The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Two new companies report acquisitions in Alaska; venture capital drought will likely spur additional merger, acquisition activity
Although spring took its good old time in arriving across much of Alaska, the mining industry's busy summer exploration and development season has arrived.
Five of Alaska's major mines reported strong first-quarter operating results, and two new companies acquired exploration properties in Alaska in the last month.
These new acquisitions are not expected to be the last, as the prolonged venture capital drought continues with no end in sight.
The news this month is sparse, primarily because budgets are considerably smaller this year relative to last year and because everyone who has a budget is just getting started on their programs.
As always, some projects will survive, others will not.
We'll hear more about them as the summer progresses.
Western Alaska
Teck Resources Ltd. (75 percent) and partner NANA, Inc. (25 percent) announced first-quarter 2012 results from the Red Dog mine.
In the first quarter, the mine produced 128,300 metric tons of zinc in concentrate, a 10 percent decrease from the year-previous period.
Zinc ore grade decreased to 17.9 percent, while mill recoveries were up slightly at 83.6 percent.
The mine also produced 23,400 metric tons of lead in concentrate.
Lead ore grade decreased to 4.7 percent, while mill recoveries decreased to 57.4 percent.
The mine posted a $64 million operating profit for the quarter, down significantly from the $74 million profit in the year-previous period.
Mill throughput decreased by 7 percent due to harder, higher silica ore from the Aqqaluk pit and lower mill availability.
Zinc and lead ore grades declined as the majority of ore feed was from the lower-grade Aqqaluk pit.
The decreased operating income was attributed to higher operating costs and lower zinc prices, partially offset by higher sales volume.
Fire River Gold Corp. announced an update on its Nixon Fork Mine.
Significant recent accomplishments include mining and processing of 25,875 metric tons of ore grading approximately 15.5 grams per metric ton gold (12,875 ounces of gold) were mined.
In addition the mine produced about 175 metric tons of copper-gold concentrate.
Commissioning of the 250 metric-ton-per-day carbon-in-leach circuit in the mill, conversion of the tailings disposal system from wet tailings impoundment to dry stack placement, successful implementation of longhole open stoping in the mine in two locations in the 3300 zone, development of access to six new mining zones, renewal of all permits and bonding requirements, and establishment of a broken ore inventory of approximately 14,000 metric tons of ore at an estimated grade of 22 grams of gold per tonne.
Using the newly commissioned systems, approximately 20 percent of the gold production will be in the form of gold dore and 80 percent will be derived from the copper concentrate.
To date approximately half of the mill feed and half of the current broken inventory were extracted from sources not identified in the current resources.
Grade control studies have indicated that diamond drilling can successfully locate broad mining zones, however tighter-spaced short-hole drilling is required to adequately determine the geometry of minable zones.
The 2012 production target is 29,000 ounces of gold mined at a cost of $950 per ounce, with targets of 40,000 ounces at a cost of $750 per ounce in 2013 and 50,000 ounces at a cost of $600 per ounce in 2014.
Northern Dynasty Minerals and partner Anglo American plc have approved a budget of approximately US$107 million to advance the Pebble copper-gold-molybdenum project in 2012, with the objective of initiating permitting under the National Environmental Policy Act toward the end of 2012.
Significant activities planned for 2012 include engineering studies to complete a project description in 2012 and finalize a prefeasibility study in 2013, continued environmental baseline monitoring studies focused on surface and groundwater hydrology, water quality and fisheries resources, additional exploration, geotechnical, geo-hydrology and metallurgical drilling and stakeholder engagement and public affairs programming.
Graphite One Resources announced the commencement of the airborne geophysical survey at its Graphite Creek graphite property on the Seward Peninsula. The 690 line-kilometer helicopter borne survey will collect both magnetic and electromagnetic data as part of a $4.5 million exploration program that will include prospecting, geological mapping, geochemical sampling and drilling.
Interior Alaska
Kinross Gold Corp. announced first-quarter 2012 results from its Fort Knox mine. The mine produced 61,716 ounces at a cash cost of $861 per ounce versus 65,047 ounces at a cash cost of $628 per ounce in the year-previous period. The production decrease was attributed to lower average mill feed grades and slightly lower recovery from the valley leach side of the operation. The mine processed 4,156,000 metric tons of ore grading 0.46 g/t gold with a mill recovery of 84 percent. The mine is focusing on pre-production stripping for its phase 7 pit and valley leach expansion.
Freegold Ventures Ltd. announced additional 2012 winter drilling results from its Golden Summit project near Fairbanks.
At the Cleary Hill prospect, significant results included include 91 meters grading 0.7 g/t gold, including 9.3 meters grading 3.38 g/t gold in hole GSCL1213 at the western edge of the Cleary Hill vein system.
Hole GSCL1214 intercepted 7.6 meters grading 3.39 g/t gold in shears biotite schist cut by multiple generations of sulfide (galena-sphalerite-stibnite) veins and gold-bearing quartz-sulfide veins.
Unlike most other gold-bearing veins in the area, the gold-bearing interval from 310 to 335 feet contained highly anomalous lead (to 1.24 percent) and zinc (to 0.88 percent).
At the adjacent Dolphin zone, holes GSDL1203 averaged 0.49 g/t gold over its entire 350.9-meter depth with the bottom 30.2 meters averaging 1.15 g/t gold.
Hole GSDL1210 intercepted several intervals of mineralization, including a 20.9-meter interval grading 34.69 g/t gold.
