Bottom feeders hunt projects in Alaska

The unseasonably, interminably, unspeakably cold spring that is delaying mineral exploration and development work in Alaska this year is being mimicked by a financial chill that is affecting Alaska exploration efforts just like it is the rest of the world. Not to put too fine a point on it, but from a mineral exploration standpoint, Alaska is shaping up to be as dead as a doornail this summer (ever wonder where that saying came from ... but I digress.).

How dead? Try this statistic on for size: Of the 49 exploration projects I have been tracking around the state, the two largest (Pebble and Donlin), will account for almost two-thirds of this year's estimated exploration expenditures. The top five will account for almost 85 percent of this year's estimated exploration expenditures. Perhaps equally distressing is the fact that more than half of the 49 "active" exploration projects are planning to spend little or nothing on exploration.

Granted, not everyone announces their annual exploration budgets, but many companies do and even if they don't put a number on the work programs they describe, it usually is not hard to estimate what they might spend.

Another arresting quasi-factoid is the dramatic year-on-year decrease in exploration expenditures from Alaska's all-time high of US$365.1 million in 2011. It is a quasi-factoid because 2012 and 2013 exploration expenditures are still estimated amounts; however, based on what I can see in my rutilated quartz crystal ball, 2013 exploration expenditures are looking like they will be down at least 25 percent from what we saw in 2012 and will plunge more than 50 percent from the peak exploration spending levels of 2011.

As is always the case when slow times hit the mining industry, counter-cyclical buying (some call it bottom feeding) is occurring, quietly and deliberately, but the result will be new faces and names in the list of active Alaska mineral industry entities.

Western Alaska

Teck Resources Ltd. (75 percent) and partner NANA, Inc. (25 percent) reported first quarter 2013 results from its Red Dog mine.

In the first quarter, the mine produced 128,200 metric tons of zinc in concentrate, almost identical to the year-previous period.

Zinc ore grade decreased slightly to 17.8 percent, while mill recoveries fell slightly to 82.3 percent.

The mine also produced 23,000 metric tons of lead in concentrate.

Lead ore grade decreased to 3.9 percent, while mill recoveries increased to 66.8 percent.

The mine posted a US$71 million operating profit for the quarter, up significantly from the US$64 million profit a year earlier.

Mill throughput increased to 873,000 metric tons versus 859,000 metric tons a year ago.

Zazu Metals Corp. announced that a second Cost Reimbursement Agreement had been signed with Alaska Industrial Development and Export Authority.

This agreement funds studies commissioned by AIDEA to evaluate the potential use of AIDEA's haul road and port that currently services Teck Resources Ltd.'s Red Dog mine, for hauling and shipping concentrates from Zazu's Lik deposit.

These studies satisfied AIDEA's requirement that the project demonstrate sufficient viability to warrant further support. The second study will determine if modifications are required for handling Lik concentrate, based on current mine output expectations.

It also will produce a Term Sheet detailing the expected cost for Zazu to use the road and port facilities.

Current resources at Lik include Lik South with an indicated mineral resource of 18.74 million metric tons grading 8.08 percent zinc, 2.62 percent lead and 52.8 grams per metric ton silver, plus an inferred mineral resource of 1.23 million metric tons grading 6.80 percent zinc, 2.12 percent lead and 35 g/t silver, at a 5 percent zinc cut-off grade.

Lik North is an additional 5.18 million metric tons grading 9.65 percent zinc, 3.25 percent lead and 51 g/t silver of inferred resource at a 7 percent zinc cut-off grade.

Graphite One Resources Inc. announced initial beneficiation tests at its Graphite Creek graphite project north of Nome. These tests demonstrated that a leaching process could produce graphitic carbon from a rough concentrate with a purity of 99.2 percent. Metallurgical test work is ongoing to develop a simple concentration and leaching process to produce an ultra-high purity (99.9 percent) graphite product.

Millrock Resources Inc. said had terminated its agreement with Bering Straits Native Corporation on the Bluff project and a portion of the Council project.

