The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
International Tower Hill has discovered a zone of oxidized mineralization that could be larger than the Core zone outlined in 2008
LIVENGOOD - From the surface, there is nothing outstanding about the low-lying hills that cover International Tower Hill Mines Ltd.'s gold project. The birch and black spruce-covered terrain is typical of the vast expanse of Alaska's Interior. But the Vancouver-based junior has unveiled a multimillion-ounce gold deposit here, lying in the shadows of the appropriately named Money Knob.
The rapidly expanding deposit has, at last official count, 288 million metric tons of ore with an average grade of about 0.827 grams gold per metric ton, or 7.6 million ounces of the precious metal, according to a resource estimate released by the explorer in June. The estimated cost of finding the gold at Livengood is about US$3 per ounce, according to International Tower Hill.
The junior said it plans to calculate a new resource after this year's aggressive 45,000-meter, US$14 million exploration program is completed in October. The new resource, scheduled to be completed by the end of the year, is expected to be north of 10 million ounces of gold.
The summer program, designed to expand mineral resource estimates in the East and Northeast zones of the deposit, discovered the Sunshine zone, a new area of mineralization that rivals the property's higher-grade Core zone outlined by the explorer in 2008.
Drilling in the Sunshine
Drilling at Sunshine, which is located about 1 kilometer to the northeast of the Core zone, has intersected virtually continuous mineralization from the surface to depths in excess of 250 meters, in an area that runs 100-150 meters wide by more than 500 meters long and remains open to the north.
Hole MK-RC-0160, drilled in the Sunshine zone, intersected 45.7 meters (starting at the surface) with an average grade of 0.62 grams gold per metric ton. At a depth of 64 meters, the same hole intersected an additional 131.1 meters averaging 0.88 g/t gold. MK-RC-0162 cut 118.9 meters that exceeds 1 g/t gold and another 22.9 meters grading 0.98 g/t gold.
The discovery of the Sunshine zone has caused the explorer to postpone completion of a preliminary economic assessment of the Livengood Project in order to include Sunshine drill results in the study. International Tower Hill said the long intersects of near-surface, oxidized mineralization make the newly-discovered zone a prime candidate for a starter pit.
"We have come across the Sunshine zone, and that is going to have a big effect on our pit. We want to get this new zone in (the preliminary economic assessment) because we have oxidation basically to the bottom of the holes," International Tower Hill President and CEO Jeff Pontius told Mining News. "We have a starter pit in the Core zone area, but this is going to be another, probably, even larger starter pit area. It is going to have a big impact on the pit design."
Pontius said the economic assessment, which was originally scheduled to be released in July, is not expected to be finished until late September. The Sunshine zone has become a top priority for drill crews and the assay lab until the company has the data it needs to complete the study.
"The guys are working like crazy right now trying to get the lab to push through about 20 more drill holes that we can get into the database. We will have added about 75 holes. That is certainly going to change the shape of the pit, and it will even impact strip ratio," Pontius explained.
Coring the Core zone
The summer program also features a core drill rig, which is targeting mineralization at depths of the Core zone not obtainable by the reverse-circulation rigs that have been the key to the rapid expansion of the Livengood resource to date.
The oriented core, which is produced by marking the orientation of the core with regard to its in-ground position for analysis after it has been removed, has provided the junior's geologists with a first look at the structural controls hidden below the surface.
The first core hole, MK-09-34, was drilled on the west flank of the Core zone. The hole, which was angled under the higher-grade zone, intersected several zones of higher grade mineralization associated with north-northwest trending steeply dipping veins and a high concentration of dikes. The drill cored 22 meters averaging 0.98 g/t gold, 41 meters with 1.17 g/t gold and 48 meters at 1.02 g/t gold.
While the geology revealed by the core drilling is encouraging to the explorer, the rig has not been able to reach the depths needed to test the Core zone beyond the reach of the reverse circulation rigs. The deepest of the five core holes drilled so far is about 500 meters.
The sixth hole (MK-09-40) had to be cemented twice in the top 300 meters. As of Aug. 21, the hole was down 434 meters of the 600-meter depth that the junior hopes to reach.
The inability to reach desired depths with the core rig is bittersweet for the explorer. While the junior would like to test the mineralization at depth and search for higher grade feeder zones, the altered and fractured rock causing difficulties is the mineralization that the company is seeking.
"The hole we are in now is in great looking rock, which is good and bad," Pontius said.
Scout drill
The company also sent one of its RC rigs out on a scouting mission. Starting about 1,600 meters to the east of the Core zone, crews have drilled a series of exploratory holes trending to the southwest. The scout drill has since moved to investigate an area to the south of the Southwest zone.
"We are really looking to see if our stratigraphy is there, the alteration system is there and hopefully gold is there. That would be a huge step out for us," Pontius said.
The junior explorer hopes the information gained from these exploratory holes will help it plan its winter program, which will primarily be focused on the Southwest Zone, but also will drill other areas that can only be explored in winter.
The company anticipates having all four drills turning during the winter program.
Metallurgical studies under way
The metallurgy of the Livengood deposit will determine the type of recovery system and ultimately the economics of a mine built at the Interior Alaska deposit. Initial metallurgical data indicates the deposit is potentially amenable to some type of combined milling and heap leach system of gold recovery, similar to the Fort Knox gold mine.
