Alaska mines welcome higher gold prices

It is high summer in Alaska and the mining industry is busy breaking rocks, drilling holes, collecting baseline data, making upgrades to mine facilities and producing metal and coal across the state. The effects of declining prices for metals are starting to be felt at the operating metal mines and except for a few projects, the exploration sector continues to wallow in the doldrums, which have plagued the industry since 2013. That said, the tire-kicking of earlier this season has resulted in several properties being acquired by new owners with several others likely to enjoy the same fate over the remainder of the summer.

As this article went to press, the gold price was making a relatively aggressive recovery in conjunction with growing economic uncertainty in China and the weakening of several currencies relative to the U.S. dollar. The rise in gold prices was welcome at Fort Knox, Pogo, Kensington and Greens Creek, where gold is a primary or secondary commodity. Unfortunately, the rise in gold price had no effect on the exploration sector where a more significant and sustained rise in the yellow metal's prices will be required to jumpstart the exploration sector.

Western Alaska

Teck Resources Ltd. and partner NANA Inc. announced second quarter results from its Red Dog mine.

During the quarter the mine produced 154,700 metric tons of zinc in concentrate.

Zinc ore grade was steady at 16.5 percent while mill recoveries were up significantly to 85.8 percent.

The mine also produced 31,000 metric tons of lead in concentrate.

Lead ore grade increased marginally to 4.8 percent while mill recoveries increased significantly to 58.8 percent.

The mine posted an $84 million operating profit for the quarter, up slightly from the $80 million profit in the year previous period.

Zinc grade was similar and recoveries were higher than 2014 resulting in 9 percent more zinc production.

Both higher lead grade and recoveries than 2014 yielded 16 percent more lead production.

Operating costs in the current quarter decreased due to lower fuel and freight costs.

Capitalized stripping costs were $16 million in the second quarter compared with $8 million a year ago.

Royalty costs for the quarter were $6 million versus $9 million in the year previous quarter.

The mine plans to ship 170,000 metric tons of contained zinc metal in the third quarter and 200,000 metric tons in the fourth quarter reflecting the normal seasonal pattern of sales for the mine.

Interior Alaska

Kinross Gold announced preliminary second quarter results from the Fort Knox mine near Fairbanks. The mine produced 116,061 oz of gold at a cost of $606 per ounce in the second quarter versus 91,316 oz of gold at a cost of $834 per ounce in the year previous period. Production increase due to higher grade mill material and the seasonal impact of warmer weather on heap leach performance. Cost decreased in part to lower fuel and power costs.

Freegold Ventures Ltd. announced that it has raised $1,350,000 through a private placement and will be conducting a 3,000-meter drill program at its Shorty Creek copper-gold project in the Livengood-Tolovana District.

Limited previous drilling in the area of the copper - gold porphyry target had returned significant intervals of gold mineralization.

The area of drilling in 1989 and 1990 was restricted to a 500-meter by 200-meter area.

A total of 2,094 meters of drilling were completed with a maximum hole depth of 152 meters.

The presence of copper mineralization in conjunction with gold mineralization was noted at depth in most of the historic drill holes.

Additional mapping has confirmed the presence of quartz porphyry in the creek 30 meters below the depth of previous drilling.

Ground geophysics and soil sampling completed by the company in the vicinity of the drilling has now expanded the target area by another 500 meters to the southwest and 400 meters to the northeast.

Another significant target, located 2.5 kilometers to the northwest of the copper - gold target, was also identified as a result of the ground geophysical and soil sampling program.

The presence of a strong chargeability anomaly coincident with strong copper values in soils (up to 669 parts per million) covering a 2,000-meter x 1,000-meter area was observed.

Within the copper geochemical anomaly a strong molybdenum core is present (up to 235 parts per million molybdenum which covers a 1,000-meter by 800-meter area in the central portion of the chargeability anomaly.

Drilling is expected to commence in late September.

Northern Empire Resources Corp. and Sonoro Metals Corp. announced an extension of the first phase exploration program on the Hilltop project in the Richardson District. The extension to the Phase 1 exploration program is budgeted at $100,000 and will commence in August. The scope of work is designed to expand upon the previously completed $250,000 Phase 1 program. Results of initial work are pending and plans for the newly funded work program were not released.

Coventry Resources Inc. announced that it entered into a mineral lease and purchase agreement pursuant to which Great American Minerals Exploration Inc. will lease the company's Uncle Sam gold project in the western Goodpaster District.

