The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Worldwide economic uncertainties persist, though metals prices are climbing and some investors are snapping up bargain properties
Spring has arrived in Alaska and the mining industry is heading to the hills to do its work. Compared to last year, the state is a quiet place in the sun due to drastically reduced exploration and development budgets. Alaska's mines continue to benefit from the sharply reduced costs of power, diesel fuel, labor and other goods and services, but worldwide economic uncertainties have dried up the availability of venture capital for smaller exploration companies and have made funding larger development-scale projects doubly difficult.
As expected, there are a few contrarians out there acquiring properties for a song and a dance that were priced at stratospheric levels as recently as last September. Gold and copper prices remain strong and although most other metal prices are still depressed, virtually all of the industrial metals have enjoyed rising prices over the last few months. The jury is still out as to whether this means there is a light at the end of the tunnel or the bright light is a freight train headed our way!
Western Alaska
NovaGold Resources and partner Barrick Gold announced the long-awaited results of their feasibility study at their Donlin Creek gold project.
The highlights of the study indicate that the project has proven and probable reserves estimated at 29.3 million ounces of contained gold at an average grade of 2.37 grams of gold per metric ton.
Initial plans suggest a 21-year life of mine with milling of 53,500 metric tons of ore per day.
Average stripping ratio is 5.69 metric tons of waste for every metric ton of ore.
Production in the first five years is estimated at 1.6 million ounces at a total cash cost of US$394 per ounce of gold.
Average annual after-tax cash flow is estimated at $779 million at a US$900 per ounce gold price.
Over the first 12 years, the mine would produce an average annual gold production of 1.5 million ounces with life-of-mine average production of 1.25 million ounces of gold per year.
Mining costs were pegged at US$4.60 per metric ton mined while milling costs came in at US$30.03 per metric ton milled.
At current US$900 per ounce gold price, the project's net present value using a 5 percent discount rate is US$1.5 billion with an internal rate or return of 9.4 percent.
It is expected that the Donlin Creek ore will be processed by crushing and milling followed by flotation, pressure oxidation and carbon in leach recovery.
Total gold recovery is expected to average 89.5 percent, based on the combined life-of-mine average recovery of 92.6 percent from flotation and 96.6 percent from pressure oxidation of the concentrate.
The mine is expected to draw an average of 127 MW of electrical power sourced from a combination of on-site combined cycle gas turbine generators and wind co-generation.
In an effort to optimize energy costs and reduce environmental impact, an average of 7.5 percent of annual energy requirements is expected to come from 14 wind turbine generators.
Infrastructure for the mine includes a port on the Kuskokwim River, a 76-mile access road connecting the port to the mine site, an airstrip, camp accommodations, the mine and plant site area, the tailings facility, and supporting turbine generator and wind power facilities.
Cargo and supplies would be shipped on ocean barges to a port on the Kuskokwim River, barged up river and then transported via truck along the mine access road.
Total capital costs for initial production were estimated at $4.481 billion with an additional $803 million in sustaining capital required.
Revised proven and probable reserves came in at 383.8 million metric tons grading 2.37 grams of gold per metric ton for a total of 29.27 million ounces.
Measured and indicated resources came in at 94.6 million metric tons grading 1.98 g/t gold for a total of 6.01 million ounces.
Inferred resources came in at 54.5 million metric tons grading 2.29 g/t gold for a total of 4.02 million ounces.
All-in, the deposit now sports a hefty gold resource of 39.29 million ounces.
NovaGold Resources also reported some not-so-good news from its shuttered Rock Creek mine. Under an agreement with the U.S. Justice Department and Environmental Protection Agency, the mining company will pay $883,628 in civil penalties to settle pollution charges for multiple water quality violations from April 2007 to September 2008, when sediment-laden storm water flowed into three area creeks during mine construction.
Linux Gold Corp. announced completion of a summary report on its Dime Creek prospect on the eastern Seward Peninsula. Dime Creek has produced an estimated 40,000 to 61,000 ounces of gold from 1915 to 1955 - most of which was produced prior to 1952. Significant conclusions in the report include an estimated 1 million cubic yards of auriferous pay remaining in several defined areas within the project. The average gold grades for these gravels were not specified. In addition, lode targets for platinum and possibly gold have been outlined by an auger soil survey carried out by past investigators. The report recommends both placer and lode exploration programs.
Eastern Interior
Kinross Gold announced first-quarter 2009 production results from its Fort Knox mine.
