Miners miss out on ample opportunities

I have been reading the tea leaves and think there is an extremely important sequence of events unfolding that represents a golden opportunity for Alaska. Please bear with me as I try to wade through the logic of this and you can tell me what you think.

About two months ago, Brent Cook, a well-known mining analyst and owner of Exploration Insights, published a rather illuminating article entitled "Where Have All the Gold Mines Gone?" The upshot of his article was that most mineral exploration companies currently are being driven by a belief that they need to acquire projects with near-term production characteristics as opposed to generating new projects internally.

This corporate philosophy has infected the mining industry to a degree not previously seen, and, with few exceptions, this corporate goal has been manifestly unsuccessful. Brent says it much more eloquently than I will, but the underlying premise of this prevailing philosophy is that the company espousing it is somehow endowed with intelligence and insight that the competition just flat does not have. Put another way, one has to feel that one is smarter than the competition and will recognize gems in the rough when one's competitors do not.

This thinking causes companies to make one of the cardinal mistakes of business: They underestimate the intelligence of their competition. Take gold for example: In spite of a nearly US$600 rise in the gold price, new gold discoveries are becoming rarer every year, while worldwide gold production has dropped steadily since 2001. This in the face of the record US$18 billion pumped into the exploration business in the last 5 years!

Even more alarming is the more rapid decline in production from the mature areas of the globe (Canada, Australia, Western U.S. and South Africa), suggesting that new discoveries will have to come from under-prospected areas of the globe, many of which offer significant geographic, political, social and economic risks that more mature areas simply do not have.

With demand for gold increasing and new discoveries and production declining, there simply are not enough near-term production possibilities out there, meaning new ounces will have to be discovered.

So how does this affect Alaska? Like some parts of the globe, Alaska is highly under-prospected elephant country, everyone agrees on that. However, unlike most other under-prospected parts of the globe, Alaska is located in a politically stable, economically sound jurisdiction with lots of stable state, federal and native land with a long history of mining.

So, if you are Joe Exploration Company looking for a new discovery, Alaska represents one of the most promising geological venues on earth for new discoveries, while also offering significantly reduced risk. Not many places like that. Go forth and discover!

Western Alaska

Zazu Metals Corp. announced revised mineral resource estimates on its Lik zinc-lead-silver deposit in the western Brooks Range.

At a 3 percent combined lead plus zinc cutoff grade, indicated resources at Lik South deposit came in at 22.13 million tons grading 7.98 percent zinc, 2.58 percent lead and 1.53 ounces of silver per ton with an additional inferred resource of 1.39 million tons grading 6.73 percent zinc, 2.09 percent lead and 1.02 ounces of silver per ton.

At a 7 percent combined lead plus zinc cutoff grade, inferred resources at Lik North deposit came in at 5.71 million tons grading 9.65 percent zinc, 3.25 percent lead and 1.48 ounces of silver per ton.

The resource estimate was based on the results of 204 diamond drill holes, totaling 34,460 meters.

The company continues with baseline environmental, engineering, transportation and shipping studies designed to be incorporated into a preliminary assessment study to be released in the future.

Placer Gold Corp. said it has acquired the Bear Creek placer gold prospect in the Cripple Creek Mountains. The Bear Creek mine has a 400-cubic-yard-per-hour dredge on site that can be brought into production within 30 days of receiving funding to recommence mining. Estimated cash production cost are less than $200 per ounce. Historic reports indicate resources at Bear Creek exceed 1 million cubic yards of gravel containing 0.0291 ounces, or 0.825 grams, of gold per bank cubic yard of gravel.

Mantra Mining announced completion of its acquisition from Cougar Gold LLC of five claim blocks located in southwestern Alaska and collectively known as the Golden Lynx properties.

These properties include the Kisa, Gold Lake, Little Swift, Gold Creek and Gossan Valley prospects, formerly explored by Goldcrest Mines.

In order to maintain a 55 percent interest in Golden Lynx, Mantra must make capital contributions to Golden Lynx of $321,000 by April 18, 2010, and a further US$1,500,000 by April 18, 2013, which amounts will be used to fund exploration expenditures on the properties.

Mantra can earn an additional 25 percent interest in Golden Lynx by making an additional capital contribution of $2,500,000 by April 18, 2015.

Mantra Mining also said it has awarded a drilling contract for 2,500 meters of drilling at its Colorado Creek prospect.

