The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Publication ranks three Alaska gold projects among world's largest; suggests production head grades will drop and costs will climb
Over a year ago, Natural Resource Holdings published a report entitled "How Rare are One Million Ounce Gold Deposits?" At that time, the publisher ranked 296 gold deposits that have more than 1 million ounces of gold in all resources categories.
The same firm recently published a follow-up report titled, "Global Gold Mines & Deposits 2012 Ranking." The report ranks gold deposits above 1 million ounces, whose numbers have increased to 439 deposits with total resources of 3,015,542,164 ounces of gold. Some new factoids were brought out by this study. For example, there are only thirty-three +20 million-ounce gold deposits in the world and Alaska has three of them: Pebble (ranked No. 1), Donlin Creek (ranked No. 10) and Livengood (ranked No. 31). Those thirty-three deposits, comprising only 7.5 percent of the total number of +1 million ounce deposits, contain more than 41 percent of the world's total gold resources.
Or, how about this: The average producing gold mine today has a head grade of 1.06 grams per metric ton gold.
However, the average grade of all undeveloped gold deposits is only 0.82 g/t gold (37 percent lower) meaning future production grades are going to drop and production costs are going to go up.
Perhaps more important was the finding that the increased price of gold in the last several years has had no affect on the rate of new gold discoveries.
The current producers, many of whom are also producing from +1 million-ounce deposits, churn out 90 million ounces of gold per year.
Assuming that production figure is maintained and, barring multiple high-grade, multimillion-ounce discoveries every year, an unlikely possibility given recent discovery trends, the report indicates that "peak gold" production will occur between 2022 and 2025.
Time will tell whether "peak gold" will be as elusive to pin down as "peak oil" has been.
Western Alaska
Teck Resources Ltd. and 25 percent partner NANA Inc. announced second-quarter results from its Red Dog mine.
During the quarter, the mine produced 129,600 metric tons of zinc in concentrate.
Zinc ore grade increased slightly to 18.8 percent while mill recoveries were up slightly to 82.5 percent.
The mine also produced 23,400 metric tons of lead in concentrate.
Lead ore grade increased to 4.9 percent while mill recoveries increased significantly to 56.5 percent.
The mine posted a $46 million operating profit for the quarter, down significantly from the $65 million profit in the year previous period as a result of decreased mill throughput due to scaling and plugging of feed lines.
The increased lead recoveries resulted from producing less oxidized ore from the near-surface portions of the Aqqaluk deposit.
The mine plans to ship 1,000,000 metric tons of zinc concentrate and 163,000 tons of lead concentrate from the port facility this shipping season.
Graphite One Resources Inc. announced drill results from its Graphite Creek graphite prospect on the Seward Peninsula. Results include hole 12GC001 which returned 411.7 meters of 2.1 percent graphite including 127.9 meters of 4.1 percent graphite, and an additional 41.73 meters of 6.7 percent graphite, and hole 12GC00 which returned 353 meters of 2.7 percent graphite including 165.3 meters of 4.23 percent graphite, 46.4 meters of 6.6 percent graphite and 21 meters of 10.1 percent graphite. Additional drilling has been completed along the 16 kilometer strike of known graphite mineralization. Additional results are pending.
Millrock Resources Inc. and partner Kinross Gold Corp. announced commencement of drilling at the Council gold prospect on the Seward Peninsula. The planned program consists of six holes totaling about 1,000 meters of drilling. Drill holes will test a seven-kilometer (4.3 miles) long by up to 400-meter-wide gold-arsenic soil anomaly that is coincident with a regional structural feature. The project is budgeted at US$1 million.
NovaGold Resources Inc. and partner Barrick Gold Corp. commenced the long-awaited permitting process for its Donlin Creek gold deposit. Initial permits were submitted to the U.S. Army Corps of Engineers to start the National Environmental Policy Act review process and the attendant environmental impact statement. Agency and public review and comment will follow. The companies expect the process to require 4 years.
Liberty Star Uranium & Metals Corp. announced commencement of drilling at its Big Chuck copper-gold project. Following review of its geophysical data, the company is targeting a 2.5 kilometer wide target that has characteristics of a porphyry copper deposit. The top of the target zone is approximately 500 meters below surface. Some 10,000 feet of drilling is planned to test this target as well as others defined by previous work.