Terms of the deal require Great American Minerals to pay $30,000 to undertake exploration and development activities on the project, pay annual lease payments of $25,000 and pay all property holding costs including annual rents, permitting costs and all other costs associated with exploration and development activities.

Great American Minerals will retain the option to purchase a 100 percent interest in the project by paying $500,000 in the event the option is exercised at any time prior to the fifth anniversary of the agreement or paying $750,000 in the event the option is exercised at any time between the fifth and tenth anniversary of the agreement.

Millrock Resources Inc. announced that it had acquired the West Pogo gold property from a subsidiary of Corvus Gold.

The claims cover the projection of a favorable structure that passes through Sumitomo's Pogo mine located three kilometers to the south.

Under terms of the deal, Millrock will pay $20,000 for a 100 percent interest with Corvus retaining a royalty of 3 percent net smelter returns production royalty on precious metals and 1 percent net smelter return production royalty on base metals.

Millrock may reduce the precious metals royalty to 1 percent by making payments totaling $7 million.

Millrock has also purchased an extensive, proprietary database of geological information.

The database was created through years of exploration effort by Anglogold-Ashanti and International Tower Hill Mines in the 1990s and early 2000s and contains information from throughout Alaska's Goodpaster Mining District and the Pogo mine area.

Included in the information are geochemical results for thousands of stream sediment, soil, rock and vegetation samples, airborne geophysical surveys, structural and remote sensing analyses and project generation reports.

It is estimated that data represents in excess of $5 million in exploration work.

The purchase price for the database is $100,000.

A royalty of 1 percent net smelter returns production royalty in favor of Corvus will be payable for any claims staked by Millrock within a defined area of interest in the coming five years.

The royalty may be reduced to 0.5 percent by payment of $2.0 million.

Corvus has also granted Millrock a Right of First Refusal to acquire the LMS gold project under agreed upon terms until September 1, 2015.

This project is also located in the Goodpaster Mining District.

A high-angle, mineralized structure that may be a feeder zone is postulated and forms a sound exploration target for drill testing.

Alaska Range

Brazil Resources Inc. announce that it has completed the acquisition of 100 percent of the Whistler gold-copper project and certain related assets from Kiska Metals Corporation.

Brazil issued 3.5 million shares valued at $1.61 million to acquire the project, which includes 304 State mining claims, a 50-person all-season exploration camp, airstrip and assorted equipment.

The project is underlain by a volcano-sedimentary sequence of the Jura-Cretaceous Kahiltna Assemblage that has been intruded by the Late Cretaceous Whistler Intrusive Suite with associated gold-copper porphyry and epithermal mineralization, and the Late Cretaceous to Paleocene Composite Intrusive Suite with associated intrusion-related gold mineralization.

Resource estimates are based on 48 drill holes (19,870 meters) and is reported within a conceptual pit shell with 45-degree pit slope angles resulting in a strip ratio of 1.3:1 (waste to ore) at a 0.3 grams per metric ton gold cut-off.

Indicated resources include 79.2 million metric tons grading 0.51 g/t gold, 1.97 g/t silver and 0.17 percent copper.

Inferred resources come in at 145.8 million metric tons grading 0.40 g/t gold, 1.75 g/t silver and 0.15 percent copper.

Other prospective e exploration plays in the project area include the Whistler Orbit, Muddy Creek and Island Mountain.

Coventry Resources Inc. announced diamond core drilling results from its Caribou Dome copper project in the Valdez Creek District.

Holes CD15-01 and CD15-02 were drilled to evaluate the shallow portion of the eastern end of Lense 6.

Significant results include 10.1 meters at 7.1 percent copper from 39.0 meters in CD15-02 and 12.2 meters at 3.2 percent copper from 39.8 meters in CD15-01.

Hole CD15-03 was drilled to evaluate the upper portions of Lense 4.

This hole returned 51.1 meters at 5.3 percent copper from 4.4 meters, including several higher grade intervals.

CD15-04 and CD15-05 were new exploration holes drilled to evaluate the central portion of the previously untested Lense 2, which surface mapping indicates is at least 200 meters long.

Hole CD15-04 intersected 8.7 meters at 1.7 percent copper from 54.2 meters.

CD15-05, drilled from the same pad at a steeper angle, intersected 10.0 meters at 1.6 percent copper from 62.5 meters.

