Hope for rebound in recent mining news

In an industry eager for even a scintilla of good news, a recent report from industry analyst SNL Metals & Mining recently gave the good-news-starved industry a bit of hope. SNL's article, titled, "Too early to start celebrating a recovery in the sector," indicated that although the downward trend in mineral exploration has not broken yet, the market has stopped down-grading mining equities, with a modest gain in market capitalization since its most recent low in mid-2013.

The steady decline in market value of mining companies during a period of strong demand and commodities prices has baffled financial gurus and frustrated mining company CEOs for the past three years.

Everyone hopes that we are seeing the beginning of the end of this phenomenon.

Right on the heels of this upbeat global news was some encouraging local news: A recent economic report, issued by Alaska Department of Labor and Workforce Development, forecasts a growth of non-oil mining employment by 24.8 percent, or 683 new jobs, from 2012 to 2022.

This growth forecast is driven largely by increased commodity prices and expansion of existing operations.

Mines and projects that are considered likely contributors to the growth in mining jobs include Kinross Gold's Fort Knox gold mine, Sumitomo's Pogo gold mine, Coeur Mining's Kensington gold mine, Teck and NANA Inc.'s Red Dog mine, NovaGold Resources/Barrick Gold's Donlin gold project, Ucore Rare Earth's Bokan - Dotson Ridge rare earth project, NovaCopper's Upper Kobuk polymetallic project and Heatherdale Resources' Niblack polymetallic project.

The projected 24.8 percent growth in non-oil mining labor is second only to the 25 percent growth projected for the health care industry.

Western Alaska

NovaGold Resources Inc. announced third-quarter financial data and update on the permitting process at the Donlin gold project, a 50:50 joint venture with Barrick Gold Corp. on land leased from Calista Corp. The company indicated that it is about half-way through a four-year permitting process with most of its current efforts focusing on the draft Environmental Impact Statement that is on schedule to be issued for public comment in 2015.

The partners continue to work simultaneously with several permitting agencies on additional major permit applications, such as air quality, water discharge and usage, gas pipeline, rights of way, wetlands and dam safety.

The company's share of total expenditures related to Donlin through the end of September was $11.4 million, on-track with the company's originally approved budget of $15 million for 2014.

Northern Dynasty Minerals Ltd. announced that U.S. federal court in Alaska granted a motion to dismiss the case by the Pebble Limited Partnership, State of Alaska and Alaska Peninsula Corporation challenging the U.S. Environmental Protection Agency statutory authority to pre-emptively impose development restrictions on the Pebble project prior to the submission of a proposed development plan. The largely administrative decision deferred judgment on the original suit until a final determination has been made by the EPA. This decision has simply deferred the case until or if the EPA makes a negative decision on Pebble project prior to the filing of a permit under the Clean Water Act.

Alaska newcomer Southern Crown Minerals Ltd. announced exploration results from its Luna-Quicksilver project near Bethel.

The company reported that a 102 line-kilometer ground magnetic survey has highlighted the potential for felsic dykes and sills within the altered surrounding sediments.

In addition, the survey has highlighted a major northeast trending structural break southeast of the project that can be observed readily in the field.

Several cross-cutting structures and a potential breccia pipe have been interpreted from the magnetic data requiring field validation.

Scout drilling has shown the intensity of bedrock weathering increases in proximity to the fault zone and evidence of the fault can be seen in geological outcrops.

The company also reported a total of 1,600 feet of bedrock channels have been exposed from strategic locations along the stream cut banks around Luna-Luna East prospect.

Analytical results are pending on 160 samples collected during this work.

During August an auger rig was transported to the Luna-Quicksilver prospect to conduct geochemical scout drilling through the overburden to test the top of bedrock.

Early geological logging has located the Luna Fault and associated fault clays, sulfides associated with the Luna outcrop and dykes located southeast of the Luna fault.

Analytical results are pending on this auger testing.

Millrock Resources Inc. announced that it plans to raise gross proceeds of up to $3.5 million through the sale of 70 million units priced at 5 cents per unit. Each unit consists of one common share and one share purchase warrant with each warrant entitling the holder to purchase one additional common share at a price of $0.07 per share for a period of two years, and thereafter at a price of 10 cents per share for an additional period of three years. The company also indicated that that immediately following the closing of the financing, it will consolidate its stock on a 10:1 basis, leaving the company will about 30 million fully diluted shares outstanding.

Interior Alaska

Freegold Ventures Ltd. announced results of its ground geophysics program at its Shorty Creek copper gold porphyry project.