Mineralization consisted of native gold, arsenopyrite and lesser jamesonite and stibnite hosted in highly sheared biotite quartz schist cut by several generations of quartz and quartz-sulfide veins.
Visible gold was observed in core at several locations within this interval.
The geometry of the shear zone controlling mineralization in hole GSDL1210 remains uncertain.
Additional results from the Dolphin zone include hole GSDL1207 which intercepted 39.6 meters grading 1.88 g/t gold, including 1.5 meters grading 27 g/t gold.
The company plans to resume drilling at the Dolphin prospect in mid-May and also plans to conduct drilling at the Goose Creek and Too Much Gold prospect later in the year.
Endurance Gold Corp. announced that two significant gold-in-soil anomalies were discovered during the 2011 geological and geochemical sampling program on the McCord Creek gold prospect in the Livengood District.
Soil sampling identified five gold-in-soil anomalies (defined as greater than 10 parts per billion).
The two largest soil anomalies are 850 by 250 meters, and 650 by 200 meters in size.
The maximum soil value exceeds 100 parts per billion gold.
These two soil anomalies fall within the catchment basin of McCord Creek.
Shortly afterward the company announced that it had entered into an agreement with Alaska newcomer Liberty Gold Corp. that provides Liberty an option to earn a 60 percent joint venture interest in the property by spending $600,000 in exploration expenditures and making $85,000 in cash payments over three years.
The $150,000 program for 2012 includes additional soil sampling and trenching with the objective of defining drill targets for the 2013 field season.
Welcome to Alaska Liberty Gold Corp.!
Alaska newcomer Sono Resources Inc. announced that it had acquired 100 percent interest in Alaska Metals Corp. which has the right to acquire a 100 percent interest in the Bear gold prospect, a 4,840-acre prospect along the Steese Highway in the Circle Mining District.
Placer mining remains active in all of the drainages that surround the prospect including Miller Creek, Mammoth Creek, Porcupine Creek and Bonanza Creek.
Limited exploration was conducted on the prospect by BHP-Utah International in 1990 and 1991, which consisted of geological mapping and collection of 1,321 soil samples and 287 rock samples.
Exploration work conducted to date by Alaska Metals includes soil sampling, MMI sampling, and geologic mapping.
Welcome to Alaska Sono Resources Inc.
Northern Alaska
Goldrich Mining Co. and joint-venture with NyacAU, LLC, announced that they have successfully completed mobilizing the mining equipment needed to begin mining operations this summer at the Chandalar placer gold property. Subject to permitting, preparation for mining is expected to begin in June with production by June 2013, although it may begin as early as the summer of 2012. Eventual production of approximately 10,000 ounces of fine gold per season is anticipated by the partners.
Southeast Alaska
Hecla Mining Co. announced first-quarter 2012 production results from the Greens Creek mine on Admiralty Island.
The total cash cost per ounce of silver produced at Greens Creek for the quarter was $2.24 per ounce versus negative $0.73 per ounce in the year-previous period.
The higher costs were due primarily to ground support rehabilitation work that diverted equipment and personnel away from production.
The average grade of ore mined during the quarter was 11.08 ounces of silver per ton, down from the average grade of 12.5 ounces per ton that was mined in the first quarter of 2011.
During the first quarter, the mine produced 1,328,704 ounces of silver, 12,652 ounces of gold, 4,854 tons of lead and 15,943 tons of zinc.
The mill processed 165,516 tons of ore during the quarter.
Drilling at Greens Creek continues to define ore-grade mineralization along trend of the Gallagher and 9a Zones and South West Bench.
Drilling of the 9a Zone has likely extended the resource to the south and drilling of the South West Bench has defined ore-grade material to the north and the east of the existing reserve model.
At the Gallagher, drilling continues to define two discrete high-grade zones that are strong to the south and to the east near the Gallagher Fault.
Significant drilling results from this work include 16.8 feet grading 32 ounces of silver per ton, 0.02 ounces per ton gold, 8.1 percent lead and 4 percent zinc from the 200 South zone, 19.8 feet grading 26.1 oz./t silver, 0.02 oz./t gold, 11.5 percent lead and 6.6 percent zinc from the 9a zone and 4.4 feet grading 25.6 ounces of silver per ton, 0.03 oz./t gold, 5.4 percent lead and 3.3 percent zinc from the Southwest Bench zone.
Coeur d'Alene Mines announced first-quarter 2012 production results from its Kensington gold mine. The mine returned to full-scale production ahead of schedule after completing a series of mine and mill complex improvements and completed 27,800 feet of definition drilling. Due to a planned temporary reduction in production that began in December 2011, the mine produced 7,444 ounces of gold at a cash cost of $2,709 per ounce and total production costs of $3,598 per ounce. The mill processed only 43,936 tons of ore averaging 0.18 oz./t gold during the quarter. Mill recoveries came in at 93.4 percent. The mine is expected to produce 82,600 to 86,500 ounces of gold during 2012.
Pure Nickel Inc. announced that it plans to conduct a 2200-meter drilling program at its Salt Chuck copper - palladium property in Southeast Alaska. The program is designed to test coincident geochemical and geophysical anomalies. Permitting has been initiated, and review of the plan of operations is expected to be completed before the end of May. The start date of the drill program will depend on final permit approval. The Salt Chuck mine produced approximately 300,000 metric tons of ore, with a reported average grade of 0.95 percent copper, 1.96 g/t palladium, 1.12 g/t gold and 5.29 g/t silver.
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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