been recommended for 2007.
Linux Gold announced results from exploration at the Dime Creek prospect on its Granite Mountain project on the Seward Peninsula. Seven pan concentrate samples from Dime Creek returned platinum values ranging from 127 to 9,230 parts-per-billion platinum and 3 to 786 parts-per-billion gold. Anomalous gold was also detected in Quartz Creek and another unnamed creek on the project. Additional work is planned on the project in 2007.
Full Metal Minerals and joint venture partner Triex Minerals Corp. announced plans to conduct a 1,300 meter drill program in May or June 2007 to test for potential new deposits along strike to the north of historic resources at the Boulder Creek uranium project north of Elim. The project hosts Alaska's largest uranium resource at 1 million pounds of U3O8 at an average grade of 0.27 percent U3O8 with an average thickness of 3 meters.
Freegold Ventures announced acquisition of the Vinasale gold project near McGrath from Doyon Ltd. Under the agreement, Freegold must make cash payments of $320,000 over five years, make annual scholarship donations of $10,000 and make exploration expenditures totaling $4.75 million. Freegold may at its option enter into a one year extension by making an additional cash payment of $100,000 and incurring an additional $1.5 million in exploration expenditures. Additional terms (read "boring but important") apply to any portion of the project area advanced to the mining lease stage.
Significant lode gold mineralization was first discovered at Vinasale by Central Alaska Gold Co. in 1990. Subsequent drilling established an initial gold resource of 614,000 ounces (10.4 million tons grading 0.057 ounces of gold per ton). While the gold mineralization was found to be refractory, metallurgical testing showed that 95 percent of the gold reported to the flotation concentrate.
The property was subsequently optioned by ASA-Montague in 1994 and additional soil sampling followed by drilling was successful in further increasing the gold resource to 18.04 million tons grading 0.051 ounces of gold per ton (920,000 ounces). Previous wide-spaced drilling northeast and south of the known deposit indicates these areas may have potential for resource expansion while limited reconnaissance work suggests that additional gold mineralization exists on the property outside the area known to contain resources.
The main objective of Freegold's initial efforts will be to expand the current resources and test other areas on the property that may have the potential to host gold resources. Planned 2007 programs will include geological mapping, sampling and geophysical surveys. Freegold will also be collecting new samples for further metallurgical testing.
Eastern Interior
Kinross Gold announced year end results from its Fort Knox mine. The mine produced 72,921 ounces of gold in the fourth quarter at a cash cost of $354 per ounce while year-end totals were 333,383 ounces of gold produced at a cost of $300 per ounce. While production was up slightly over 2005, cost of production rose 17 percent due primarily to increased commodity and energy costs. Exploration spending for 2006 totaled $1.4 million while capital expenditures for the year were $49.9 million.
During the year the mill processed 13,462,000 tonnes of ore grading 0.90 grams of gold per tonne. Recovery was 85.7 percent. The company also tabled year-end 2006 resource updates that included proven and probable reserves of 159,673,000 tonnes grading 0.53 grams gold per tonne, equivalent to 2,705,000 ounces. An additional 71,284,000 tonnes grading 0.69 grams gold per tonne, equivalent to 1,573,000 ounces, are classified as measured and indicated resources.
International Tower Hill Mines Ltd. announced that it had entered into an option agreement with the University of Alaska regarding a property adjacent to the company's Coffee Dome project in the Fairbanks District. Under terms of the agreement the company is required to pay the University $117,500 over five years and incur exploration expenditures totaling $400,000 over five years. The company also has the right to enter into a mining lease over some or all of the lands subject to the option.
The mining lease will have an initial term of 15 years and requires escalating advance royalty payments ranging from $30,000 to $150,000. The company is also required to incur escalating minimum exploration expenditures ranging from $125,000 to $350,000 and to deliver a feasibility study within 10 years of the commencement of the lease. Upon the commencement of commercial production, the company will pay a sliding scale net smelter return royalty ranging from 3 percent to 5 percent depending upon the price of gold.
The company acquired the Coffee Dome project in 2005 and discovered significant gold, arsenic, bismuth and tellurium anomalies in soils with gold in rock samples ranging up to 96.6 grams of gold per tonne.
In 2006 the company expanded the soil survey onto the University ground, which generated a 700 by 200 meter gold and trace element anomaly.
