The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Fire River is re-evaluating property before resuming operations at the high-grade gold project
In a few short months in 2009, Fire River Gold Corp. , the newest member of the International Metals Group, transitioned from a new junior with one grassroots gold property to a near-term producer of high-grade gold in Alaska.
Raising about C$500,000 during its initial public offering that closed in May, Fire River began an early phase exploration program at its Draken gold property, located in the Fortymile District of eastern Alaska.
By September the newly formed junior had four gold properties in its portfolio, including the high-grade Nixon Fork gold mine in western Interior Alaska.
In a deal worth about C$3 million, Fire River Gold acquired the turnkey gold project from Pacific North West Capital Corp., another International Metals Group company, by paying US$500,000 in cash and issuing 6.415 million, or about 43 percent, of Fire River Gold's issued and outstanding shares. The sister-company also received 1 million purchase warrants and will be reimbursed for the exploration expenses it has incurred since it bought the property in May.
Harry Barr, who is founder of the International Metals Group and president of both Pacific North West Capital and Fire River Gold, said the deal benefits both companies. Fire River, which is completely focused on Alaska gold projects, is in a better position of the two companies to raise funds needed to move the project toward production. Pacific North West gets reimbursed for what it has invested in the project and is able to participate in the upside of Nixon Fork through its ownership interest in the new junior.
According to a NI 43-101 report prepared in August for Fire River, Nixon Fork produced 125,591 ounces of gold from about 106,137 metric tons of ore mined between 1920 and 2007. In addition to the gold, at least 19,566 ounces of silver and 1.273 million pounds of copper were recovered during the same period.
Though Nixon Fork has historically produced high-grade gold (an average of about 38 grams per metric ton), past producers have not been able to keep the mine in production. By carefully evaluating the mine, Fire River hopes to capitalize on exploration and development expenditures made by past owners.
Turnkey operation
With the purchase of Nixon Fork, located about 56 kilometers, or 35 miles, northeast of McGrath, Fire River Gold boasts ownership of a fully functional high-grade gold mine.
The previous operator at Nixon Fork, St Andrew Goldfields, spent about US$54 million on upgrades and new equipment after purchasing the underground gold mine in 2003. St Andrew put Nixon Fork in limited production in 2007, but due to economic challenges, the Toronto-based company shuttered the mine and put it up for sale.
The facility that Pacific North West bought for US$500,000 is complete with a 200-metric-ton-per-day flotation plant with a gravity gold separation circuit, a sulfide flotation circuit, and a brand-new Carbon-in-leach circuit. The mine also boasts a fleet of mining vehicles, a power plant, maintenance facilities, an 85-person camp, office facilities, and a 1.5 kilometer-long airstrip.
The purchase also includes a US$3.5 million bond posted to the State of Alaska and the permits needed to move the project quickly back into production.
Another man's treasure
The adage, "One man's junk is another man's treasure," could literally be true for the owners of Nixon Fork.
The tailings that past producers disposed could provide Fire River's first gold production. It is estimated that the already-milled tailings contain about one-quarter ounce of gold per metric ton and could be processed through the existing facility by mid-2010.
According to Fire River Gold, the first operator of the Nixon Fork Mine produced an average head grade of about 43 grams per metric ton but only averaged 83 percent recovery, leaving about 7.3 g/t in the milled tailings. Based on previous studies the tailings pond contains about 150,000 metric tons of mill tailings averaging 8.1 g/t, or nearly 40,000 troy ounces of gold.
The Vancouver-B.C. based junior completed a 15-hole drill program at the tailings facility, and about 110 samples have been sent to an assay lab in Fairbanks, Alaska. The company is also having metallurgical studies done on the tailings material. The results of this work will help the company determine the feasibility of processing the tailings.
Myers would like to use the new CIL circuit to recover the gold from the tailings, but the expected high copper content may prevent that. The company will look at other options, including running the gold-rich material back through the mill to be reprocessed with gravity and flotation recovery.
A complete evaluation on the tailings is expected to be finalized with a corresponding report issued by the end of the year. Subject to positive results, management plans to install the balance of the CIL plant or other related tailings production equipment in the winter of 2010.
Revaluating the resource
Though everything is in place to reopen the mine, Fire River plans to complete an extensive re-evaluation of the geological model at Nixon Fork before resuming operations. Continuing the work initiated by North West Capital in April, Fire River Gold is spending about C$1.25 million on the program.
In order to have a better understanding of the complex geology of the high-grade gold mineralization at Nixon Fork, the newly-formed company is compiling all the information that has been generated into a three-dimension model.
Using the compiled data and new information learned from logging thousands of feet of historic core, Myers is re-interpreting the geological model for Nixon Fork. This work is scheduled to be completed by early in 2010, but the project manager said there is still a massive amount of data to go through, and he will take the time needed to thoroughly evaluate the information before moving the underground project forward.
Fire River believes its re-evaluation of the current data will increase this resource and provide a better geological understanding of Nixon Fork. The company can then use this knowledge to define additional underground reserves and begin to look at other gold targets identified on the property that have yet to be explored.
"We are focusing the 2009-2010 exploration program on a complete re-logging of the previous drilling samples. Several phases of the intrusive rock complex have been identified and a few specific dikes are clearly associated with mineralization. The challenge now is to figure out what controls the occurrence of these dikes so we can better target them with the next drilling phase, and create a new 3-dimensional model of the geology and mineralization," Myers told Mining News.
Once Myers has completed the geological model the company will move ahead with an exploration program in 2010.
Exploring Golden Zone
Golden Zone is another property Fire River optioned this summer. This advanced-stage gold-copper-silver exploration project is located 150 miles, or 240 kilometers north of Anchorage, Alaska on the south flank of the Alaska Range.
The Golden Zone property has previously received more than 20,000 meters of drilling, extensive trenching, soil sampling grids, multiple geophysical surveys, and metallurgical samples collected from core and the underground workings in the main breccia zone.
A technical report prepared by Norwest Corporation for Piper Capital in 2005 outlines an NI 43-101-compliant measured and indicated resource at Golden Zone of about 3.09 million tons grading 2.81 grams per metric ton gold for a total of 259,940 ounces, with 7.61 million pounds of copper and 1.39 million ounces of silver. Fire River said it has not confirmed this resource and it is having a new NI 43-101 resource completed for the property.
The newly-formed junior said the breccia target is the most advanced of the 14 targets identified at Golden Zone and hosts the mineral resource. The 2009 exploration program evaluated the possible extension of this mineralization. Fire River believes that further exploration of the 19,768-acre property has the potential to add millions of ounces to the company's gold banks.
The junior is also reviewing data on its newly-acquired Kansas Creek gold 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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