The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Economic uncertainties, industrial demand fuel recent upturn in metal prices
With metal prices stabilizing, physical stockpiles dwindling and demand again on the rise, things are beginning to look up for the beleagered mining industry.
Gold's performance over the past several months is a case in point. The World Gold Council reported that during the first quarter, buying of exchange-traded gold funds rose to its highest level since early 2009, wiping out the deep sell-offs of 2014 and 2015 for this instrument. Uncertainties in the fiscal stability of the European, Japanese, Chinese and American economies further fueled the demand and price increases seen in the past several months.
But for most metals, including silver, copper, lead, zinc, rare earth metals and graphite, all of which are part of the Alaska mining sector, industrial demand is the key long-term driver and long-term forecasts look brighter, if not downright daunting! In the April 2016 Newsletter of the Society of Economic Geologists, authors Keenan Jenning and Richard Schodde point out that with current commodity demand increases of two percent to three percent per year, the mining sector will need to deliver 50-80 percent more metal within 20 years.
Even bringing on near-mine projects that are in the pipeline moving to production will not satisfy this demand.
And that does not count the inevitable mine closures that will occur as finite resources are depleted.
So with the sun shining and the seasonal exploration and development clock ticking loudly, Alaska's mining industry is going back to the field in increasing numbers in anticipation of better times ahead.
Western Alaska
Graphite One Resources Inc. announced that it had produced premium grade spheroidized graphite from 99.98 percent graphitic carbon from its Graphite Creek deposit.
The laboratory product was created from Spheroidal, Thin, Aggregate and eXpanded graphite, with yields in the first-run trial averaging 74.6 percent.
The initial results suggest that processing of STAX graphite from the project is potentially less energy intensive than conventional flake graphite recovery processes.
Follow-up work on STAX graphite involved performance tests on coin cell batteries manufactured with the company's premium grade uncoated spheroidized graphite.
Three of the five coin cells evidenced a first discharge capacity that approached natural graphite's theoretical maximum with results deviating by less than 1 percent and one coin cell result equaling it.
Coin cell tests also demonstrated the ability of the graphite to achieve the same or similar discharge capacity in repeated subsequent charging and discharging cycles.
Results from these studies are being incorporated into the company's preliminary economic analysis, due out in late June.
NovaGold Resources Inc. said the U.S. Army Corps of Engineers had extended the draft EIS public comment period for its 50 percent-owned Donlin Gold project (50 percent NovaGold/50 percent Barrick Gold). The comment period was extended one month to May 31, in order to give stakeholders a longer period to make comments on the draft EIS. The comments will then be reviewed and responded to in the final EIS, which is expected to be published in 2017.
Redstar Gold Corp. said it raised roughly $1.1 million to be used partly for continued exploration of its Unga gold project near Sand Point.
The company is currently focused on expansion of the Shumagin gold prospect located at the eastern end of the 7.5 kilometer-long Shumagin Trend.
The Shumagin prospect is characterized by multi-episodic gold-silver bearing quartz-adularia-rhodochrosite breccia bodies that occur within structurally controlled dilation zones along the +1,200-meter-long Shumagin Scarp.
In addition, the company is evaluating the Orange Mountain and Empire Ridge prospects, both of which are along-strike extensions to known high-grade prospects and mines and have similar geochemical signatures and structural features as the Shumagin prospect.
Specific plans for 2016 were not released.
Interior Alaska
Kinross Gold posted first-quarter 2016 results from its Fort Knox mine near Fairbanks.
The mine produced 87,800 ounces of gold at a cash cost of $708 per ounce versus 82,673 oz. at a cash cost of $672/oz. in the year-previous period.
The mine's production increase resulted from significantly higher heap leap loadings.
The mill treated 3,246,000 metric tons of ore grading 0.66 grams per metric ton gold with a mill recovery of 81 percent.
The heap leach saw additions of 7,495,000 metric tons of ore grading 0.26 g/t gold.
The heap leap tonnage was more than double the year-previous period's production.
As the mine approached the 20th anniversary of its first gold pour in December 1996, a couple of facts about the mine might interest you.
For starters, Fort Knox will easily pass its 20th anniversary even though it went into production with a 10-year mine life.
In 2016 it will pour its 7 millionth ounce of gold, this from an initial recoverable reserve of less than 4 million oz. The mine has processed more than 435 million tons of ore through its mill and heap leach facilities.
Rolling stock at the mine consumes about 45,000 gallons of diesel fuel per day.
On the safety side, the administration group, which includes the exploration and mine geology group, has not had a lost time accident since 2005, while mill maintenance has not had a lost time incident since 2003.
The mine also has contributed funds to more than 99 area nonprofit organizations, including its second $1 million commitment to the University of Alaska.
