The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
PricewaterhouseCoopers report tallies the devastating financial impact of the 2008, 2009 recession on mining companies worldwide
The Alaska summer is in full swing but news is slow in arriving from new field programs and mining operations around the state.
The biggest news in the past month was the U.S. Supreme Court's affirmation of Coeur d'Alene Mines' tailing disposal permits at its Kensington deposit north of Juneau. The longstanding stalemate, dating back to late 2006, clears the way (hopefully) for completion of the construction at the Slate Lake tailings facility and commencement of mining operations, slated for the second half of 2010.
In a summary of "how bad is the recession" with respect to mining companies, financial powerhouse PricewaterhouseCoopers reported that 2008 was a year with two distinct parts - an early part with strong operating results and company valuations, and a second half with dismal performance that was far worse than the market as a whole. For 2008, mining companies capitalized on strong demand and record prices early in the year to increase revenue 23 percent to $349 billion from $284 billion in 2007. However, operating costs continued to rise at a greater rate than revenue.
For the 40 top mining companies worldwide, net profits decreased 14 percent in 2008 to $57 billion from $66 billion in 2007. Market capitalization of the top 40 mining companies plunged 62 percent in 2008, compared to the S&P 500 index, which declined "only" 38 percent over the same period.
The first quarter of 2009 saw 14 of the top 40 mining companies announce mine closures, production cuts or moves to place mines on care and maintenance status. In addition $13 billion in capital expenditures was deferred or canceled. Combined, this has led to more than 40,000 job cuts. The only good news was that gold company market capitalizations decreased by "only" 20 percent in 2008, most likely because of the perception of gold as a safe haven in tough times.
Western Alaska
NovaGold Resources Inc. announced that during the second quarter, its share of expenses at the Donlin Creek project totaled US$4.4 million, compared with US$16.9 million in the second quarter of 2008. The company's remaining share of the 2009 budget to be funded at the Donlin Creek project is approximately US$7 million, the majority of which is planned to be used for permitting activities at the project.
Pacific North West Capital Corp. said it granted to Fire River Gold Corp. an option to acquire the outstanding shares of Mystery Creek Resources, Inc., a wholly owned Alaska subsidiary of Pacific North West Capital which in turn owns the Nixon Fork gold project near McGrath.
Under terms of the deal, Fire River Gold will pay Pacific North West US$50,000 on signing of the agreement.
Fire River may exercise the option by making further payments totaling US$450,000 over a six-month period and issuing a total of US$2.5 million in Fire River shares at a deemed price of US$0.45 cents per share for a total of 6.415 million shares.
The option agreement was completed after a third-party valuation determined a fair market value of US$2.8 million for the Nixon Fork property.
Millrock Resources Inc. announced that fieldwork had begun on the company's Estelle project and on project generation activities to be carried out under a strategic alliance with Altius Minerals Corp. At the Estelle project, the company will follow up on discoveries made in 2008, and define targets in anticipation of a possible September drilling program. Work last year revealed the presence of widespread disseminated arsenopyrite mineralization with strong gold values. The company also is conducting reconnaissance surveys within one of five areas of interest subject to a strategic alliance with Altius. The work will focus on gold targets developed through geological research.
Eastern Interior
International Tower Hill Mines Ltd. announced updated resources at its Livengood gold project.
The updated indicated gold resource is 145.7 million metric tons at an average grade of 0.863 grams of gold per metric ton (4.04 million ounces) and inferred resource of 142.5 Mt at an average grade of 0.790 g/t gold (3.59 million ounces), based on a cutoff grade of 0.50 g/t gold.
At a cutoff grade of 0.30 g/t gold, the indicated resource jumps to 234.9 Mt grading 0.69 g/t gold (5.17 million ounces), along with inferred resources of 280.5 Mt grading 0.59 g/t gold (5.32 million ounces).
At the lower grade cutoff, the deposit holds approximately 10.5 million ounces of gold.
At a 0.3 g/t gold cutoff, the average grade of the overall deposit has increased by about 8 percent.
