Recession walloped exploration spending

As the active exploration season winds down in Alaska, both good news and bad is afoot and both sets of news turn out to be the same data. Double speak you say? Read on and judge for yourself.

Halifax-based Metals Economics Group announced some preliminary numbers relating to worldwide mineral industry exploration for 2009.

The group estimates that worldwide exploration spending will drop to US$8.4 billion in 2009, a 40 percent decrease from the US$14 billion spent in 2008.

Due to the worldwide recession, this drop in spending affected all commodities at all stages of development, in all regions of the world.

Though major and mid-tier companies were adversely affected, the junior mining sector suffered the most in the past year because of the near-drought in available venture capital.

As you might expect, this dramatic fall in the exploration spending has been accompanied by falling prices for goods and services and the expected decrease in the asking price for good-quality projects.

But the buyer's market is quickly coming to a close as the effects of the recession begin to ease up and the commodities markets heat up.

So if you are in the acquisition mode, you better pick up the pace!

Western Alaska

After two years of formal review the Environmental Protection Agency said it planned to approve Teck Resources and NANA's Red Dog Mine expansion permit application. The permit would allow expansion into the Aqqaluk deposit after the current resource area is mined out in 2011. The final permit could be issued as early as December, after a 30-day public comment period and a 30-day administrative appeals period. The company needs additional permits from the U.S. Army Corps of Engineers and other state and federal agencies; however, the water discharge permit from the EPA is critical to continued operations at the mine.

NovaGold Resources reported on its third-quarter activities.

Through the end of August, expenditures at Donlin Creek totaled US$23.8 million of the US$28 million budgeted for 2009.

Work focused on geotechnical drilling for the location of mine facilities, environmental baseline data collection, pre-permitting community advisory meetings and various optimization studies.

The company and 50 percent partner Barrick Gold are considering a drilling program with the goal of expanding the resource base and identifying nonrefractory ore that can be mined with lower processing costs at the beginning of operations.

The company also reported on work at its Rock Creek mine near Nome.

Through the end of August, expenditures at Rock Creek totaled US$12.5 million with efforts focused on ensuring that the project remains in compliance with all environmental regulations during next spring's thaw.

Northern Dynasty Minerals Ltd. and Anglo American said the Pebble Limited Partnership has approved an additional US$10.1 million budget for the Pebble project for 2009, bringing total approved budgets to US$70 million for the year. The primary focus of the 2009 program has been to finalize a preliminary feasibility study and prepare for project permitting. The company indicated that by the end of 2009, total Pebble project expenditures will have reached approximately $430 million.

Mantra Mining said it had changed its name to Tintina Gold Resources Inc. and successfully vended its base metal assets to newly formed AsiaBaseMetals Inc.

Eastern Interior

International Tower Hill Mines Ltd. announced an updated resource estimate for its Livengood gold project.

The independent study incorporates all drilling results from 308 diamond and reverse circulation drill holes, totaling 83,200 meters.

Using a 0.5-gram-per-metric-ton gold cutoff, the new estimate yielded an indicated resource of 297 million metric tons grading 0.85 g/t (8.1 million ounces) gold and an inferred resource of 164 million metric tons grading 0.84 g/t (4.4 million ounces) gold.

Using a 0.9 g/t gold cutoff, the new resource estimate yielded an indicated resource of 3.4 million ounces gold at 1.36 g/t gold and inferred resource of 1.8 million ounces gold at 1.46 g/t gold.

These higher-grade areas form large coherent bodies that could constitute initial starter zones for initial mining efforts.

The company also noted that total resources at a lower 0.3 g/t gold cutoff increase to 525 million metric tons, grading 0.65 g/t gold for 11 million total ounces in the indicated category and an additional 336 million tonnes grading 0.61 g/t gold for 6.6 million ounces in the inferred category.

Significant changes to the resource base at the 0.5 g/t cutoff over previous estimates include an increase in the average resource grade of 18 percent, growth of the indicated resources by 86 percent and growth of the inferred resources by 27 percent.

At the 0.3 g/t cutoff, the current estimates include growth of the indicated resources by 115 percent and growth of the inferred resources by 24 percent.

The company said about 60 percent of the gold resources outlined to date for Livengood are classified as oxidized, while the remaining 40 percent is considered un-oxidized.

Much of the resources increase came from the newly discovered Sunshine and Northeast zones where mineralization starts at surface and extends to a depth of at least 170 meters.

The project continues to operate 4 drills and is expected to complete approximately 25 additional holes before the end of the 2009 drill campaign.

Results for an additional 37 completed drill holes are pending.

A new resource estimate is scheduled to be completed the first quarter of 2010.