The work has defined significant chargeability anomalies which are coincident with strong copper, gold and bismuth geochemistry.

The company's 2014 programs has consisted of 28.6 line kilometers of induced polarization surveys, collection of 354 soil geochemical samples and staking of additional claims that bring the property claim position to 26,087 acres.

Results show a strong chargeability anomaly which is over two kilometers long and one kilometers wide in the northwestern area of the grid.

Coincident with the geophysical anomaly strongly anomalous copper values (up to 669 parts per million) with significant molybdenum (up to 235 ppm) were returned.

In the southern portion of the grid, where previous drilling in 1989-1990 was completed, a significant chargeability zone was identified.

Previous limited drilling in the area appears to have targeted the higher resistivity with some of the best copper grades appearing to be associated with the increasing chargeability to the southwest.

Strongly anomalous gold (up to 480 parts per billion) and bismuth (up to 276 ppm) are associated with the area of increasing chargeability.

Contango ORE Inc. announced that it has executed an agreement with Royal Gold Inc. for the formation of a joint venture to advance exploration and development of its Tetlin project near Tok. Upon closing of the agreement, the parties will form a limited liability company to hold the joint venture assets, and the joint venture will be managed according to a joint venture agreement. Royal Gold will invest $5 million initially to fund exploration activity, and will have the option to earn up to a 40 percent economic interest in the joint venture by investing up to $30 million (inclusive of the initial $5 million investment) prior to October 2018.

Alaska Range

Alaska newcomer Nortec Minerals Corp. announced that it has signed two Memoranda of Understanding to directly acquire 100 percent interest in the Golden Zone project near Cantwell.

One agreement was signed with Chulitna Mining Co. while the second was signed with Mines Trust Co. and Hidefield Gold Ltd. / Hidefield Gold (Alaska) Inc. Nortec will commission an update of the existing industry-compliant report on the project and commission metallurgical studies to confirm and update the previous studies.

The work will include an update of the current resource estimates and preparatory work for initiation of a preliminary feasibility study.

Current resources on the project include measured resources 1,973,915 metric tons grading 3.41 grams-per-metric-ton gold, 16.62 g/t silver and 0.11 percent copper at 1 g/t gold cut-off (196,399 ounces gold), indicated resources of 1,195,416 metric tons grading 2.37 g/t gold, 16.25 g/t silver and 0.09 percent copper at 1 g/t gold cut-off (82,763 oz gold).

Welcome to Alaska Nortec Minerals Corp.!

Miranda Gold Corp. announced exploration results at its Willow Creek project in the Willow Creek District near Anchorage.

The company recently collected 234 soil samples along with rock samples of quartz vein rubble, the results of which suggest that the vein system mined on Bullion Mountain extends beyond a fault that bounded historic production.

The gold in soil anomaly is 800 meters long and open but the highlights of the sample program are the discovery of three quartz vein sub-crops that assayed 50.74 g/t gold, 17.05 g/t gold and 18.15 g/t gold.

The company thinks that the Lucky Shot Ridge and Bullion Mountain veins are fault offsets of the same zone of high-grade gold quartz veins and that the area where the soil grid is located offers exploration potential for a new discovery.

The soil anomalies show discrete breaks from background and are defined as having gold values of greater than 0.100 parts per milling to 2.00 parts-per-million gold.

The soil anomaly remains open to further expansion.

Gold Torrent Inc. has completed its due diligence on the project and is working with Miranda to finalize a joint venture agreement.

Once the Joint Venture Agreement is signed Miranda anticipates that Gold Torrent will begin permitting, underground drilling, and other work needed to expand the resource base and bring the Coleman vein into production.

Southeast Alaska

Coeur Mining Inc. announced third quarter 2014 production results and new exploration results from its Kensington gold mine near Juneau.

The mine produced 30,773 ounces of gold, a 10 percent increase from the third quarter of 2013, due primarily to higher head grades and offset by lower mill throughput due to mill maintenance downtime.

Cash operating costs per ounce were not announced.

Average mill head grade of 0.23 oz per ton gold was significantly higher than the 0.20 oz/t head grade averaged during the third quarter of 2013.

Average recovery was 93.0 percent.

The operation milled 147,097 tons of ore during the quarter.

Estimated 2014 total production from Kensington is 107,000-112,000 oz of gold.

On the exploration front, the company announced that drilling encountered high-grade gold in Kensington South (Zones 10 and 20) immediately beneath current production areas, 100 to 200 feet away from current mine development.