Full Metal Minerals Ltd. and partner Antofagasta Minerals S.A. announced commencement of its 2012 core drilling program at the Pyramid copper project on the Alaska Peninsula. Five holes have been completed to date, and drilling is ongoing on the planned 3,000-meter program. Drilling during 2010 and 2011 covered an area approximately 1,100 meters east-west by 900 meters north-south. The 2012 drilling will test beyond these limits and test for areas of near-surface supergene copper enrichment. Results are pending.
Interior Alaska
Kinross Gold announced second quarter results from the Fort Knox mine near Fairbanks. The mine produced 71,952 ounces of gold at a cost of US$757 per ounce. As a result of lower head grades and lower gold recoveries, production decreased over the second quarter of 2011 when 77,727 ounces of gold were produced. During the quarter the mill and heap leach processed 13,084,000 metric tons of ore grading 0.51 g/t gold including 9,632,000 metric tons grading 0.33 g/t gold placed on the heap leach pad. Gold recovery in the mill averaged 85 percent. Gold recovery on the heap leach pad was not released.
Freegold Ventures Limited announced additional drilling results from its Golden Summit project near Fairbanks. At the Dolphin zone significant results included 13.3 meters grading 1.08 g/t gold in hole GSDL1214, 48.6 meters grading 1.21 g/t gold in hole GSDL1215, 34.9 meters grading 1.05 g/t gold in hole GSDL1216, 217.2 meters grading 0.76 g/t gold including 80.5 meters grading 1.08 g/t gold in hole GSDL1217 and 531.3 meters grading 0.59 g/t gold including 90.5 meters grading 1.10 g/t gold in hole GSDL1218. Additional drilling is on-gong in the Dolphin zone and the company expects to update its resource estimate at Dolphin by early October.
In late July, Sumitomo Metal Mining announced the pouring of its 2 millionth ounce of gold at the Pogo mine near Delta. The mine feeds some 2,500 tons of gold ore per day to the mill and produces about 380,000 ounces of gold per year. More than 330 direct employees and 150 contractors work at the mine. Congratulations Pogo mine!
Alix Resources Corp. announced that it has completed phase one drilling at its Money Rock and West Pogo gold projects in the Goodpaster District. Phase one drilling focused on the West Pogo portion of the project, with two core holes completed for a cumulative total of 610 meters. Both holes encountered metagranite with broad intervals of brecciation, including zones of iron-stained sericite alteration and arsenopyrite. Assays are pending and additional drilling is under way.
Liberty Gold Corp. and partner Endurance Gold Corp. announced that they have staked 19 additional State mining claims at their McCord Creek gold prospect in the Tolovana District. The company recently commenced field work which includes power auger soil sampling, rock sampling, possible trenching and geophysics, with the objective of defining drill targets for the 2013 field season.
Alaska Range
Corvus Gold Inc. announced that joint venture partner Westmountain Index Advisors Inc. has commenced exploration at the Terra property. Planned work will include installation of the on-site bulk sample gold mill and commencement of gold production, 1,200 meters of core drilling to further extend the Ben Vein structure, completion of a resource update and technical report expected in late 2012, commencement of engineering work to support a Scoping Study of an underground mining operation expected in mid-2013, and initial surface work on the Camp Creek Midway porphyry target.
Northern Alaska
Andover Mining Corp. announced discovery of six new prospects at its SUN copper-silver-lead-zinc-gold volcanogenic massive sulfide project in the Ambler District.
Initial results from three of these prospects (SAL, STU, and Picnic Creek) have generated immediate drill targets that will be tested this summer.
At the SAL prospect, strong alteration with strong iron staining within the prospective rock package has been mapped for approximately 200 meters along strike before disappearing underneath cover.
Grab samples from gossan and altered rocks in the area have returned assay values of up to 1.8 percent copper, 1.48 percent lead, 1.34 percent zinc, 42 g/t silver, and 0.54 g/t gold.
The target has never been drilled.
At the STU prospect, strong alteration and gossan within the prospective rocks have been mapped for approximately 100 meters along strike before disappearing beneath cover.
Grab samples from the STU area have returned values of up to 2.04 percent copper, 0.95 percent lead, 1.21 percent zinc, 64 g/t silver and 0.49 g/t gold.