The results also indicate a possible extension of this anomaly a kilometer to the north.
The top 15 percent of the 111 rock samples collected on University ground averaged 31.2 grams of gold per tonne, 3 percent arsenic, 109 parts-per-million bismuth and 16.8 parts-per-million tellurium.
The quartz veins hosting this mineralization are commonly banded with scorodite and arsenopyrite and range in width from 10-30 centimeters.
Work to date indicates that the veins occur in swarms along a generalized northeast trend.
The company is planning a trenching and drilling program in 2007.
Rubicon Minerals Corp. announced that it has acquired a 513,000 acre land package in the Goodpaster District from privately owned Evanachan Ltd. The property position includes approximately 187,000 acres of land under joint venture agreement with Rimfire Minerals with the balance of the lands vended directly from Evanachan. Rubicon plans to spend $2.5 million per year for the first two years in Alaska.
Full Metal Minerals announced that it plans to conduct a first phase, 20 drill hole, 3,500 meter drilling program on the LWM polymetallic prospect at its Fortymile project under option from Doyon Ltd. LWM is characterized by a gravity geophysical high, located within a 1,800 meter by 365 meter zinc-silver-lead soil anomaly.
The company also plans to conduct follow up work on the Fish prospect where drilling over a 500 meter strike length encountered strongly oxidized massive sulfides including 12.3 percent zinc over 9.0 meters and 9.0 percent zinc over 10.9 meters.
The company is currently conducting metallurgical testing on oxide mineralization to determine the potential for a zinc oxide-style target, in addition to the primary sulfide mineralization.
Alaska Range
Usibelli Coal Mine has announced that it recently secured an export contract for three shipments of coal to South America during the first half of 2007. The coal will be transported from Healy by the Alaska Railroad to the Port of Seward where it will be loaded on Panamax vessels capable of approximately 70,000 tons payload. The mine produced 1,397,500 short tons of ultra-low sulfur, sub-bituminous C coal during calendar year 2006 and is planning to mine approximately 1.5 million short tons during calendar year 2007.
Full Metal Minerals announced that it is planning a first phase, 75 hole, 15,000 meter diamond drill program at its Lucky Shot gold property north of Anchorage. Drilling will focus on further delineating the high grade Coleman Block, and expanding the recently discovered Murphy Block located north of the past-producing War Baby zone.
Northern Alaska
Silverado Gold Mines Ltd. announced recovery of a 13.78 troy ounce gold nugget from its Mary's East underground alluvial mine on it Nolan project in the Brooks Range. The company has stockpiled 4,600 loose cubic yards of gravel from Mary's East plus an additional 9,000 loose cubic yards of gravel from the Swede Channel. Both stockpiles will be processed after spring thaw.
Southeast Alaska
Kennecott (70.3 percent) and Hecla (29.7 percent) announced year-end 2006 production results from the Greens Creek mine on Admiralty Island. The total cash cost per ounce of silver produced at Greens Creek for the year was a negative $4.20 per ounce with total production costs for the year of negative 30 cents per ounce. The average grade of ore mined during the year was 15.78 ounces of silver per ton, down significantly from the average grade of 18.17 ounces per ton that was mined in 2005. For the year the mine produced 8,866,743 ounces of silver, 62,943 ounces of gold, 20,995 tons of lead and 59,434 tons of zinc.
The company also reported that exploration efforts intercepted mineralization across the Gallagher Fault resulting in the addition of approximately 6 million ounces of silver resources from the West Gallagher zone. In addition, the extension of the high-grade silver in the currently active 5250 zone resulted in a continued focus on exploration along that structure.
The worst news of the month came on March 17 when the U.S. 9th Circuit Court of Appeals overturned the lower court ruling which had upheld the U.S. Army Corps of Engineers wetland permit at Coeur d'Alene Mines' Kensington project north of Juneau. The 9th Circuit ruling vacates the previously issued permits and leaves the future of the partially completed mine in limbo. The company indicated that it would review the findings of the 9th Circuit Court before deciding how to proceed.
Full Metal Minerals announced that it will resume drilling in April on Mount Andrew iron oxide copper gold project on Prince of Wales Island. The company is planning a 4,000 meter phase 1 drill program to followup on the initial five shallow drill holes completed in late 2006. Four of these holes encountered multiple intersections of magnetite-chalcopyrite mineralization and the mineralization is open in all directions.
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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