Full Metal Minerals Ltd. announced that it has agreed to sell a 100 percent interest in its Pebble South project to Pebble Limited Partnership, a 50:50 partnership between Anglo American plc and Northern Dynasty Minerals Ltd. The sale price was US$750,000.

Silver Predator Corp. announced that it has completed an option agreement with privately-held Plan B Minerals Corp. whereby Plan B can earn up to a 100 percent interest in the Illinois Creek gold-silver property.

Under the agreement, Plan B will pay an aggregate US$264,500 and a total of 2 million common shares of Plan B through December 2016.

Silver Predator will retain a 0.5 percent net smelter returns royalty in the property, provided a feasibility study establishes a minimum proven mineral resource of 500,000 ounces of gold.

The Illinois Creek property is centered on a 10-kilometer- (six miles) long east-west striking mineralized zone with related precious and base metal occurrences.

The most prominent mineralized area is an open pit heap leach gold-silver mine that was productive in the 1996-1998 time frame.

Plan B plans a field program for 2013 that could include drilling in and around the open pit, with the goal of expanding and confirming zones of gold and silver in the quartzite host rocks.

In 1997, the geologic resource was estimated to be 7,761,000 tons of ore grading 0.063 ounces-per-ton gold and 1.38 oz/t silver.

TNR Gold Corp. announced completion of a resource estimate at the Shotgun gold project near Dillingham.

The Shotgun Ridge prospect contains a Canadian National Instrument 43-101-compliant inferred mineral resource of 20,734,313 metric tons grading 1.06 g/t gold for a total of 705,960 oz gold using a 0.5 g/t gold cut-off.

This mineral resource estimate is based on 34 diamond drill holes totaling 4,932.3 meters.

The mineralization at Shotgun Ridge is crops out at surface on a topographic high point and is only defined to a vertical depth of 150 meters.

Mineralization appears to be open both at depth and along strike.

There are several targets at surface in close proximity to the defined resources that have never been drill tested.

These targets will be a priority for future drill campaigns.

Millrock Resources Inc. said it had entered into an exploration agreement with Bristol Bay Native Corporation on about 650,000 hectares (1,606,150 acres) of land containing at least three known porphyry copper occurrences, Kawisgag, Mallard Duck Bay and Bee Creek.

At the Kawisgag prospect, targets are immediately ready to drill.

There are two main centers of mineralization and alteration which locally contain disseminated and vein chalcopyrite, molybdenite and pyrite at surface.

The Mallard Duck Bay prospect is a zone of hydrothermal alteration covering an area greater than eight square kilometers.

Limited exploration indicates that mineralization is associated with a diorite stock.

Previous worked identified a strong chargeability induce polarization anomaly coincident with exposed mineralization in a potassic alteration zone but this target never drilled.

Mineralization at the Bee Creek prospect is hosted in hornfelsed sediments intruded by a multiphase diorite intrusive rock containing mineralized veins and disseminated chalcopyrite, molybdenite and pyrite.

A broad, central, potassic alteration zone bordered by a discontinuous halo of phyllic alteration is exposed at surface.

The prospect was initially explored by Bear Creek Mining with five drill holes in 1976.

In 2005 and 2006, Metallica Resources Inc. and Full Metal Minerals Ltd. carried out geochemical and geophysical surveys, and drilled two holes.

One of the holes intersected 118 meters averaging 0.31 percent copper, 0.009 percent molybdenum and 0.126 parts-per-million gold with 20 meters of 0.66 percent copper and 0.255 ppm gold.

Under terms of the deal, Millrock must incur exploration expenditures of US$5 million and pay US$725,000 prior to Dec. 31, 2019.

A sliding-scale net smelter return royalty ranging from 1 percent to 2 percent is payable on gold with a 1 percent net smelter return royalty due on production of all other metals.

Full Metal Minerals Ltd. and Antofagasta Minerals S.A. announced an initial NI 43-101-compliant inferred mineral resource estimate at the Pyramid copper-gold-molybdenum project on the Alaska Peninsula.