The target has never been drilled.
At the Picnic Creek target area, altered and iron stained gossanous rocks of the prospective package outcrop in a roughly 50 meter by 100 meter area.
However, much of the area where the prospective rocks are thought to occur is covered by extensive talus.
Ferricrete gossans are currently forming from natural ground water springs, indicating weathering sulfide mineralization may be present beneath the talus cover.
Grab samples of oxidized rocks have run up to 0.26 percent copper, 250 parts per million lead, 450 parts per million zinc, 4.5 g/t silver, and 0.42 g/t gold.
Limited drilling has been conducted on this prospect in the past.
Goldrich Mining Co. and partner NyacAU, LLC reported the purchase of a production royalty at its Chandalar project in the Brooks Range. The 2 percent royalty interest was purchased for US$250,000 from Jumbo Basin Corp. The royalty was purchased in anticipation of beginning early production in August this year. Full-scale commercial production is expected to begin by June 2013.
Southeast Alaska
Hecla Mining announced second 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 US$1.03 per ounce versus US52 cents per ounce in the year previous period.
Mining costs per ton were up by 23 percent and milling costs per ton were down by 12 percent in the second quarter compared to the same period in 2011.
The higher mining costs were due primarily to increased use of contract miners, while the lower milling costs resulted from improved mill throughput.
The average grade of ore mined during the quarter was 9.57 ounces of silver per ton, down significantly from the average grade of 10.47 ounces per ton that was mined in the second quarter of 2011.
During the second quarter the mine produced 1,365,093 ounces of silver, 13,257 ounces of gold, 4,873 tons of lead and 16,073 tons of zinc.
The mill processed 197,432 tons of ore during the quarter.
In addition to production, exploration and definition drilling continued during the second quarter.
Underground drilling continued to extend mineralization along trend of the Southwest Bench, Gallagher, 200 South, 5250 and 9a Zones.
Drilling at the Southwest Bench has defined high-grade extensions beyond the current resources, connected isolated mineralized bodies into continuous zones, and defined a new lens of mineralization.
Highlights from drilling of the Southwest Bench include intercepts of 0.39 ounces of gold per ton, 14.83 ounces of silver per ton, 10.5 percent lead and 22.4 percent zinc over 58.4 feet, 0.14 ounces of gold per ton, 56.2 ounces of silver per ton, 8.8 percent lead and 16.6 percent zinc over 42.6 feet and 0.11 ounces of gold per ton, 3.9 ounces of silver per ton, 6.5 percent lead and 38.1 percent zinc over 24.6 feet.
Drilling of the Gallagher Zone continues to extend mineralization further to the southeast beyond the current resource boundaries.
High-grade mineralization at both the 5250 and 9a Zones has been defined beyond the current resources and is open further to the south.
Coeur d'Alene Mines announced second-quarter 2012 production results from its Kensington gold mine.
The mine produced 21,572 ounces of gold at a cash cost of US$924 per ounce and a total production cost of US$1,799 per ounce.
Cash costs are expected to decrease to US$900 per ounce by year-end as sustainable production levels have been achieved and all major improvement projects have been completed.
During the second quarter, the mill processed 97,794 tons of ore grading 0.23 ounces of gold per ton.
Mill recoveries averaged 94.2 percent.
Exploration consisted of 4,534 meters of core drilling, nearly all of which was devoted to infill drilling of the Raven zone, which is located about 670 meters due west of the Kensington ore body.
In addition, drilling recommenced on a new target, Kensington South, where drilling encountered encouraging gold grades, veining and alteration similar to that of the main Kensington deposit.
Ucore Rare Metals Inc. announced completion of mineral separation studies on samples from the Bokan Mountain rare earth element deposit on Prince of Wales Island.
Leaching tests of the rare earth rock products were followed by a purification process that was successful in removing impurities from the leach solutions prior to precipitation of a bulk mixed rare earth element concentrate.
These bench-scale tests have demonstrated that over 99 percent of detrimental contaminant elements can be removed from Bokan Mountain ore prior to the precipitation of a mixed rare earth element concentrate.
The studies represent one of the final components required for the release of a comprehensive preliminary economic assessment due out shortly.
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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