Alaska mines, projects reach milestones

Although the mining news for the last month was rather on the thin side in terms of volume, a number of significant milestones were reached by the Alaska mineral industry.

Over the past 30 days or so, we have had new mineral resources published on three gold deposits and one polymetallic deposit.

We've had the first preliminary economic analysis released on a deposit from the Ambler Mining District and the schedule for a second preliminary economic analysis announced for Alaska's largest gold-only ore body.

We've also had Alaska's first gold mine to reach the 5-million-ounce production mark, while another gold-only deposit reached the rare distinction of having more than 20 million ounces in total resources, only the second to ever do so in Alaska.

And we also have had one mine amass an astounding four-year, 4-million-man-hour record without a lost-time injury.

Other than that, pretty dull month.

Western Alaska

NovaGold Resources Inc. provided a corporate update for the Donlin Creek project, which is a 50:50 joint venture with Barrick Gold Corp. During the first quarter of 201, activities were focused on the revision of a feasibility study update for a natural gas pipeline option, permitting support studies and community outreach programs.

The partners spent approximately US$9.2 million in the quarter as per of their US$41 million 2011 budget.

The work program for this year will focus on completing the feasibility revision to incorporate the option of a pipeline feeding gas to the project and preparing permit applications for the project.

The feasibility revision will provide operating costs using natural gas rather than diesel as the primary power source for the project, and also will use more recent gold prices and capital inputs to provide updated capital and cash flow estimates.

The project is expected to expend US$12.7 million in the second quarter on environmental studies and feasibility revision activities.

The feasibility revision should be completed in the second half of 2011, after which the partners are expected to prepare and file permit applications for the project.

Fire River Gold Corp. reported results obtained from additional underground drilling at the Nixon Fork project. Significant new intercepts in the 3000 zone include 65.3 grams-per-metric-ton gold over 5.5 meters in hole N10U-043, 124.3 g/t gold over 2.7 meters in hole N10U-044, 25.7 g/t gold over 2.3 meters in hole N11U-06 and 83.3 g/t gold over 5.6 meters in hole N11U-010. Significant new intercepts in the 3100 zone include 108 g/t gold over 2.4 meters in hole N10U-047 and 11.4 g/t gold over 8.6 meters in hole N10U-045.

Freegold Ventures Ltd. announced updated mineral resource for its Vinasale gold project under option from Doyon Ltd. Utilizing a cutoff value of 0.5 g/t gold, the project contains inferred resources of 37.3 million metric tons averaging 1.11 g/t gold, or 1.331 oz of gold.

The project consists of 72 drill holes containing 8,711 gold assays within three areas: the Central, Northeast and South zones.

The highest density of drilling has been completed in the Central Zone where 29 drill holes totaling 6,902 meters were used in estimating the resource for the Central zone.

Gold assays were capped at 22 g/t gold.

To date, mineralization in the Central Zone extends over a strike length of 400 meters and remains open to the north, south and at depth.

The 2011 exploration program will include a ground geophysical survey, which is scheduled to begin in mid-May and will be followed by a drill program aimed at expanding the known resources.

Interior Alaska

Kinross Gold Corp. reported that its Fort Knox mine passed three significant milestones recently: the 500 employees at the mine had passed four years without a lost time injury.

In the process of achieving this amazing feat, they had amassed over 4 million man-hours worked without a lost time injury.

And the icing on the cake was the production of their 5 millionth ounce of gold! For those of you who remember, when the mine first went into production, total estimated resources were only 4.1 million ounces.

Given the mining dilution and mill recovery operating parameters at the mine, a rough estimate says the mine has extracted about 50 percent more ounces from the deposit that the original resource estimate said were in the deposit on start-up.

Congratulation to Kinross Gold and the employees of Fort Knox!

Freegold Ventures Ltd. announced updated mineral resources at its Golden Summit project.

Using a0.3 g/t gold possible cut-off for open-pit extraction, the total indicated resource came in at 7.79Mt, grading 0.695 g/t gold for a total of 174,000oz in contained gold.

The total inferred resource at the same cutoff grade came in at 27.01Mt, grading 0.606 g/t gold for a total of 526,000oz in contained gold.

Gold assays were capped at 42 g/t gold.

The resource was based on 49 drill holes totaling 5,966 meters that were drilled in the mineralized Dolphin stock.

The Dolphin stock is a multi-phase intrusive that has been traced on surface by soil sampling and RC drill.

A 5,000 meter diamond core drilling program is currently underway on the Dolphin zone with the objective of both expanding and upgrading the new resource.

A second drill rig has bee mobilized to the property.

Additional exploration planned for this summer will include a property wide ground geophysical survey in order to delineate targets for a subsequent fall drilling program.

In late March Sumitomo Metal Mining Pogo LLC provided the Alaska Department of Natural Resources with a year-end 2010 summary of production from Alaska's largest gold producer, the Pogo gold mine near Delta Junction.

During 2010, the mine treated an average 2,467 metric-tons-per-day ore and produced 383,434 oz gold at a cash cost of US$449/oz. This equates to a recovered grade of 14.6 g/t, or 0.426 oz/t gold.

Total 2009 production was similar at 389,808 oz gold at a cash cost of US$423/oz. The mine also conducted drilling, geophysical surveys, a LIDAR survey and soil sampling on its holdings including 1,737 meters of underground drilling in 10 holes and an additional 22,632 meters of drilling in 76 holes from surface using roads and helicopter support. The current mine operating life now extends to 2017.

International Tower Hill Mines Ltd. announced a resource upgrade at is Livengood gold project.

Using a 0.5 gold cut-off, the Money Knob deposit now contains estimated measured resources of 7.4Moz at an average grade of 0.83 gold, indicated resources of 3.2Moz at an average grade of 0.83 gold and inferred resources of 2.7Moz at an average grade of 1.11 gold.

