The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Mining executive stresses importance of attracting capital during rising tide
After a particularly long and painful bear market for the mining sector, the more than 25 percent surge in gold prices since the beginning of the year is lifting the share price of mining and mineral exploration companies in Alaska.
“It has been five very long years and hopefully this a start to what is going to be a good run,” Greg Beischer, president and CEO of Millrock Resources Inc., told an audience at a recent Alaska Miners Association meeting in Anchorage.
While gold prices topping US$1,350 per ounce is obviously good for miners and explorers of the precious metal, the rise has loosened venture capital for companies across the sector.
“The tide is rising, and it is floating all boats,” Beischer added.
The message left many people in the room wondering if Alaska’s ship, which is anchored by sub-US$50-per-barrel oil prices, could also catch this rising tide.
“The geology of Alaska is compelling,” the Millrock CEO answered. “Geologists want to come here – they know there are more Pebble deposits, they know there are more Donlin Creek deposits – but the perception is that it is a really tough place to permit a mine.”
While Beischer does not personally believe that it is tough to permit a mine in Alaska, the perception persists. And, when mining and mineral exploration companies must make a decision where they can get the best return on their investment, the line between perception and reality blurs.
Mixed view
The Fraser Institute Survey of Mining Companies, which asks the world’s mining executives to rank the world’s mining jurisdictions on a wide range of issues, is one of the best measures of Alaska’s allure to the global mining community.
Reflecting Beischer’s message, mining executives participating in the survey feel that Alaska is one of the best places to find world-class mining deposits but are not quite as enthused about the prospects of permitting a mine after such a discovery is made.
When it comes to pure mineral potential, mining executives have ranked Alaska among the top five jurisdictions on the planet for seven years running, including a second place showing among 109 jurisdictions considered in the most recent survey.
While the survey is subjective, this consistent strong endorsement by the global mining community speaks volumes about the mineral potential of The Last Frontier.
However, the same mining executives that collectively consider Alaska the second-richest mineral jurisdiction ranked the state 59th, right below Zimbabwe, when it comes to uncertainty concerning environmental regulations.
The U.S. Environmental Protection Agency’s attempt to utilize its presumed authority under the federal Clean Water Act to proactively veto or place restrictions on permits needed to develop the world-class Pebble copper-gold-molybdenum project has become a classic example of this mixed view.
“The Pebble deposit is one of the largest porphyry copper deposits in the world and has good grade,” observed a geologist responding to the Fraser survey. “The EPA has declared a pre-emptive veto for permit applications that have not yet been submitted.”
“The EPA’s effort to circumvent the law and stop Pebble at all costs has had significant negative ramifications on mining development in Alaska,” a manager of a large producing company added.
Despite complaints about federal agencies, many feel that regulators at the state level somewhat offset their more antagonistic federal counterparts.
“Alaska’s Large Mine Permitting Team within the Office of Project Management and Permitting has the unique ability to bring federal and local permitting agencies to the table in order to avoid duplicative efforts in the permit process. Without this group in place, developers and operators would face an uphill battle in attempting to open and operate mining projects,” a mining manager commented.
Attracting investment
With Alaska’s budget deficit north of US$3 billion on persistent low oil prices, lawmakers are looking for new flows of cash to Alaska’s coffers.
For perspective, Alaska’s budget shortfall is larger than the worth of all the zinc, gold, silver, lead and coal mined in Alaska during 2015.
Despite the daunting task of balancing the state’s budget in the short term, a number of economists believe mining has a role to play in the state’s long-term prosperity.
“We have trillions of dollars of natural resources left to be developed in this state. I think that we are still a very young state, and in the long run, this is going to be the beginning of Alaska’s resource development curve,” according to Mark Edwards, economist, Northrim Bank.
Donlin Gold, with roughly US$45.8 billion of gold reserves at the current price, and Pebble, with a roughly US$356 billion copper-gold-molybdenum deposit on state lands, are prime examples of the untapped world-class mining potential in Alaska.
For this potential to be realized, Beischer contends that Alaska needs to let global miners and mineral exploration companies know that the state is open for business.
“The main thing is to tell the mining world that we want mining here. That has to come right from the top – the governor has to say, ‘we want you to invest in our state’,” the Millrock CEO informed convention participants.
Alaska’s rich mineral endowment gives the state an advantage on this front.
While concerns over environmental regulations weigh on the minds of global mining executives, Alaska still ranked sixth on the Fraser Institute survey’s investment attractiveness index, which weighs both the perception of mining policies and the pure mineral potential.
Maintaining and building on this favorable reputation during the incoming tide could help draw the capital needed to explore and develop the state’s world-class mineral potential, and possibly make Alaska more buoyant in the process.
“It is our job to attract as much of that venture capital available worldwide to our state; so that means, we have to do our best to make Alaska an attractive place for mining exploration and development,” Beischer added.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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