The drill program, which will begin in mid-June, will initially target about 10 holes within the more than 4.5-kilometer-long mineralized corridor defined by a coincident gold soil anomaly and magnetic low located adjacent to a large intrusive center and associated with a series of rhyodacite porphyry sills and dikes.

Mantra also plans additional surface sampling on trend with the northeast striking mineralized corridor.

Historic exploration data, which include 1372.5 meters of core drilled by Placer Dome in 1997, airborne geophysics, and results from over 1,900 soil samples and 600 rock samples, have been compiled and integrated into a comprehensive project database.

The data define a northeast trending mineralized zone that is at least 4.5 kilometers, or 2.8 miles, long and associated with a magnetic low on the margin of a multiphase intrusive complex.

Gold mineralization appears associated with the porphyry dikes and sills that intrude Cretaceous-age sedimentary and volcanic rocks.

Rimfire Minerals Corp. and Geoinformatics Exploration Inc. announced a merger between the two companies which will see Geoinformatics acquire all of the issued and outstanding shares of Rimfire at an agreed exchange ratio of 2.6 Geoinformatics shares per Rimfire share. Rimfire's management team will remain intact in the new organization and Geoinformatics will bring its flagship Whistler copper-gold project to the new company. The Whistler Zone is the most advanced prospect within the Whistler project area with resources of 1.31 million and 4.44 million ounces of gold equivalent in the Indicated and inferred resource categories, respectively.

Millrock Resources said Kinross Gold Corp. has made a private placement in the company in the amount of $350,000, giving Kinross a 6.46 percent interest in the company. Millrock indicated that it would use these funds to carry out reconnaissance surveys and property acquisitions in an undisclosed area of mutual interest in Alaska.

Millrock Resources also said it has entered into a strategic exploration alliance with Alaska newcomer Altius Minerals Corp. This private placement will raise gross proceeds of $930,000 and give Altius approximately 11 percent interest in Millrock.

The total gross proceeds from this private placement will increase to approximately $994,243 if Kinross Gold fully exercises its anti-dilution rights (see previous news story).

The funds will be used to fund a strategic alliance in five specific areas in Alaska.

Millrock will use alliance funds to research each area and propose an exploration plan for acceptance by Altius.

Millrock will be operator of the alliance and will undertake reconnaissance exploration to generate new prospects.

Following project identification, the alliance will use standard joint venture agreements for advancement of the properties.

Welcome to Alaska Altius Minerals!

Eastern Interior

Teryl Resources Corp. and partner Kinross Gold said drilling had begun on the Gil project east of the Fort Knox mine. The reverse circulation drilling program is planned for 10,000 feet and the core drilling program planned for 6,000. To date, seven drill holes have been completed.

Alaska newcomer Golden Predator Royalty & Development Corp. announced that it has signed an agreement with Copper Ridge Explorations Inc. to acquire Copper Ridge's interest in the Ogopogo gold project in the Goodpaster District, Alaska. Ogopogo is a gold exploration project adjacent to Sumitomo's Pogo gold mine. At Ogopogo three soil geochemical anomalies have been defined in gold as well as the key pathfinder elements, arsenic, bismuth and antimony. Welcome to Alaska Golden Predator!

International Tower Hill Mines Ltd. announced commencement of its summer 2009 exploration program at its Livengood gold project.

The summer drilling program is scheduled to complete at least 35,000 meters of reverse circulation and diamond drilling over 5 months, utilizing 3 reverse circulation drill rigs and one deep hole core rig.

The initial focus of the program will be the higher grade plus-1-gram-of-gold-per-tonne zone within the system.

The program will also include a series of deep holes testing for deposit extension at depths of 300 - 600 meters below known mineralized gold deposit.

Other planned milestones for the project include completion of updated resource estimate in June followed by an independent Preliminary Economic Assessment in July.

The company also plans to release results from New Discovery target testing in September.

A total of four new discovery targets are planned to be drill tested, all of which are within the main 12.5-kilometer-long Livengood gold anomaly.

In addition, first pass surface exploration will be conducted on other district-scale targets along trend to the northeast.

By October the company expects to release an updated resource estimate, incorporating the results of the bulk of the summer 2009 drill program and the results of the ongoing metallurgical testing and the deep drilling.

By January or February of 2010 the company expects to release the final 2009 year end resource update and commence the winter 2010 drilling program.

Tri-Valley Corp. announced that it has doubled the size of its land block at its Shorty Creek project near Livengood. The total land position now covers approximately 39 square miles. The company indicated that geochemical and geological data indicate an anomalous gold trend extending farther south than previously thought from International Tower Hill's Livengood deposit property. This trend passes onto the Shorty Creek project and extends into the newly staked property.