The generally higher grade intervals in the SW target area raised the overall grade of the resource by approximately 5.4 percent.
The next resource update is anticipated for October.
International Tower Hill Mines Ltd. also released results from the first 16 holes of the summer 2009 drilling campaign at Livengood.
Significant results from the Northeast zone include hole MK-RC-143, which returned 30.5 meters grading 1.06 g/t gold; hole MK-RC-145, which returned 25.9 meters grading 0.91 g/t gold; and hole MK-RC-155, which returned 35.1 meters grading 1.59 g/t gold and 53.3 meters grading 1.35 g/t gold.
Results demonstrate the continuity of mineralization at greater than 1 kilometer to the northeast.
Significant results from the East zone include hole MK-RC-154, which returned 45.7 meters grading 1.62 g/t gold; and hole MK-RC-147, which returned 45.7 meters grading 1.62 g/t gold.
Current drilling has now extended the East zone mineralization over 225 meters to the east where it remains open to expansion.
In the Core zone, hole MK-09-34, the first core hole designed to establish structural controls for the suspected deep mineralization below the Core zone, intersected several intervals of higher grade mineralization associated with north-northwest-trending steeply dipping veins and a high concentration of dikes which returned 22 meters grading 0.98 g/t gold, 41 meters grading 1.17 g/t gold and 48 meters grading 1.02 g/t gold.
Four drills (three reverse-circulation and one core) are currently operating in the summer drilling program.
To date, 56 holes totaling 16,300 meters have been completed in the summer program and an additional 25,000 meters of drilling is planned for the remainder of the year.
Alaska Range
Usibelli Coal Mine Inc. announced a revised estimate of coal reserves on its leases in the Nenana Coal Field.
This effort has identified a surface minable reserve base of approximately 700 million standard tons, of which, 450 million tons can be classified as proven and 250 million tons as probable.
Some of the reserve areas are open-ended and future exploration work is expected to increase the total figure to nearly 1 billion tons.
All of the reserves are sub-bituminous C rank coal.
Typical as-mined analysis for this coal is 7,650 Btu per pound, 28 percent moisture, 9 percent ash and 0.2 percent sulfur.
In addition to the very low sulfur content, this coal is also low in mercury and other deleterious trace elements.
Southeast Alaska
After what seemed an interminable wait, Coeur d'Alene Mines Corp. announced that the U.S Supreme Court has released its decision affirming the previously issued permit for the tailings facility for the Kensington gold mine near Juneau. The decision clears the way for completion of the only item remaining to be constructed, the tailings facility at Slate Lake, and for production to commence. Initial production at the 125,000-ounce-per-year mine has been targeted for the second half of 2010, and the mine is expected to provide an estimated 370 direct and indirect jobs.
But wait, there is more!
Several days after the injunction was lifted, the U.S. Environmental Protection Agency threw a curve ball by asking the U.S. Army Corps of Engineers to slow down and take another look at the paste-backfill option for Kensington's tailings disposal. This option was abandoned last year. The EPA estimated that such a re-evaluation would take eight months, including a new public comment period, and said it would work quickly with the Corps "to complete the permitting process for the (paste tailings facility)." Implicit in this re-evaluation is the fact that during this review of a review of a review, no work could be conducted on the Slate Lake tailings facility.
Coeur's response was immediate and predictable, saying that the EPA request was "really unbelievable," particularly in light of the recent Supreme Court ruling, and that it had taken the company nine years and multiple public comment periods to get the Slate Lake permit, and federal and state agencies all supported it.
Ucore Uranium Inc. announced additional assay results from its Bokan Mountain property. These new assays indicate the presence of significant quantities of the Heavy Rare Earth Elements europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium (you won't find these babies in your multi-vitamins!) Results include 11.48 percent total rare earth element oxides over 2.52 meters, which include 10.85 percent heavy rare earth element oxides containing 7.31 percent yttrium oxide, and 0.63 percent light rare earth element oxides. The company intends to continue extensive drilling over the 6-kilometer, or 4-mile, strike length of the Bokan Mountain mineralization.
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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