At a 0.3 grams of gold per tonne cut-off, which is approximately the average grade for the heap leach option described in the company's recent preliminary economic analysis, the project contains measured and indicated resources of 15.3Moz at an average grade of 0.61 gold and inferred resources of 4.9Moz at an average grade of 0.54 gold.

The goal of the recent drilling was to convert indicated and inferred resources to the measured category and results show more than 50 percent of the total resources have been converted to the measured category.

A limited number of holes drilled beneath the existing deposit intersected a higher grade zone of mineralization, highlighted by hole MK-RC-0458 which intercepted 112.8 meters grading 2.6 gold and hole MK-RC-0470 which intercepted 13.7 meters of 5.45 gold.

Additional drilling is under way to better define this new deep target.

Although the goal of the drilling was to upgrade resources to more assured classification, the drilling also officially pushed the deposit past a major milestone (seems milestones are popular this month…): the Livengood deposit now contains total resources in excess of 20 million ounces of gold using a 0.3 g/t gold cutoff.

Only a handful of gold deposits have ever reached this size and only one other Alaska gold deposit has ever reached this benchmark (Donlin Creek).

Congratulations International Tower Hill Mines Ltd.!

Northern Alaska

NovaGold Resources Inc. announced a preliminary economic analysis for its Ambler project in the Ambler Mining District.

Based on the study, mining of the Ambler deposit is envisioned as an underground operation processing up to 4,000 t/d of material to support a 25-year mine life.

Indicated mineral resources stand at 16.845 Mt grading 4.14 percent copper, 6.02 percent zinc, 0.94 percent lead, 0.83 g/t gold and 59.62 g/t silver, while the inferred mineral resource stands at of 12.087Mt grading 3.53 percent copper, 4.94 percent zinc, 0.79 percent lead, 0.67 g/t gold and 48.04 g/t silver.

An underground mining operation is envisioned with a 25-year mine life that will process up to 4,000 t/d with a conventional flotation circuit producing three concentrates.

The three concentrates consist of a copper concentrate with gold byproduct, a lead concentrate with silver and gold byproducts and a zinc concentrate with silver byproduct.

Average annual payable metal production was estimated at 67 million pounds of copper, 80M lbs of zinc, 12M lbs of lead, 11,000 oz gold and 866,000 oz silver.

The life-of-mine payable metal production was estimated at 1.7 billion lbs copper, 2.0 billion lbs zinc, 291 million lbs lead, 266,000 oz gold and 22M oz silver.

Initial startup capital costs rang in at US$262 million and sustaining capital was estimated at US$134 million.

Operating costs came in at US$99.32 per metric ton milled with cash cost of US97 cents per pound of copper net of byproducts.

At current metal prices and an 8 percent discount rate, the project generates a pre-tax net present value of US$2.2 billion with an internal rate of return of 59 percent.

At current metal prices and an 8 percent discount rate, the project generates a post-tax net present value US$1.6 billion with an internal rate of return of 50 percent.

Mineralization at the project and within the Ambler District generally consists of polymetallic (copper-zinc-lead-gold-silver) volcanogenic massive sulfide occurrences.

Mineralization occurs as stratiform semi-massive to massive sulfide beds.

The sulfide beds average 4 meters thick but vary from less than 1 meter up to 18 meters thick.

The bulk of the mineralization is within four zones located between two thrust faults, the upper Warm Springs Thrust and the Lower Thrust.

A smaller fifth zone is located below the Lower Thrust.

All of these zones are within an area of roughly 1 square kilometer, with average zone length ranging from 850 meters to 600 meters and width ranging from 700 meters to 350 meters.

Depths of known mineralization extend to approximately 250 meters below the surface.

Host rocks are bimodal metavolcanic and metasedimentary rocks of the Devonian Ambler Sequence.

Planned 2011 field work at project includes 10,000 meters of exploration and geotechnical drilling.

Exploration drilling will focus on in-fill drilling to convert inferred resources to a higher classification and to expand the overall resource base.

Geotechnical drilling will provide structural information for a greater understanding of the deposit as well as subsurface hydrologic information.

In addition, the 2011 work program will focus on advancing the environmental and engineering studies required to initiate a pre-feasibility study for the project, with geotechnical, metallurgical and hydrological studies as well as environmental baseline data collection.

Andover Ventures Inc. outlined its 2011 work program for the SUN massive sulfide project in the Ambler Mining District. The focus of the 2011 program will be an estimated 2000-meter drill program designed to further extend the Main SUN deposit to the northeast towards Picnic Creek and also to the southwest to test the S.W. SUN area. The US$1.1 million drilling program is expected to mobilize to the project in late May.

Southeast Alaska

Ucore Rare Metals Inc. announced that it has recovered more than 4,000 meters of old core from past drilling at their Bokan Mountain rare earth element project.

The core represents over 70 drill holes completed by Standard Metals in the 1970s.

A significant portion of the samples appear to be mineralized and will be analyzed to determine rare earth element mineralization in the area.

The core was derived from locations situated to the northwest of the Dotson Zone in an area outside of those delineated in the company's recent resource estimate.

The company also reported that it has obtained a database of information on the project from Newmont Mining Corp. The database includes drill core logs, maps, cross sections and geochemical analyses unrelated to the Standard Metals drill activities.

Newmont was the last operator in the Bokan Mountain area during the 1970s.

Quaterra Resources Inc. announced that Copper Ridge Explorations Inc. has terminated its option on the Duke Island project in southeast Alaska. Quaterra retains 100 percent ownership of the project and is reviewing its options for future exploration on the project.

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).

• Email: [email protected]
• Phone: 907-457-5159
• Contact Curt Freeman