Alaska Range

Fire River Gold Corp. announced that it has completed a limited exploration program and signed a formal option agreement to acquire the Golden Zone copper-gold project from Hidefield Gold PLC and Mines Trust Co. The exploration program included 1,340 feet of trenching south of the Breccia Pipe resource area toward the GAS Prospect and was designed to further investigate mineralization encountered in previous drilling.

Trenching in the Gas area uncovered extensive hornfels alteration and a strongly altered fault zone.

Trench 4 in the Copper King area discovered hornfels at the contact with a quartz porphyry intrusive body.

The hornfels contained copper staining and this target has not been previously drilled.

Trenching in Long Creek area also uncovered previously unknown quartz porphyry intrusive bodies.

Previous drill core was re-logged and samples were collected for assay from intervals not previously sampled.

Current resources at the project include measured and indicated resources of approximately 3.09 million tons grading 0.082 ounces of gold per short ton, using a cutoff grade of 0.03 oz/t gold for a total of 259,940 ounces of gold with 7.61 million pounds of copper and 1.39 million ounces of silver.

Caribou Copper Resources Ltd. announced that it had completed more than 1,400 feet of surface diamond drilling under its 2009 work program on its Caribou Dome property in the Valdez Creek district. This planned program consists of drilling about 3,000 feet designed to test for the potential eastward extension of previously encountered mineralization and to explore for deeper mineralization where few historic holes have been drilled. The company has indicated that weather conditions and accessibility along the Denali Highway may force suspension of the drilling program if snow conditions worsen.

Pure Nickel Inc. and partner ITOCHU Corp. reported that they have completed a planned exploration program for the Man Project. The work consisted of ground electromagnetic and magnetic surveys, a Z-Axis Tipper Electromagnetic survey and bore-hole electromagnetic surveys. These data were utilized in drill-hole target identification. Assay data are pending.

Cook Inlet Region Inc. has announced that it is considering developing a coal-fired electrical power plant using coal from its large holdings in the Beluga coal fields west of Anchorage.

The company is considering using in-situ gasification of coal to avoid surface or underground mining.

The project would involve drilling wells into the coal seams and injecting compressed air to cause combustion and gas generation.

The company would then utilize the gas to create electricity at a purpose-built 100-megawatt power plant.

Underground coal gasification plants have been built in Australia, South Africa and Eastern Europe, but this facility would be the first in the United States.

A side-benefit of this operation would be the production of carbon dioxide, which could be pumped to existing Cook Inlet oil wells for re-injection and enhanced oil recovery.

Permits to drill in the area in December have been submitted.

Northern Alaska

Goldrich Mining Co. reported the results of alluvial gold production at its Chandalar property north of Fairbanks.

The 500-to 700-cubic-yards-per-day plant processed both low-grade overburden and pit-run gravel.

The latter produced 522.3 ounces of raw gold bullion from processing of 8,905 cubic yards of material for a recovered grade of 0.059 ounce per cubic yard.

At the 89-cubic-yard-per-hour processing rate experienced in 2009, the plant recovered about 5.2 ounces of gold per hour.

Gold fineness of the recovered product was approximately 870, with the remainder consisting mostly of silver.

Gold recovery rates were estimated at 98 percent, partly due to the coarse nature of the gold and partly due to the low-volume of associated heavy minerals.

The company indicated that this test run has shown that gold of economically attractive grade can be produced at the property.

Increased haulage rates, improved processing plant technologies and improved settling ponds will be utilized to increase production to near the plants 180 cubic yard per hour design rate.

A spring drilling program is planned to outline overburden stripping requirements and consideration is being given to starting a second processing plant down stream from the current plant to maximize production and fully utilize the overburden stripping crews.

Silverado Gold Mines Ltd. announced additional results of the 2009 drill program from its Nolan Creek property. At the Workman's Bench prospect, a total of 2,660 feet of diamond core drilling was completed in nine holes in 2009. Significant results include 1.5 feet grading 0.05 ounces of gold per ton and 32.1 percent antimony in hole 09SH12, 4.8 feet grading 0.04 ounces of gold per ton and 8.91 percent antimony in hole 09SH13 and 1.9 feet grading 5.72 ounces of gold per ton and 37.73 percent antimony in hole 09SH18. Additional assays are pending.

Southeast Alaska

The Beard Co. announced that Geohedral LLC, a private company in which Beard has a 23.16 percent equity interest, has expanded its holdings by staking 521 new federal claims (10,420 acres) at its Yakutat Forelands project in Southeast Alaska.

The additional claims are located in the Tanis Mesa area and are contiguous to its previously staked claims.

Thirty holes were dug or drilled across a grid of points, with a spacing of one-half mile, across the central part of the staked area.

Depth of the holes ranged from 2.5 feet to 27.1 feet.

An additional 30 surface pits and two holes totaling 62.3 feet also were completed.