Northern Alaska

Goldrich Mining Company announced plans to initiate alluvial gold production at its Chandalar property in July.

The company indicated that all permits have been obtained for extraction and processing of about 20,000 cubic yards of mineralized material as part of a test mining operation on Little Squaw Creek.

The 200-cubic-yard-per-hour gold recovery plant has been constructed in Fairbanks and will soon be mobilized to the mining site.

The mining camp has been re-opened and overburden removal has begun.

Previous mineral estimates indicate that the Little Squaw Creek alluvial deposit contains an estimated 10.5 million bank cubic yards of "in place" material having an average grade of 0.0246 fine ounces of gold per bank cubic yard.

The total amount of unmineralized material that would need to be removed to access the mineralized material is about 9.3 million bank cubic yards of gravel, making for an overburden-to-mineralized material strip ratio of 0.89-to-1.00.

Silverado Gold Mines Ltd. announced that an amended preliminary feasibility study has been submitted on its Workman's Bench gold and antimony deposit at its Nolan Creek property in the Brooks Range.

The amended report was required in order to clarify metal price forecasts, summarize an analysis of depreciation and sunk costs, review the affect of variable interest rates on the economic model, and to present multiple scenarios for the Base Cash Flow case study.

The report also revised the inferred antimony and gold resources estimates on the Pringle Bench prospect.

As a result, inferred resources changed from 27,697 tons grading 12.26 percent antimony and 0.230 ounces, or 6.52 grams, per ton of gold, to 24,077 tons grading 12.45 percent antimony and 0.245 ounces per ton of gold.

This results in reductions of 12 percent and 8 percent of in-place inferred resources of antimony and gold respectively.

The measured reserve estimates on Workman's Bench, on which the pre-feasibility study was based, did not change.

Southeast Alaska

CBR Gold Corp. said it has entered an agreement with the Hunter Dickinson group to form a joint venture on the Niblack polymetallic project near Ketchikan.

Under the terms of agreement, Heatherdale Resources Ltd., a private company affiliated with Hunter Dickinson, will retain a 51 percent interest in an Alaska company formed to hold the joint venture by funding exploration and development expenditures totaling at least $15 million within three years.

Upon completion of this initial contribution, Hunter Dickinson shall have additional earn-in options to increase its ownership interest to 60 percent by funding additional expenditures of $10 million and to 70 percent by funding completion of a positive bankable feasibility study within an additional three year period.

This period may be extended to complete technical work programs for the bankable feasibility study if necessary, but will not exceed six years in any event.

All spending requirements are subject to minimum annual expenditure of $5 million.

CBR Gold Corp. also announced detailed metallurgical test work which has demonstrated improved metal recoveries and concentrate grades over previously completed studies.

The two bulk samples tested included a life-of-mine grade and a higher grade sample similar to mineralization seen in some parts of the deposit.

Copper recoveries were 94.3 percent and 94.9 percent in life-of-mine grade and high-grade samples, respectively, with excellent copper concentrate grades of 30.0 percent copper and 29.3 percent copper.

Gold and silver recoveries in the copper concentrate were 62.2 percent for gold and 61.2 percent silver in the life-of-mine sample.

Zinc recoveries were 90.2 percent and 93.3 percent in life-of-mine grade and high-grade samples, respectively, with excellent zinc concentrate grades of 60.5 percent zinc and 65.6 percent zinc, respectively.

Gold and silver recoveries in the zinc concentrate were 9.7 percent gold and 15.8 percent silver in the life-of-mine sample.

The company also reported that it had staked an additional 1,250 acres of land in the deposit area covering the potential down- and up-plunge extensions to the known resource as well as potential fold repetition of the host Lookout Rhyolite.

Bravo Venture Group Inc. reported that a diamond drill rig and field crews have been mobilized on its Woewodski Island precious-metal-rich volcanogenic massive sulfide project near Petersburg. The company is planning to drill two to three core holes for about 1,000 meters at an estimated cost of US$400,000. The program is designed to test the central, east-west trending axis of the East Lake paleo-graben, where surface mapping, 3-D induced polarization geophysics and recent drilling have successfully delineated the dimensions of the graben and semi-massive to massive sulfide horizons along its perimeter. To date, only shallow targets within the host stratigraphy have been drill tested.

Author Bio

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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• Phone: 907-457-5159
• Contact Curt Freeman