Freegold Ventures Ltd. said it has closed its previously announced public offering and raised more than $7.2 million for continued exploration of its Golden Summit gold project in the Fairbanks District and its Shorty Creek copper-gold project in the Livengood-Tolovana district. Specific plans for the two projects were not released.
Contango ORE Inc. announced drill results from its first-ever Phase 1 winter drilling program at the Tetlin project, a joint venture with a wholly owned subsidiary of Royal Gold Inc. Significant results from the North Peak zone included hole 16192, which returned 13.27 meters grading 49.194 g/t gold, and hole 16206, which returned 43.43 meters grading 3.611 g/t gold.
In the West Peak zone, hole 16208 returned 19.99 meters grading 2.822 g/t gold and hole 16209 cut 6.25 meters grading 4.863 g/t gold.
In the newly discovered Connector zone, some 200 meters distant from the nearest known mineralization, hole 16210 returned 43.96 meters grading 3.275 g/t gold and an additional 3.77 meters grading 2.614 g/t gold.
The company indicated that the Phase 1 effort extended the Peak zone to the west and southwest and expanded mineralization at North Peak zone.
The company indicated that phase 1 drilling suggests the Main Peak and North Peak zones may be part of a single larger system that remains open to expansion.
The company also said a phase 2 summer program was being planned to follow up previous results.
Alaska Range
Usibelli Coal Mine announced the retirement of Bill Brophy, the public face of Usibelli for the past 15 years. Bill was the kind of ambassador that every company wishes it had, informed, upbeat, unassuming and unflappable in a position that calls for all of those skills and then some. I am personally indebted to Bill for the continuing flow of information he sent me for this column over the years. No matter what I needed, Bill came through with facts and figures that let everyone know what an important place Usibelli occupies in the Alaska mining industry. So thank you and best wishes, Bill!
Brazil Resources Inc. reported an initial mineral resource estimate for the Island Mountain deposit, one of several porphyry centers identified on its Whistler project in the Alaska Range.
At a 0.3 g/t gold equivalent cut-off, the new resource estimate at Island Mountain includes an indicated resource of 25.75 million metric tons grading 0.53 g/t gold, 1.16 grams-per-metric-ton silver and 0.06 percent copper (0.54 g/t gold equivalent and 444,000 gold equiv. oz.).
The deposit also contains an inferred resource of 69.23 million metric tons grading 0.51 g/t gold, 1.07 g/t silver and 0.06 percent copper (0.51 g/t gold equiv. and 1.133 million gold equiv. oz.).
The resource is based on 12,668 meters of drilling in 34 holes on the southwest slope of Island Mountain.
The deposit is up to 400 meters in width and has been drilled over a strike length of 300 meters to a depth of 450 meters.
Mineralization remains open to depth and to the north where surface mapping, geochemistry and geophysics have identified coincident hydrothermal breccia, multi-element geochemical anomalies and magnetic anomalies for an additional 400 meters.
Gold-copper mineralization is hosted by intrusive and hydrothermal breccia associated with strong sodic-calcic alteration.
Gold-only mineralization is hosted by diorite porphyry with vein and disseminated pyrrhotite.
Brazil Resources Inc. also announced an initial mineral resource estimate for the Raintree West deposit, another of the porphyry centers identified on its Whistler project in the Alaska Range.
At a 0.6 g/t gold equivalent cut-off below the 100-meter elevation, the new resource estimate at Raintree West includes an inferred resource of 51.76 million metric tons grading 0.68 g/t gold, 3.74 g/t silver and 0.10 percent copper (0.86 g/t gold equiv. and 1.428 million gold equiv. oz.).
At a 0.3 g/t gold equiv. cut-off above the 250-meter elevation, the deposit also contains an inferred resource of 31.68 million metric tons grading 0.40 g/t gold, 5.39 g/t silver and 0.06 percent copper (0.55 g/t gold equiv. and 563,000 gold equiv. oz.).
The resource is based on 7,078 meters of drilling in 14 holes.
The deposit is up to 400 meters in width and has been drilled over a strike length of 500 meters to a depth of 700 meters.
The deposit is open along strike to the north and south, and at depth.
Gold-copper mineralization is associated with quartz, plus magnetite stockwork zones hosted in potassic-altered diorite intrusive rocks.
Northern Alaska
NovaCopper Inc. posted an updated resource estimate for the Bornite deposit at the Upper Kobuk Mineral project, a partnership with NANA Inc. At a base case 0.50 percent copper cutoff grade, the Bornite deposit is estimated to contain in-pit indicated resources of 40.5 million metric tons at 1.02 percent copper for 913 million pounds of contained copper.
At a base case 0.50 percent copper cutoff grade, the deposit is estimated to contain in-pit inferred resources of 84.1 million metric tons at 0.95 percent copper for 1.8 billion pounds of contained copper.