In July International Tower Hill hired Kappes, Cassiday and Associates to undertake much more advanced metallurgical studies on the Livengood mineralization. The US$400,000 study will test six metric tons of rock representing 35 different mineralization types within the deposit.
The Reno, Nev.-based laboratory will test the mineralized samples for hardness, the gravity recoverable component and cyanide recovery as well as a whole new swath of tests for the heap leach-ability of the deposit.
Samples from the Sunshine zone were included in the first batch sent to the metallurgical lab, and the junior is sending additional samples of the oxidized material that could be amenable to heap leach.
Moving away from Sunshine
Once drilling is completed at the Sunshine zone, the three rigs currently turning on the priority target will move out to the East zone, which continues to show promise, with significant higher-grade zones of gold mineralization. Drill crews have already punched more than 30 holes into the East zone this summer.
Hole MK-RC-0154, drilled about 250 meters east of the Core zone, intersected 45.7 meters of mineralization, starting at 200 meters. The interval averaged 1.62 g/t gold.
MK-RC-0157, located 75 meters to the north of hole 154, drilled 10.7 meters averaging 1.88 g/t gold starting at a depth of 160 meters; starting at 173.7 meters, the bit cut through another 36.6 meters grading 0.81 g/t gold and a third intersect of 25.9 meters averaging 0.73 g/t gold.
"Before the end of the year, we will finish drilling off the East zone and wrap it basically back up into the Sunshine zone," Pontius said. "We think that when we get that put together, we will have roughly 2.5 kilometers of strike length about 1.5 kilometers wide that will have enough drilling to know about the deposit in that area, and a lot of it will be on the 75-meter centers so we can get indicated ounces out of those."
Pontius said the next focus of the drill program will be to build measured ounces for Livengood. International Tower Hill believes that placing a hole in the center of each square of the 75-meter grid will provide enough density to convert the project's indicated resource to a measured resource. The junior plans to have the infill drilling complete by fall of next year.
The company plans to extend the summer drill program into October. A new gold resource estimate, which is expected to be completed around the end of the year, will be calculated based on the summer program.
Ideal location
In Alaska the infrastructure for a mine does not get much better than that found at Livengood. About an hour and a half drive from Fairbanks, the deposit lies adjacent to the Dalton Highway, the road used to service the trans-Alaska oil pipeline and oil fields on the North Slope. It is also adjacent to the proposed route for trans-Alaska gas pipelines currently being developed.
Natural gas-fired generators using liquefied natural gas trucked down from the North Slope are being considered to power a mine at Livengood, which would allow the project to tap into a gas pipeline when one is built.
The project also has the advantage of being able to use a camp built for the construction and maintenance of the trans-Alaska oil pipeline. International Tower Hill has leased the camp and yard which is no longer being used for work on the oil pipeline.
The camp, located less than five miles from the deposit, has kitchen and bath facilities and more than enough room for offices and sleeping quarters for the crews needed to run the exploration program. The large, fenced facility also has several large shops. The junior uses one of these buildings to process samples from the drill program and two others to repair and maintain the exploration equipment. Use of the facility has played a key role in the success of the company's winter drill program.
"The fact that Livengood is so favorably located along a paved highway some 70 miles northwest of Fairbanks is a huge positive for its potential near-term development into a large mining project," company geologist Heather Kelly told Mining News.
Ties to AngloGold
Pontius and Myers, two of the top brass at International Tower Hill, were members of the AngloGold Ashanti team when the South Africa-based major acquired Livengood in 2003. In 2006 Anglo sold the project, along with seven other Alaska targets, to International Tower Hill in exchange for a 19.99 percent stake in the junior.
Kelly said Pontius was the North American exploration manager for AngloGold, who initiated the Tintina Gold Belt project, as well as leader of the Alaska exploration effort. Myers, a senior geologist for the major, conducted the technical analysis and targeting work on the Tintina Belt study for AngloGold.
AngloGold drilled 12 RC and core holes defining and confirming a broad, large-tonnage gold system that lies in the center of the Livengood Placer District, which has produced more than 500,000 ounces of gold since 1914 and has an additional 350,000 ounces of drill-defined placer gold.
Major interest
International Tower Hill believes the Livengood deposit will be an attractive target for one of the global giants. When asked, Pontius said major producers have shown interest in the project, but he could not divulge any further information.
While it is unclear whether AngloGold is interested in building a mine at Livengood, the major is maintaining a stake in the junior. The major spent C$3.265 million to maintain an 13.29 percent interest in International Tower Hill when the major's equity had been diluted as a result of the junior raising C$23 million in May.
Kinross Gold Corp., which owns the Fort Knox Gold Mine about 60 miles, or 100 kilometers, south of Livengood, has said it is keeping its eye on the expanding gold deposit. Livengood has similar geology and slightly higher grades than the smaller Fort Knox deposit.
Though Kinross has not invested in International Tower Hill, the major is closely watching the project.
Fort Knox former General Manager Larry Radford told the Greater Fairbanks Chamber of Commerce in May that "a future partnership to develop the Livengood property is a possibility."
International Tower Hill Aug. 26 said it has adopted a shareholder rights plan, or poison pill, to protect its shareholders' interests in case a major does make an unsolicited move on the junior.
"I would expect that the Livengood project will grow to a compelling acquisition target for a major gold company in the near term and that the company will then continue on with the exploration and development of its other very attractive exploration assets," Kelly said. "ITH has a very robust pipeline of projects, which will receive greater exploration effort following the monetization of the Livengood project."
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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