Exploration expenditures drop in 2014

The state of the world's exploration industry was recently summarized in SNL Metal & Mining's annual "World Exploration Trends" publication, released at the Prospectors and Developers Association of Canada convention in Toronto. Not surprisingly, it painted a grim picture of 2014, a year we are all glad to have behind us.

The statistics indicate that worldwide exploration expenditures declined a further 26 percent to $11.4 billion, compared with $15.2 billion in 2013 and record expenditures of $21.5 billion in 2012.

The combined double whammy of decreasing commodity prices and lackluster investor confidence that continued into 2015 forced further reductions in exploration budgets worldwide.

The decline in Alaska's exploration spending was nearly identical in scale to that of the worldwide scene.

As in years past, Latin America was the dominant exploration destination of choice, pulling in 27 percent of the exploration funds spent around the globe.

Africa was a distant second at 16 percent, followed by Canada at 14 percent, Eurasia at 13 percent and Australia at 12 percent.

Exploration in the United States amounted to only 6 percent of the global spend, with three states, Nevada, Arizona and Alaska accounting for 71 percent of the country's spending in the sector.

As a result of this dessication of exploration budgets, the number of new discoveries and the volume and value of new resources announced have declined steadily in the past three years.

For example, only 50 new resource estimates were released in 2014, compared with 68 in 2013 and 168 in 2012, and the value of these resources totaled $130.6 billion, $87.1 billion and $366.5 billion for 2014, 2013 and 2012, respectively.

SNL's forecast for 2015 was not encouraging: more of the same.

But gloom and doom does not appear to be the only items on Alaska's plate for 2015.

Compared to this point in 2014, significantly more and larger exploration budgets have been approved and more exploration programs are moving forward when compared to 2014.

Like the sound of that!

Western Alaska

Graphite One Resources Inc. reported final 2014 drill results and a new resource estimate for its 100 percent-owned Graphite Creek project located near Nome.

The results of the final 10 diamond core holes from 2014 include 42.81 meters of 6.27 percent graphite carbon, including 6.78 meters of 9.14 percent graphite carbon and 9.86 meters of 12.46 percent graphite carbon in hole 14GCH102, 24.56 meters of 6.76 percent graphite carbon including 18.31 meters of 8.11 percent graphite carbon in hole 14GCH120 and 38.80 meters of 7.80 percent graphite carbon, including 17.92 meters of 13.37 percent graphite carbon in hole 14GCH016.

All 10 holes intercepted significant widths of near-surface graphite mineralization along 700 meters strike and drilling continued to show good continuity along strike and down dip.

The company also updated its resources at the project which now include indicated mineral resource of 17.95 million metric tons at 6.3 percent graphite carbon and an inferred resource of 154.36 million metric tons of 5.7 percent graphite carbon, both at 3 percent cutoff grade.

This resource is 14 percent higher grade than the previously announced resource and makes the Graphite Creek deposit the largest published graphite resource in the United States.

Geological interpretation and estimation utilized 48 drill holes, totaling 7,494.35 meters of drilling and constrain the resources to a block measuring 730 meters long strike, 185 meters across strike and 200 meters below surface.

The deposit remains open along strike in both the east and west directions, as well as down dip.

The company will utilize this mineral resource estimate to prepare an initial preliminary economic assessment for the project, expected to be released in the second quarter of 2015.

Interior Alaska

Alaska newcomers Northern Empire Resources Corp. and Sonoro Metals Corp. said they had signed an option agreement on the Hilltop prospect on the western end of Empire's Richardson gold project southeast of Fairbanks. Under terms of the agreement, Sonoro can earn a 60 percent interest in the 31,720-acre Hilltop project by spending C$3 million on exploration activities and issuing to Northern Empire 1 million Sonoro shares prior to Dec. 31, 2019. Immediate plans for the project were not released. Welcome to Alaska Northern Empire Resources Corp. and Sonoro Metals Corp.!

Alaska Range

Strongbow Exploration Inc. said it has entered into an agreement to acquire all the outstanding shares of Thor Gold Alaska, Inc. and, thereby, a 100 percent interest in each of the Sleitat and Coal Creek tin properties.

Under terms of the deal, Strongbow will acquire Thor in exchange for a total of 6,500,000 common shares of Strongbow and a 2 percent NSR royalty on the properties.

The Sleitat property consists of 1,425 hectares of State mining claims located about 137 kilometers northeast of Dillingham.

Past evaluation of the property was conducted by Cominco America Inc. in the mid-1980s and Solomon Resources in the mid-2000s.