Several of the holes have returned grades greater than 1.0 ounce of gold per ton, including hole KX13-069 which returned 4.03 oz/t gold over 2.4 feet, hole KX13-071 which returned 0.969 oz/t gold over 15.2 feet and hole KX14-1560-270-X05 which returned 3.416 oz/t gold over 4.1 feet.

In the Jualin area, exploration of the Jualin Veins 4 and 5 has encountered several multi-ounce gold intercepts.

Underground development at Jualin is planned for 2015 and production from Vein 4 is expected to begin in 2017.

Vein 4 is open in all directions.

Jualin Vein 4 reaches within 300 feet beneath the Jualin portal.

Permitting is underway for underground development at Jualin to provide access to underground drill stations.

Significant drill results from the Jualin area include hole JU13-007 which returned 0.927 oz/t gold over 8.1 feet, hole JU13-011 which returned 0.616 oz/t gold over 10.2 feet, hole JU13-020 which returned 1.611 ounces of gold per ton over 5.8 feet, hole JU14-X015 which returned 5.54 oz/t gold over 8.6 feet and hole JU14-X029 which returned 0.701 oz/t gold over 7.9 feet.

Constantine Metal Resources Ltd. and funding partner Dowa Metals and Mining Co. Ltd. announced additional results from a 10,000-meter 2014 drilling program on its Palmer volcanogenic massive sulfide project near Haines.

Drill hole CMR14-65 returned 89 meters grading 0.79 percent copper, 5.03 percent zinc, 21.1 g/t silver and 0.32 g/t gold.

The 89-meter intersection in hole CMR14-65 near the eastern edge of the EM plate consists of alternating layers of semi-massive to massive barite-sulfide (sphalerite-chalcopyrite-pyrite-pyrrhotite) and mineralized cherty breccia with about 15 percent cross-cutting mafic dykes.

The majority of the intersection is non-conductive barite-sphalerite dominant mineralization, with the lowermost 15.7 meters consisting of massive chalcopyrite-pyrite-pyrrhotite dominant mineralization that correlates with the modeled electromagnetic geophysical conductor.

This hole tested the eastern edge of the South Wall EM conductor, a 400-meter by 400-meter target area modelled from borehole geophysical data.

New drilling has extended the South Wall Zone a further 100 meters west and 50 meters lower in elevation.

South Wall mineralization has now been defined over a vertical distance of greater than 650 meters, and 500 meters along strike.

Other significant drill intercepts from released include hole CMR14-59 in the South Wall Extension which returned 15.4 meters grading 1.03 percent copper, 2.88 percent zinc, 21 g/t silver and 0.16 g/t gold.

Additional borehole geophysical surveys have been added to the program to help refine targeting of the South Wall EM zone.

Arrowstar Resources Ltd. announced that it had terminated its option on 49 claims at its Port Snettisham iron ore project near Juneau.

The company retained 21 claims covering the area where a second magnetic anomaly was identified during recent exploration.

The company's internal estimates suggest that using an expected freight cost of $20 per metric ton, a loading cost of $5 per metric ton and an $80 million capital expenditure, the planned operation did not provide sufficient profit at 2 million tonnes a year production to adequately reward shareholders.

In addition, the geochemistry from the 109 samples taken after extensive testing showed that the grind size would have to be reduced to 1 millimeter to create a product with 63.5 percent iron, adding an additional $3-$4 per metric ton in operating costs.

The samples containing representative magnetite iron ore also showed that the ferrous iron value was low and that a dual processing system would have to be implemented as 75 percent of the iron extracted was hematite or altered magnetite (non-magnetic) and only 25 percent was magnetic that could be separated by high speed magnetic drums.

High concentrations of silica and titanium were present in the high iron samples, both of which reduce the value of the final product.

Ucore Rare Metals Inc. announced the issuance of a request for proposals to engage a consulting firm to prepare a bankable feasibility study for the company's Bokan-Dotson Ridge heavy rare earth deposit.

The preparation of the feasibility study has been timed to allow responding consultants to have access to final metallurgical work and the operation of the forthcoming Bokan pilot plant before finalizing the feasibility study.

The study also will be able to utilize results from the 2014 drilling programs conducted on the project, including 2,500 meters of infill drilling, 1,500 meters of deep targeted drilling to expand the existing resource at depth and 1,000 meters of geotechnical and groundwater drilling to support environmental analysis and the permitting process.

In order to shorten the timeline to construction, the permitting process will continue during the preparation of the feasibility study.

This simultaneous undertaking is designed to ensure that mine construction is ready to commence with minimal delay as soon as company received the required mine construction permits.

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).

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• Contact Curt Freeman