The mine produced 48,626 ounces of gold at a cash cost of US$672 per ounce versus 65,394 ounces at a cash cost of US$459 per ounce in the year-previous period.
The significant production decrease was attributed to lower average head grades and a breakdown of the primary crusher during the quarter.
The mine reported that in April the head grades and mill throughput had returned to planned levels.
The mine processed 3,048,000 metric tons of ore grading 0.58 g/t gold with a mill recovery of 80 percent.
The company also announced that it has resumed construction of its valley leach production system and expects construction of the carbon-in-column circuit to be completed and commissioned during the second quarter.
Startup of ore placement on the leach pads is scheduled for the third quarter of 2009, with first gold production in the fourth quarter.
The company also is undertaking a 29,000-meter drilling program designed to expand reserves and extend mine life.
This work is targeting additional reserve ounces in the northwest sector of the pit (Phase 8), in deep Phase 6/7 extensions on the southwest side of the pit, and in the South Wall.
Teck Resources Ltd. announced that it has entered into a non-binding memorandum of understanding with Sumitomo Metal Mining Co. Ltd. regarding the proposed sale of Teck's 40 percent interest in the Pogo mine for US$245 million subject to adjustment for working capital. Sumitomo holds an indirect 51 percent interest in Pogo and an affiliate of Sumitomo holds a 9 percent interest in Pogo. The arrangement follows receipt by Teck of a third-party offer to acquire Teck's interest in Pogo on comparable terms. Teck expects the transaction to close by the end of the second quarter.
International Tower Hill Mines Ltd. announced final drilling results from its winter 2009 program at its Livengood gold project.
Highlights from the Southwest zone include hole MK-RC-0120, the farthest southwest hole to date, which returned 45.7 meters grading 2.11 g/t gold.
Also in the southwest zone were hole MK-RC 0119 which returned 57.9 meters grading 2.2 g/t gold, including 9.2 meters grading 8.3 g/t and hole MK-RC-0123 which returned 159 meters grading 1.0 g/t gold.
The company completed its 10,000-meter winter drill program and is now focusing on preparation of an updated resource estimate, which it expects to announce in June.
The summer 2009 drill program will include at least 35,000 meters of reverse circulation and core drilling.
The June resource estimate will be used to conduct the first preliminary economic analysis of the project, which the company expects to release in the third quarter of 2009.
Alaska newcomer Fire River Gold announced that it has conducted its initial public offering and is planning to conduct field programs on its Draken gold property on the Taylor Highway. Welcome to Alaska Fire River Gold!
Alaska Range
Pure Nickel Inc. and its project partner, ITOCHU Corp., have approved an expanded US$4.4 million exploration budget for the MAN project. US$500,000 of this budget has been earmarked for a new airborne survey covering about 2,722 line kilometers. The majority of the budget will be allocated to a 5,700-meter drill program. Initial drill targets have been selected on Alpha complex with further targets identified elsewhere on the project pending initial drilling results. Other exploration planned includes ground magnetic and electromagnetic surveys along with extensive prospecting and mapping.
Northern Alaska
Andover Ventures Inc. announced that it plans to complete a new resource calculation on the SUN polymetallic deposit in the Ambler District. Recent drilling will be utilized to update the current resources which stand at 12.5 million tons grading 1.8 percent copper, 5.3 percent zinc, 1.8 percent lead and 2.6 ounces/t.
Southeast Alaska
Hecla Mining Inc. announced first-quarter 2009 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 $3.21 per ounce.
The average grade of ore mined during the quarter was 14.12 ounces of silver per ton, up slightly from the average grade of 13.57 ounces/t silver mined in the first quarter of 2008.
During the first quarter the mine produced 1,996,853 ounces of silver, 18,049 ounces of gold, 5,186 tons of lead and 16,121 tons of zinc.
Total production costs for the quarter were $9.81 per ounce of silver produced versus negative $1.32 per ounce for the first quarter of 2008.
In addition to production, exploration and definition drilling was condutced in the first quarter.
Production drilling was conducted on the lowermost development level on a poorly defined deeper extension of the West Wall ore zone.
This drilling encountered good mineralization and results indicate that underground development is warranted for this level, and possibly one to two additional levels below.
Elsewhere, infill drilling of the Northwest-West zone from the 878 block confirmed grades and styles of mineralization for future longhole stope development in this area.
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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