The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Hit with declining commodity prices and shrinking budgets, industry places worldwide exploration sector on life support
As in the recent past, the state of the world's exploration industry was summarized in SNL Metal & Mining's annual "Corporate Exploration Strategies" publication, released at the Prospectors and Developers Association of Canada convention in Toronto earlier this month. Not surprisingly, it painted a grim picture of 2015, the worst year for exploration since 2009.
The statistics indicate that worldwide exploration expenditures declined a further 19 percent to $9.2 billion compared with to $11.4 billion in 2014 and a far cry from record expenditures of $21.5 billion in 2012.
The combined double whammy of commodity prices decreasing since 2011 and decreasing exploration budgets since 2012, have left the exploration industry on life support around the globe.
Producing companies continue to fight falling average grades, falling commodity demand, falling commodity prices and shareholder pressure for leaner, more efficient organizations, all of which require cuts in exploration spending, down 18 percent in 2015, the third straight year the majors have cut exploration spending.
In the junior sector, exploration spending plummeted a whopping 26 percent last year, this after an even steeper year-over-year decline of 29 percent in 2014.
The desire for less risky exploration (more successful exploration), increased near-mine exploration to 34 percent of total exploration in 2015, with grassroots exploration accounting for only 29 percent of the sector's total spending, while advanced stage exploration pulled in 37 percent.
On a commodity basis, all of the major metals saw reduced exploration in 2015, raising concerns about future production from a project pipeline that has fewer and fewer new projects in it.
Gold-directed exploration fell 14 percent, platinum fell 33 percent and uranium fell 34 percent year-on-year.
From a geographic standpoint, Latin America's share of the global total increased to more than 28 percent of worldwide exploration expenditures, the region's highest share since the bottom of the last downturn in 2001.
Exploration budgets in Africa and Pacific/Southeast Asia were hit hard, declining 30 percent and 28 percent, respectively.
Looking into my crystal ball for 2016, I have been able to track announced and estimated budgets for about two dozen Alaska exploration projects and come up with a dismal $42 million in estimated exploration expenditures for the year.
By comparison, that would be the lowest level of expenditures for exploration since 2003.
Despite all the gloom and doom, several of SNL Metals & Mining's recent economic indicators suggested that the mining industry may be at or near the bottom of this cycle.
Hope that is true because Alaska did well in the recent Fraser Institute "Survey of Mining Companies, 2015", a fact we all hope will be remembered when the markets pick up.
We placed 2nd of 109 jurisdictions worldwide behind Western Australia in the Mineral Potential Index (using best management practices), and 6th in the Investment Attractiveness Index, behind Western Australia, Saskatchewan, Nevada, Ireland and Finland.
Although Alaska rose in the Policy Potential Index about 10 percentile points over its ranking in 2014, we still placed a disappointing 23rd.
However, if history is any gauge of the future, the mining industry is willing to take risk if the potential for new mineral discoveries exists, and such discoveries cannot occur unless, like Alaska, a jurisdiction's mineral endowment is top-flight.
Western Alaska
Graphite One Resources Inc. announced that it has completed the first three phases of its five-phase exploratory product development program to produce carbon-coated spherical graphite from its Graphite Creek deposit on the Seward Peninsula.
The test work used "STAX" graphite from the project.
(STAX is an acronym for graphite that is Spheroidal, Thin, Aggregate and eXpanded.) The tests achieved a minimum purity level of greater than 99.98 percent graphitic carbon in three samples totaling 3,000 grams.
The graphite purity from all runs exceeds the threshold requirement of 99.95 percent graphitic carbon for preparing spherical graphite and was assessed by assaying for both impurity and graphite content.
The three phases of the product development work now completed include a 300-gram phase 1 graphite concentrate use to test air milling characteristics.
Results indicate that 66 percent less air pressure is required to achieve size reduction in STAX graphite than what is typically observed for conventional flake graphite.
In Phase 2, the 300-gram trial sample was purified to greater than 99.99 percent graphitic carbon by non-acid methods at a U.S.-based purification facility.
In Phase 3, an air-milled 2,400-gram trial sample and a 300- gram unmilled trial sample were each given the same purification treatment as the sample in phase 2, and the results were independently verified as achieving a graphite purity of greater than 99.98 percent graphitic carbon and greater than 99.99 percent graphitic carbon, respectively.
Phase 5 will be dedicated to manufacturing and generating electrochemical performance data for the coin cells (coated spherical graphite) and evaluating the spherical graphite quality and performance as battery anode material.
In addition, mineral processing test work is underway to validate the mineral processing flowsheet for the project, including the generation of 5 kilograms of high-purity concentrate.
The results from mineral processing and second-stage product development will form the basis for the Graphite Creel preliminary economic assessment expected out later this year.
Alaska Range
Miranda Gold Corp. and JV partner Gold Torrent, Inc., announced an updated mineral resource for their Willow Creek gold project near Hatcher Pass.
The updated mineral resource estimate includes measured and indicated mineral resources of 121,500 ounces of gold contained in 206,500 metric tons grading an average of 18.3 grams per metric ton gold.
An additional inferred mineral resource includes 35,150 ounces of gold contained in 59,000 metric tons grading an average of 18.5 g/t gold.
All of the estimated mineral resources are based on a cutoff of 5.0 g/t gold.
An updated model has been expanded to include a portion of the Lucky Shot area.
In total, mineral resources at the Willow Creek project include eight veins in the Coleman area and two veins in the Lucky Shot area.
The mineral resource estimate is based on information from 174 drill holes.
Potential exists to increase the mineral resources at the project through drilling down-dip extensions of the Coleman and Lucky Shot area, and the exploration targets in the War Baby and Murphy areas along strike to the east.
Completion of the updated mineral resource estimate for the project allows Gold Torrent to move forward with its planned preliminary feasibility study, anticipated to be released during the first half of 2016.
Southeast Alaska
Ucore Rare Metals Inc. provided an update on the preparations for utilizing their rare earth separation pilot plant using raw ore from their Bokan-Dotson rare earth elements project.
IBC Advanced Technologies of American Fork, Utah, has completed construction of all Molecular Recognition Technology superstructure, processing architecture, automation systems, and initial water testing of the rare earth separation pilot plant.
The plant is now in a pre-production quality control and testing phase.
The next stage of the pilot plant process is the commissioning phase, scheduled to commence this month, which will include the initial start-up of the processing systems and further water testing, followed by the receiving of pregnant leach solution.
Each section of the plant will be water-tested prior to testing with actual pregnant leach solution.
The pilot plant program will entail the following components: 1) rare earth separation, in which all rare earths, as a group, are isolated from the waste materials in the pregnant leach solution; 2) removal of scandium, a valuable rare earth element used in advanced aluminum alloys for the aerospace sector; 3) class separation of the light rare earth elements (lanthanum to neodymium plus yttrium) and the heavy rare earth elements (samarium to lutetium); and 4) separation of individual rare earth elements, including the pilot program separation of terbium and europium at more than 99 percent purity, plus dysprosium at 99.99 percent purity.
The remaining heavy rare earth element solution, consisting of holmium to lutetium, gadolinium and samarium; as well as the light rare earth elements solution, consisting of lanthanum to neodymium and yttrium, will be retained for future work.
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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