Assays results from unconsolidated materials above the bedrock in the Tanis Mesa area contain appreciable amounts of gold and silver, averaging 0.30 ounces of gold per ton and 0.75 ounces of silver per ton.

Additional work is planned.

Ucore Uranium Inc. reported surface sampling results at its Bokan-Dotson Ridge rare earth element project. Surface samples from the Dotson trend returned total rare earth element values ranging from 2.2 percent to 18.8 percent with maximum light rare earth element values of 5.9 percent and maximum heavy rare earth element values of 17.3 percent. Drilling continues on the project, and the company is planning to conduct a low-altitude, high-resolution airborne magnetic survey to help outline prospective rare earth element targets.

The U.S. Environmental Protection Agency announced that it had recommended the Salt Chuck mine for inclusion in its National Priorities List, which if approved, will qualify the old copper-palladium mine site for the U.S. Superfund Cleanup program.

The EPA said heavy metals from Salt Chuck mine tailings are impacting water quality and sediments in Lake Ellen Creek and Kasaan Bay.

The contamination affects both salmon and shellfish in areas of Kasaan Bay known as important commercial and subsistence fisheries.

The Salt Chuck mine was active between 1905 and 1941 and produced about 300,000 tons of copper sulfide ore grading 0.95 percent copper, 2.0 grams per metric ton palladium, 1.1 g/t gold and 5.7 g/t silver.

Quaterra Resources Inc. announced that it has signed an option agreement with Copper Ridge Exploration Inc. whereby Copper Ridge can earn up to a 65 percent interest in the Duke Island copper-nickel-platinum-palladium property.

The Duke Island property was discovered by Quaterra in 2001.

Between 2001 and 2006 Quaterra completed geological mapping, soil and rock sampling, ground and airborne geophysical surveys and 1,820 meters of core drilling in 11 holes.

Mineralization includes copper, nickel and platinum group element enriched sulfide mineralization within an Alaska-type zoned ultramafic intrusion in Alaska's Alexander Platinum Belt.

The occurrence is unique in the high percentage of disseminated and net-textured to massive sulfide mineralization within certain phases of the ultramafic intrusions.

Geochemical, geological, and geophysical data suggest the sulfide system extends for over 14.5 kilometers along strike, up to 3.8 kilometers across strike and remains open to expansion.

Multiple airborne magnetic and electromagnetic surveys reveal numerous strong conductive electromagnetic highs.

To date, 11 sulfide showings have been discovered, six of which have received limited exploration.

Outcrop samples have returned from less than 10 parts per million copper to 2.8 percent copper, from less than 10 ppm nickel to 0.25 percent nickel and from less than 5 parts per billion PGE to more than 1 ppm from the South Rim of the Marquis prospect.

An induced polarization survey conducted over the discovery outcrop outlines a high conductivity zone of massive sulfide surrounded by a disseminated sulfide zone.

Nine of 11 core holes drilled on the induced polarization anomaly at the South Rim of the Marquis prospect intercepted from 6 to 90 meters of semimassive to massive sulfide containing highly anomalous values for copper (10 to 12,500 ppm), nickel (27 to 4,694 ppm), platinum (less than 5 to 680 ppb), and palladium (less than 5 to 548 ppb) and established a north dip to the upper contact of sulfide mineralization.

Modeling of electromagnetic and Natural Source Audio-frequency Magnetotellurics (NSAMT) geophysical survey results defines an eastern plunge and a wine-glass-shaped conduit below the covered conductive anomaly at the Marquis prospect, similar to other high grade magmatic sulfide deposits.

The historical drilling focused on the western periphery and shallower southern portions of the main Marquis zone.

Copper Ridge is conducting a surface mapping and sampling program over the core of the main Marquis prospect and to extend the NSAMT survey over the relatively unexplored Monte prospect to the south.

This work will be followed by a 1,500-meter drill test of the highest priority drill targets to be carried out during the 2010 field season.

Copper Ridge can earn up to a 51 percent interest in the Duke Island property by issuing 1 million pre-consolidation shares and spending US$3 million on exploration by Dec. 31, 2012.

A total of US$750,000 of the US$3 million is a firm commitment to be spent by Dec. 31, 2010.

The firm commitment includes US$600,000 to be allocated to drilling expenses to target the intrusive to a depth of up to 2,000 feet.

Copper Ridge may increase its interest to 65 percent by spending an additional US$2 million on exploration by Dec. 31, 2013.

CBR Gold Corp. and joint venture partner Heatherdale Resources Ltd., a subsidiary of Hunter Dickinson, announced that underground drilling has commenced at the Niblack copper-gold-silver-zinc project located on Prince of Wales Island. The US$5.35 million exploration program will concentrate on resource expansion at the Lookout Zone. This second phase of underground diamond drilling comprises 7,620 meters and will be managed by project operator Hunter Dickinson.

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