At a 0.21 percent copper equivalent cut-off, total contained copper in the Inferred resource category is estimated to be 1.338 billion pounds of copper, 74 million 1bs of molybdenum and 488,000 oz gold.

Both near-surface supergene enriched mineralization as well as hypogene copper mineralization were modeled and interpolated.

At a 0.21 percent copper- equivalent cut-off, this near surface supergene enrichment zone hosts 93.7 million metric tons averaging 0.40 percent copper, 0.019 percent molybdenum and 0.092 g/t gold, or 0.55 percent copper-equivalent.

This equates to 823 million lbs copper, 40 million lbs molybdenum and 277,000 oz gold.

The hypogene zone hosts 79.1 million metric tons averaging 0.26 percent copper, 0.020 percent molybdenum 0.083 g/t gold, or 0.45 percent copper-equivalent at a 0.21 percent copper-equivalent cutoff.

This equates to 514 million lbs copper, 35,000,000 pounds of molybdenum and 212,000 oz of gold.

The mineral resource estimate shows that the hypogene mineral resource remains open to depth and along strike in most areas, and the higher grade supergene enriched mineralization is also open for expansion in several areas.

Under zero to 90 meters of leach cap, the Pyramid deposit hosts a supergene enrichment blanket, dominated by chalcocite and local covellite mineralization.

The supergene blanket has a variable depth, extending to below 250 meters surface in some areas.

This 2013 initial resource estimate is based on 30 drill holes totaling 7,486 meters completed by Full Metal and Antofagasta during 2010 to 2012 and an additional 19 shallow historic holes totaling 1,921 meters completed by Quintana-Duval during the mid-1970s.

Interior Alaska

Kinross Gold announced first quarter 2013 results from their Fort Knox mine.

The mine produced 93,252 ounces at a cash cost of US$558 per ounce versus 61,716 ounces at a cash cost of US$861 per ounce in the year-previous period.

This impressive performance occurred in spite of the expected winter slowdown of production from the heap leach and lower mill output as a result of harder ore and slightly lower grade.

The harder ore Fort Knox encountered during the quarter is not expected to continue in the second quarter.

The mine processed 7,361,000 metric tons of ore with the mill treating 2,894,000 metric tons grading 0.88 g/t gold with a mill recovery of 84 percent.

The heap leach saw additions of 536,000 metric tons of ore grading 0.25 g/t gold.

The mine continued pre-production stripping for its phase 7 pit and valley leach expansion.

Freegold Ventures Ltd. reported winter 2013 drilling results from its Golden Summit project near Fairbanks.

Drilling targeted infill and expansion at the 6 million ounce Dolphin/Cleary Hill deposit.

Significant results include 134.9 meters grading 0.71 g/t gold in hole GSDL1301, 112 meters grading 1.03 g/t gold in hole GSDL1302, 120.1 meters grading 0.87 g/t gold in hole GSDL1304, 49.7 meters grading 1.02 g/t gold in hole GSDL1305, 106.7 meters grading 0.54 g/t gold in hole GSDL1306, 30.6 meters grading 0.93 g/t gold in hole GSDL1309 and 34.6 meters grading 0.91 g/t gold in hole GSDL1310.

Holes GDSL1301 through GSDL1306 were drilled in a fence approximately 80 meters east of the previous drilling.

Results indicate the mineralization within the Dolphin intrusive remains open to the east and to depth, with the mineralization generally increasing in in grade at depth.

Hole GSDL1307 through 1310 were drilled along the north edge of the current resource and affirm the potential for expansion of the resource to the north.

Freegold is also working towards completion of an updated NI 43-101-compliant resource based on the oxide component of the current resource inventory.

The oxide cap at Golden Summit is confined largely to the upper 200 feet of the rock column.

The company also indicated that it was planning additional exploration on the remaining 99 percent of the Golden Summit project.

