The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Black Range Minerals grabs near-development -stage coal project in Southcentral Alaska; seeks other mining investment in North
In an effort to discover projects outside Australia's highly competitive mining sector, Perth-based Black Range Minerals Ltd. began investigating the United States for new regions to explore. In 2008, the miner from Down Under narrowed its search to Alaska, discovering a near-production coal project in the Southcentral region of the state.
During his recent visit to Alaska, Black Range Minerals Managing Director Mike Haynes told Mining News, "Alaska fell into a group of five or six other states that we believe are highly prospective and have reasonable mining law, and we perceived Alaska to be a little bit less competitive than some of the lower 48 states such as Nevada. So, six or eight months ago, we came up here looking into the resources sector as a whole; in base and precious metals but also in the coal sector, and eventually that led us to identifying the Jonesville Project."
The deal
In January the Western Australian exploration company said it had agreed to pay 15 million shares of its common stock and US$2 million for 100 percent interest in the Jonesville project, located about 60 miles, or 100 kilometers north of Anchorage. The advanced-stage coal project is comprised of two leases covering 1,450 acres and includes the historic Evan Jones Coal Mine.
Black Range has agreed to issue the 15 million shares at the time of the lease transfer and will pay the lease holders the US$2 million when commercial-scale mining begins on the properties. The current lease owners also will retain a 2 percent "adjusted gross value" royalty on all production from the project.
Drilling starts in spring
According to Black Range, it has the right to reprocess tailings from the historic mine and estimates about 500,000 metric tons of clean coal could be recovered from tailings. The project currently has permits in place to start tailings reprocessing. The company plans to begin drilling the tailings in the spring.
"We are just designing a combination of a drilling and trenching program to access the quantity and quality of the tailings at the Jonesville project with the view of eventually reprocessing them. At the same time or immediately following that program, we are looking at a reasonable size diamond drilling program to further evaluate the underground potential at upper Jonesville. Those programs will likely start at breakup or soon thereafter, Haynes said."
The historic coal project also has permits in place to construct a box-cut and develop a trial underground mining operation.
"There is a permit in place for us to put in a box-cut and to extract 17,000 tons of coal from underground," Haynes explained. "The timing on that will be somewhat dependent on the results of our drilling program."
According to Haynes, Black Range anticipates starting a bulk sample program in the next 12-18 months but it will be dependent on the earlier programs at the project.
Additional permits would be required to commence commercial-scale mining.
Infrastructure in place
In addition to having all the permits in place to explore and complete early-stage mining, the project also has good infrastructure for extracting the coal and getting it to market.
The Jonesville Project is readily accessible from several minor roads that extend from the sealed Glenn Highway, which itself passes a short distance to the south of the project. A fully operational rail line connects the town of Palmer about 20 kilometers, or 12 miles, to the southwest of the project to the port of Seward 300 kilometers, or 190 miles, further south where ships can be loaded to take the coal to market.
Black Range is currently looking toward Asia for buyers of the Jonesville coal.
"We have been in discussions with a number of Japanese and Chinese groups about the quality of the coal to see if there is a ready market, and there is a strong indication that yes, we would find a buyer for the coal; so it's really now a process of finding how much coal there is and whether we can economically extract that coal and export it to a suitable market," Haynes said.
Looking for more opportunities
Haynes also said competition for exploration projects in Australia is fierce, and, while many of its contemporaries are looking to the geologically similar Africa, Black Range has chosen to look north. He said the company will be looking for other opportunities while it is here.
"Australia is quite a competitive environment; it is probably home to some of the best explorers in the world, and there is an active capital market for raising money for exploration within Australia.
But that creates a lot of companies and creates a lot of competition for projects within Australia.
For the last five or seven years, I have been involved in projects that are more focused on identifying opportunities that are outside Australia where things are less competitive and possibly (have) cheaper acquisition prices than projects in Australia," Haynes explained.
"We are a diverse resources company.
Once you have local knowledge in a district, then opportunities arise.
And yes, we are certainly interested in other opportunities, not just in coal but in the base and precious metal sectors as well, here in Alaska."
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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