Exploration work has consisted of mapping, sampling, geophysical surveys, 4,680 feet of drilling (14 holes) and initial metallurgical studies.

In 1989, The United States Bureau of Mines estimated the Sleitat prospect to contain an "inferred resource" of 25.9 million metric tons at an average grade of 0.224 percent to 0.37 percent tin.

The Coal Creek property consists of 971 hectares of state claims in the Chulitna District north of Anchorage.

Past evaluation of the Coal Creek property was conducted by Houston Oil and Minerals in the early 1980s and Brett Resources in the late 2000s.

Exploration work consisted of mapping, sampling, geophysical surveys, 19,520 feet of drilling (46 holes) and initial metallurgical studies.

In 1982, Houston Oil and Minerals estimated a "preliminary geologic resource" of 4.77 million metric tons grading 0.27 percent tin.

Miranda Gold Corp. provided an update on its activities in the Willow Creek project near Anchorage.

Project operator Gold Torrent plans to move the Coleman deposit to the production stage in 24 to 30 months.

Initial production estimates are for 21,000 ounces of gold annually from the mining and milling of 150 tons per day.

The company anticipates achieving +80 percent gold recovery through use of gravity tables and spiral concentrators, thereby avoiding the use of chemicals to expedite permitting.

The partners hope to complete an update mineral resource estimate and utilize it to complete a preliminary feasibility study by mid-2015.

In addition, the companies are conducting mine planning, mill scoping and permit planning exercises.

No drilling is planned for 2015 however the companies are modeling the old underground workings, drill holes and underground samples to provide targets for 2016.

Both companies agree that with the rehabilitation of the Enserch tunnel, targets can be best drilled from underground drill stations.

Millrock Resources Inc. announced that it has entered a collaboration agreement with a major gold mining company to explore for high-grade gold deposits in Alaska. Under the terms of the agreement the major will fund research and reconnaissance exploration efforts designed to focus on specific target areas in Alaska which the major and Millrock consider have the potential for high-grade gold deposits. Projects approved by the technical committee will each be subject to separate farm-in and joint venture agreements. Such agreements will provide for the major to acquire up to 80 percent of each project, after meeting minimum expenditure obligations, payments and certain other conditions.

Alaska's only operating coal mine, Usibelli Coal Mine, recently released updated economic impact numbers for its Healy mine operations.

The privately-owned mine, in its 72nd consecutive year of operations, employs 140 full-time direct employees and creates 278 indirect jobs, along with 222 down-stream coal-fired power plant jobs.

It pays $14.7 million in direct wages and is responsible for $48.7 million in combined direct, indirect and down-stream wages.

An impressive 100 percent of its employees are Alaska residents! The operation pays $3 million per year in state rents and royalties, contributes $618,000 per year to the Alaska Permanent Fund, and pays $130,000 per year to seven local and borough governments.

Its operations provide coal to six coal-fired power plants and its rail shipments generate about 20 percent of the Alaska Railroad's freight revenue.

The mine produces about 2 million tons per year of low-sulfur, low-ash, low-mercury coal, with about half of this production consumed in Alaska and the other half exported through the Seward export facility.

Pacrim Coal recently presented an update on its Chuitna coal project in south central Alaska.

The project is looking to recover an estimated 300 million tons of sub-bituminous ultra-low-sulfur, low-ash, low-mercury coal.

The market for this coal is the Pacific Rim where it will be used to blend with other sources of coal to improve air quality and combustion aspects.

The project, located on the state's Mental Health Trust land, is expected to provide up to 500 direct jobs during construction, up to 350 direct, full-time, year-round jobs during a 25-year operating life of the mine and up to an estimated 1,200 indirect jobs.

Production is expected to average 12 million metric tons per year from a surface mining operation linked to a loading port on Cook Inlet by an innovative, low-impact overland conveyor system.

This new design will result in a reduction of affected wetlands from 103 acres down to 29 acres, a 72 percent reduction.

One of the most impressive segments of the presentation is related to a wetland survey recently undertaken by the company.

The professional wetlands survey team identified a pond within the project footprint as a high-priority wetland area, not realizing that the pond and nearby environment was a reclaimed coal test pit from a 1980s testing program.

The project is currently in the advanced permitting stages.

Northern Alaska

Goldrich Mining Co. announced that its 50 percent-owned subsidiary, Goldrich NyacAU Placer LLC, will commence mining this month at the Chandalar gold project.

The company also released estimated production guidance information through 2018.