High priority target areas include reverse circulation drilling from 1998 in the Tamarack zone, which returned 62 meters grading 0.55 g/t gold in hole TKR 98-01 and 130 meters grading 0.68 g/t gold in hole TKR 98-07, reverse circulation drilling conducted between 1992 and 1998 in the Goose Creek zone which included GSR92-01 which intersected 36 meters grading 0.8 g/t gold, and 8.1 g/t silver, GSR 92-04 which returned 19.8 meters grading 1.72 g/t gold, GCR97-01 which returned 49 meters grading 4.1 g/t gold and 55 meters grading 30 g/t silver, GCD 97-01 which intersected 19 meters of 1.0 g/t gold and 28.4 g/t silver and GCR98-01 returned 18 meters of 3.8 g/t gold and 6.3 g/t silver.

Historical reverse circulation drilling in the Too Much Gold area returned 27 meters grading 2.3 g/t gold in hole TMG9606, and 38 meters grading 0.95 g/t gold in hole TMG 9608.

In the Iowa area Hole IAR98-01intersected 24 meters grading 0.74 g/t gold in, and hole IAR 98-03 intersected 27 meters grading 0.72 g/t gold.

Teryl Resources Corp. announced drilling plans at its Fish Creek property adjacent to Kinross Gold's Fort Knox mine. The company plans to drill six holes to test an intrusive target. These targets were defined in part by previously completed airborne geophysical surveys.

International Tower Hill Mines Ltd. provided a corporate update at its Livengood gold project.

The company is focusing on completing all the engineering and analysis to support the completion of its Feasibility Study and the environmental work needed to maintain its current schedule.

The company indicated that in light of the recent decrease in the gold price and its effect on the gold mining industry, the company has prepared for the potential of a continuing lower gold price and has developed an alternate work program.

The company revised its 2013 program to limit spending to the engineering and analysis required to support the completion of the base case feasibility study and the environmental baseline work and project documentation needed to continue to advance the project toward the permitting stage along with the company's corporate activities and compliance matters.

As the feasibility study nears completion, the company indicated that it would review its budgetary and financing options, including consideration of a future strategic alliance to assist in further development, permitting and construction costs.

Alaska Range

Heatherdale Resources Ltd. announced that it has returned the Delta polymetallic project in the eastern Alaska Range to Agnico Eagle Mines Ltd. and no longer holds an interest in the project. The company indicated that current market conditions require the company to focus its efforts on the advanced-stage Niblack polymetallic project in southeastern Alaska.

WestMountain Gold, Inc. reported that heavy equipment had been mobilized to its Terra project in anticipation of a May startup of facilities construction, including a larger airstrip, a road network and a mine portal opening for underground development. These efforts will support its 2013 bulk sample milling and mining activities at the Ben Vein Zone.

Northern Alaska

NovaCopper Inc. announced the signing of a memorandum of understanding with the Alaska Industrial Development Export Authority to investigate the viability of permitting and constructing an industrial access road to the Ambler mining district and the company's Upper Kobuk mineral project which encompasses both the Bornite and Arctic deposits.

The agreement formalizes the roles of each party as they relate to permitting and funding the Ambler Mining District Industrial Access Road.

Since 2009 considerable work has been carried out by the Alaska Department of Transportation and Public Facilities, which has evaluated various road options in the region since 2009, including numerous possible access routes and the collection of environmental baseline data.

The State of Alaska has expended about US$10 million on these studies.

A further US$8.5 million is included in the 2013 fiscal budget to support permitting activities for the Ambler Mining District Industrial Access Road.

Goldrich Mining Co. and NyacAU, LLC announced successful completion of mobilizing of equipment and supplies needed for its 2013 placer gold drilling program and its placer mining operation this summer at Chandalar, Alaska. Total investment in equipment and assets mobilized to the site for both exploration and mining activities, including equipment previously purchased, now exceeds US$8 million.

Southeastern Alaska

Hecla Mining announced first-quarter 2013 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$5.02 per ounce versus US$2.24/oz in the year previous period, due primarily to lower by-product credits as a result of lower by-product production.

Mining and milling costs per ton were up by 13 percent and 16 percent, respectively, in the first quarter compared to the same period in 2012.

The increase in milling costs was primarily due to diesel fuel costs related to the generation of more power on-site due to lower availability of less expensive hydroelectric power.