At a base case 1.50 percent copper cutoff grade, the deposit is estimated to contain below-pit inferred resources of 57.8 million metric tons at 2.89 percent copper for 3.7 billion pounds of contained copper.
Overall, contained copper in indicated resources has increased from 334 million to 913 million pounds, a 173 percent increase in contained metal over the previous 2014 resource estimate.
The latest estimate was based on 235 diamond drill holes, totaling 78,745 meters of drilling.
The deposit remains open to expansion to the north and northeast.
The Lower Reef and South Reef mineralization is open over a one-kilometer-wide front along the north end of the deposit, while to the southwest, the South Reef mineralization is open over a 200-meter-wide front along the south end of the deposit.
Mineralization in the Ruby Creek zone occurs as two discrete stratabound lenses: a Lower Reef which outcrops and dips approximately 10-15 degrees to the northeast and an Upper Reef lying more than 150 meters above the Lower Reef stratigraphy and which includes a small high-grade zone historically referred to as the No.1 Orebody.
Mineralization is hosted by Devonian-age carbonate rocks containing broad zones of dolomite alteration and associated sulfide mineralization including bornite, chalcopyrite, and chalcocite occurring as disseminations and vein stockworks as well as crackle and mosaic breccia fillings which locally grade to massive to semi-massive replacement bodies.
Southeast Alaska
Hecla Mining reported updated first-quarter 2016 production results for its Greens Creek mine on Admiralty Island.
The mine produced 2,458,276 oz. of silver and 15,981 oz. of gold, which represent a 21 percent and 4.9 percent increase, respectively, over silver and gold production levels during the year-previous period.
The mine also produced 5,087 tons of lead and 14,611 tons of zinc.
Average grades mined include 15.17 oz. /t silver, 0.11 oz. /t gold, 3.05 percent lead and 8.13 percent zinc.
Higher throughput and recoveries contributed to increased silver and gold production, with silver additionally benefiting from grades that were about two oz. per ton higher than anticipated and which are expected to moderate as the year progresses.
The mill operated at an average of 2,252 tons per day in the first quarter.
The cash cost per oz. silver increased to $3.96 from $3.23 a year earlier due to a $4.29/oz. decline in by-product revenues as a result of lower gold, zinc and lead prices.
These declines were partially offset by higher silver production.
On the exploration front, definition drilling is refining the resources of the NWW, 5250 and Deep 200 South zones for conversion to reserves, and exploration drilling of the 9A zone expanded the resource along the projected trends.
Highlights from exploration drilling include 10 feet grading 64.31 ounces per ton silver, 3.22 percent zinc and 1.5 percent lead at the North West zone, 7.1 feet grading 15.26 oz./t silver, 0.11 oz./t gold, 8.77 percent zinc and 3.97 percent lead and 13.7 feet grading 20.43 oz./t silver, 0.09 oz./t gold, 16.24 percent zinc and 5.21 percent lead at the 9A zone, and 13.8 feet grading 16.11 oz./t silver, 0.29 oz./t gold, 9.96 percent zinc and 4.76 percent lead at the East zone.
Constantine Metal Resources Ltd. announced that a budget of $3.7 million has been approved by its partner Dowa Metals & Mining Co. Ltd. for the Palmer project near Haines.
This year's planned program will focus on a drilling to test resource potential of the volcanogenic massive sulfide deposit within a three-kilometer radius of existing mineral resources at the RW and South Wall zones.
Initial work will include 1,700 meters of drilling with potential for additional follow-up drilling.
The company's efforts also will include, subject to receipt of permits, road building to the mineral resource area, environmental, geotechnical and engineering studies to evaluate a potential exploration drift for the purpose of continued drill expansion and drill definition on the deeper portion of the existing resource, continued community engagement efforts and environmental baseline work in the region.
Dowa is in the fourth year of an agreement with Constantine and has spent roughly $16.2 million on the project.
Dowa must spend $22 million in order to earn a 49 percent interest in the project and has indicated its intent to do so by Dec. 31.
Ucore Rare Metals posted an update on the commissioning of the SuperLig®-One rare earth element separation pilot plant.
The first tranche of pregnant leach solution derived from the company's Bokan-Dotson Ridge project in Alaska has been subjected to a series of tests, the most recent of which was removal of scandium, a valuable rare earth element used in advanced fuel cell applications and for making high strength aluminum alloys for aerospace applications.
The process recovered more than 99 percent of the available scandium with the scandium product purity at greater than 99 percent.
The scandium recovery process did not deplete other rare earth metals, which remained in the pregnant leach solution for subsequent recovery.
The next step in the recovery process will be separation of the light and heavy rare earth elements into two groups, after which the heavy and light groups will be further separated into individual element concentrates.
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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