Goldrich NyacAU will begin removing overburden this month and plans to transport seven additional 40-ton rock trucks to the mine in the next few weeks with mining of pay gravel expected in May. The company has completed about 15,000 feet of drilling to date on the upper half of the Little Squaw Creek placer deposit and outlined 10.5 million cubic yards of mineralized material, at an average head grade of 0.025 ounces of gold per cubic yard for an estimated total of roughly 250,000 contained ounces.

The company also released projected gold production and cost information for 2015 through 2018.

Estimated per-ounce production costs using a flat $1,200 per ounce gold price were $713, $623, $489, $451 and $450 for annual production of 16,500, 23,100, 30,200, 32,000 and 32,000 ounces, respectively.

Expected annual before-tax profits range from $12.9 million to $33.5 million, and, as is the case with every gold mine, operating profits are highly sensitive to the price of gold.

Southeast Alaska

Hecla Mining Co. reported year-end 2014 operating results for its Greens Creek mine on Admiralty Island.

The total cash cost per ounce of silver produced for the year was $2.89 per ounce versus $4.42 per ounce in 2013.

The average grade of ore mined during the year was 13.24 ounces per ton of silver, up slightly from the average grade of 13.04 ounces per ton in the year previous.

For the year, the mine produced 7,826,341 ounces of silver, 58,753 ounces of gold, 20,151 tons of lead and 59,810 tons of zinc.

The mill operated at an average of 2,236 tons per day in 2014, which is the highest daily average since the mine began operations in 1989.

Improved economics were the result of lower milling costs and higher by-product credits and silver production.

Milling costs decreased in 2014 compared to 2013 due to increased availability of less expensive hydroelectric power.

The value of by-product metals produced increased as a result of higher zinc and gold production and higher zinc prices, partially offset by lower gold prices.

The mine is forecasting 2015 production of 7.3 million ounces of silver and 55,000 ounces of gold at a silver equivalent cash cost of $4.50 per ounce.

Coeur Mining Inc. reported year-end 2014 reserves and resources at its Kensington mine near Juneau.

The mine reported proven reserves of 400,000 tons grading 0.180 ounces of gold per ton (72,000 ounces) at the Kensington deposit and an additional 17,000 tons grading 0.412 ounces of gold per ton (7,000 ounces) at its newly defined Raven deposit.

Probable reserves at Kensington came in at 2,824,000 tons grading 0.181 ounces of gold per ton (512,000 ounces), while Raven came in at 162,000 tons grading 0.241 ounces of gold per ton (39,000 ounces).

Total combined measured and indicated resources at Kensington and Raven were of 1,566,000 tons grading 0.244 ounces of gold per ton (382,000 ounces), while total combined inferred resources at Kensington and Raven were 1,622,000 tons grading 0.351 ounces of gold per ton (570,000 ounces).

Constantine Metal Resources Ltd. announced that joint venture partner Dowa Metals & Mining Co. Ltd., has approved a $5 million 2015 budget for the Palmer volcanogenic massive sulfide project. This year's drill program will focus on extensions of the encouraging drill results encountered in last year's drilling program. Drill hole CMR14-65, which intersected 89 meters grading 0.8 percent copper and 5.0 percent zinc, the most significant intersection to date, is on the extremity of known South Wall mineralization. The company is also working on an updated mineral resource estimate due out soon.

Ucore Rare Metals Inc. reported that it has entered into an agreement with IBC Advanced Technologies Inc. to acquire the exclusive rights to IBC's SuperLigTM Molecular Recognition Technology for rare earth metal separation, recycling and tailings processing applications at its Bokan-Dotson Ridge rare earth project.

Under the terms of the license agreement, Ucore has agreed to pay a one-time licensing fee to IBC in the amount of $2.9 million subject to the delivery by IBC of a fully operational rare earth SuperLig pilot plant and due diligence review by Ucore.

The Pilot Plant will be constructed at IBC's wholly owned subsidiary in Houston, Texas.

Following completion of the above terms, the companies will form a joint venture, with Ucore having a controlling interest (60 percent) in the joint venture, while IBC will retain a 40 percent beneficial interest.

IBC's SuperLig Molecular Recognition Technology is designed to recover 99 percent of rare earth elements in a clean separation from other metals while using far fewer steps than standard solvent extraction processes.

The environmentally friendly process has been used at commercial scales in other sectors of the mining industry and should reduce both capital and operating costs at Bokan-Dotson Ridge.

For those interested in learning more about molecular recognition technology, see http://mrt.ucore.com/#mrt-summary.

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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