Both mining and milling costs were impacted by an increase in labor costs as a result of higher costs of medical and other benefits and higher salary costs.

Higher mining costs are also the result of higher maintenance costs.

The average grade of ore mined during the quarter was 12.74 ounces-per-ton silver, up from the average grade of 11.08 oz/t that was mined in the first quarter of 2012.

During the first quarter, the mine produced 1,780,524 oz of silver, 13,689 oz of gold, 4,835 tons of lead and 14,072 tons of zinc.

The mill processed 197,823 tons of ore during the quarter.

Silver production in the first quarter was 34 percent higher than the same period in 2012.

This increase was due primarily to 20 percent higher tonnage and 15 percent higher grades compared to last year.

Exploration at the mine made significant progress in defining high-grade extensions to mineralization along the Deep Southwest, 5250 and Gallagher ore trends.

Deep Southwest is a recently discovered zone which lies below and further west of the Southwest Zone.

The geometry of this body is currently being defined but it is open down dip and to the southwest along strike.

Significant intersections include 27.1 oz/t silver, 0.39 oz/t gold, 13.3 percent zinc and 6.1 percent lead over 8.6 feet (Deep Southwest); 21.5 ounces of silver per ton, 0.31 oz/t gold, 8.9 percent zinc and 4.1 percent lead over 10.5 feet (Deep Southwest) and 21.9 oz/t silver, 0.05 oz/t gold, 5.8 percent zinc and 2.8 percent lead over 24.6 feet (5250 Zone).

Drilling will continue in an effort to define and expand the Deep Southwest further southwest and the 5250 Zone to the south; however, the emphasis is expected to shift to in-fill drilling of the 200 South in an effort to convert resources to reserves.

The company also announced year-end 2013 reserves and resources for the mine including proven reserves of 12,000 tons grading 9.3 oz/t silver, 0.095 oz/t gold, 2.7 percent lead and 7.8 percent zinc and probable reserves of 7,845,600 tons grading 12.0 oz/t silver, 0.092 oz/t gold, 3.4 percent lead and 9.0 percent zinc.

In addition, the mine contains 448,600 tons of indicated resources grading 5.9 oz/t silver, 0.119 oz/t gold, 3.2 percent lead and 7.0 percent zinc and 3,784,500 tons of inferred resources grading 11.4 oz/t silver, 0.100 oz/t gold, 2.4 percent lead and 6.2 percent zinc.

I know we are not supposes to do this, but if you add up the silver in all categories, the mine is carrying more than 140 million ounces of silver in resource!

Coeur d'Alene Mines announced updated first-quarter 2013 production results from its Kensington gold mine near Juneau.

The mine produced 25,206 ounces of gold at a cash cost of US$1,055 per ounce following fourth quarter 2012 production of 28,717 gold ounces at cash operating costs of US$1,065 per ounce.

During the first quarter, the mill processed 129,057 tons of ore averaging 0.20 oz/t gold, 13 percent lower than the fourth quarter 2012, but 11 percent higher than first quarter 2012.

Mill recoveries came in at 96.2 percent.

The gold grade is expected to gradually improve during the remaining quarters of 2013 as higher-grade stopes are mined and processed.

During the first quarter, rebuilds of generators limited backfilling rates, which negatively impacted overall efficiency and costs.

The mine is expected to produce 108,000 to 114,000 ounces of gold during 2013.

Development drilling during the first quarter was focused on production definition drilling in order to develop mining blocks from year-end reserves.

Exploration drilling focused on upgrading and expanding existing mineralized zones to be used in subsequent reserve estimation, mostly at zones 10 and 50 of the main Kensington deposit.

In addition, drilling was performed at the Comet target, which is situated about 5,000 feet southeast of the high-grade, narrow vein Raven deposit.

New assay results from the Kensington South zone showed potential for Kensington-style mineralization from this large, relatively untested area.

To facilitate future drilling, construction of a new cross-cut drift began in the first quarter with completion of 430 feet of the planned 750 feet of drift.