Drilling in Lense 5 in hole CD15-06 returned 4.6 meters at 0.6 percent copper from 3.0 m and 3.2 meters at 8.7 percent copper from 14.5 meters.

An additional 4,000 meter drilling program was recently approved to allow continued exploration of the project.

Southeast Alaska

Hecla Mining Co. announced updated production results for the second quarter 2015 and updated annual production estimates at its Greens Creek mine.

The mine's second quarter production of 1,856,125 oz of silver exceeded the second quarter of 2014 by 10 percent, while gold production of 13,753 oz was 8 percent lower.

The higher silver production was a result of higher recoveries and grade, partially offset by slightly lower tonnage.

Operating costs decreased to $3.30 per ounce of silver versus $3.52 per ounce in the year-previous period.

The average grade of ore mined during the quarter was 12.33 oz/t silver, up slightly from the average grade of 12.03 oz per ton that was mined in the second quarter of 2014.

During the second quarter the mine produced 1,856,125 oz of silver, 13,753 oz of gold, 5,393 tons of lead and 15,462 tons of zinc.

The mill processed 199,694 tons of ore during the quarter, down from 201,146 tons milled in the year-previous period.

Silver recoveries increased 8 percent, to 75.4 percent over the prior year period due to changes in the flotation circuit to more efficiently recover additional lead, and by introducing carbon dioxide for pH control in the lead flotation circuit.

The reduction in gold production was the result of lower tonnage and grade, partially offset by increased recoveries due to the previously described plant improvements.

The mill operated at an average of 2,194 tons per day in the second quarter.

As a result of both higher grades and recoveries, the company now expects Greens Creek to produce 7.7 million to 8.0 million oz of silver, an increase over the previous expectation of 7.3 million oz of silver.

On the exploration front, definition and exploration drilling made progress in refining the NWW, 9A, Deep 200 South and West Wall resources and expanding the Gallagher Fault Block and Upper Southwest trends.

Recent assay NWW Zone results include 107.3 oz/ton silver, 0.73 oz/t gold, 4.0 percent zinc, and 2.1 percent lead over 6.0 feet and 50.5 oz/t silver, 0.14 oz/t gold, 13.1 percent zinc, and 7.3 percent lead over 6.2 feet.

Exploration extensions to this drilling have defined additional West Wall mineralization up to 240 feet down-dip from the current resource model.

In the 9A zone significant results include 26.8 oz/t silver, 0.01 oz/t gold, 3.8 percent zinc, and 2.4 percent lead over 14.0 feet and 10.4 oz/t silver, 0.06 oz/t gold, 18.4 percent zinc, and 7.9 percent lead over 10.2 feet.

Drilling of the Upper Southwest defined multiple, flat-lying mineralized contacts between the 5250 and Upper Southwest mineralization.

Recent exploration drilling of the Gallagher Fault Block combined with existing intercepts defines mineralized zones within the Gallagher Fault with 95 to 425 vertical feet of continuity over 1,000 feet of strike length.

Recent drill intersections in the Deep 200 South zone include 61.9 oz/t silver, 0.04 oz/t gold, 2.1 percent zinc, and 1.3 percent lead over 6.2 feet and 41.2 oz/t silver, 0.04 oz/t gold, 3.7 percent zinc and 3.2 percent lead over 7.0 feet along the upper limb.

The mineralization remains open to the south and exploration drilling is planned for later in the year.

Coeur Mining Inc. announced updated second quarter 2015 production results from its Kensington gold miner near Juneau.

Second quarter production is estimated at 29,845 oz of gold, a significant increase over the 29,089 oz of gold produced in the second quarter of 2014.

Cash operating costs declined significantly to $745/oz from the year-previous period's cost of $821 per ounce.

The mine processed 170,649 tons of ore grading 0.18 oz/t gold during the quarter.

Average recovery was 94.9 percent.

Mill throughput was steady at 1,875 tpd average.

The increased production was the result of a higher throughput offset by lower gold grades during the quarter.

Work on the decline into the Jualin deposit hat Jualin in early 2016.

Estimated 2015 total production from Kensington was upgraded to 115,000-125,000 oz of gold and 2015 estimated cash operating costs were decreased to $850-$900/oz.

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).

• Email: [email protected]
• Phone: 907-457-5159
• Contact Curt Freeman