Experts forecast declines in gold output

Over the last month the inevitable termination dust has begun to show up across Alaska, bringing with it completion of mineral exploration programs and transition of development and production projects to winter operational modes. Explorers, developers and miners will soon be gathering to compare notes at the annual Alaska Miners Association Convention in Anchorage, an event that always overlaps national and local election night.

Alaska's mineral industry outlook brightened over the course of the year, and regardless of whether you will be commiserating or celebrating come Nov. 8, the industry is looking forward to increased activities in 2017.

And according to SNL Metals and Mining, it's about time! In its recent publication, titled "Strategies for Gold Reserves Replacement," SNL noted that 240 major gold deposits were discovered between 1990 and 2015, containing a total of 1.715 billion ounces of gold in reserves, resources and now past production.

New discovery rates generally followed the rise and fall of exploration spending, although the 1990s were more productive for new discoveries than the period 2000 to 2015.

In addition, exploration spending increased dramatically in the 2005-2012 time frame, but the rate of new discoveries did not, steadily declining steadily since 2006.

This decrease in discoveries is exacerbated by a more than 30 percent decline in exploration spending that began in 2013.

Bucking the widely held notion that the best place to find ore is within sight of the headframe, SNL's data indicates that 164 of the 240 significant gold discoveries (68 percent) made between 1990 and 2015 were greenfields discoveries, containing 63 percent of the total gold and 60 percent of the total value of all metals in the discoveries.

So, in fact, it does pay to explore outside your own back yard, particularly with new gold production levels forecast to decline over the next five to 10 years.

All of this spells good things for Alaska, elephant country with millions of acres of prospective, under-explored lands.

Stay tuned, stay focused and stay in Alaska, 2017 promises to be an exciting year for the mineral industry!

Western Alaska

NovaGold Resources Inc. announced an update for its Donlin gold project, 50:50 owned with Barrick Gold Corp. on land owned by Calista Corporation and The Kuskokwim Corporation.

The U.S. Army Corps of Engineers, the project's lead federal permitting agency, is now reviewing the comments received during the public comment period for the draft environmental impact statement in preparation for completing the final EIS. Other major permits and approvals being advanced with state and federal agencies include the water discharge permit, wetlands permit, air quality permit, reclamation plan approval, pipeline authorizations, water use and fish habitat permits, land and shoreline leases as well as right-of-way approvals.

Redstar Gold Corp. announced initial exploration results from the Orange Mountain zone at its Unga gold project near Sand Point.

The Orange Mountain zone occurs in the central portion of the Shumagin trend, located along the southeast portion of Unga Island, and is one of two partially fault-controlled, northeast to southwest oriented trends that transects the island.

The company completed a detailed geological mapping, rock chip and talus fine sampling program, including a total of 183 rock chip samples, 95 talus fine samples and 200 soil samples along a 4.5-kilometer-long segment of the Shumagin Trend, centered along Orange Mountain, and between high-grade gold prospects at the Aquila and Shumagin zones.

Previous work dating back to 1979 suggests the Orange Mountain zone is a high-level volcanic-hosted lithocap that may host intermediate epithermal vein systems at depth.

During 2016, the company focused composite chip and talus fine sampling over a one-square-kilometer-plus area containing exposures of massive vuggy, residual silica altered lithic tuff and polymictic breccia.

The silicic bodies commonly contain 0.5-2.0 percent pervasive-to-patchy disseminated very fine grained pyrite and/or marcasite, and within a 500-meter by 250-meter area, the residual silica is cut by numerous crustiform-drusy quartz veinlets that transition to euhedral quartz-filled cavities.

Results from composite rock chip samples taken from outcrops of the vuggy, sulfide-bearing residual silica bodies are typically barren and returned scattered results of less than 25 parts-per-billion gold and are also weakly anomalous in pathfinder elements silver, arsenic, antimony, mercury, lead, zinc and copper.

Along the central crest of Orange Mountain, numerous 0.5- to +10.0-meter wide quartz-limonite-goethite cataclasite breccias composed of angular clasts of quartz-veined residual silica in a quartz-limonite-goethite-barite matrix are localized along re-activated major structures and subsidiary joints and small-scale faults.

Composite rock-chip samples from the oxidized fault breccias are anomalous in gold (+25 ppb gold up to 278 ppb gold) and are highly anomalous in pathfinder elements with a mixed epithermal signature.

This includes high-level elements arsenic, antimony and mercury as well as lead over 100 parts per million, silver up to 9.19 ppm, arsenic to 1,700 ppm, mercury to 89.8 ppm, antimony to 928 ppm and barium to 7,730 ppm.

A soil grid and additional rock sampling also was completed on Red Mountain where rock chip samples of exposed advanced argillic alteration exhibit elevated high-level epithermal pathfinder elements, including up to 177.5 ppm arsenic, 93.4 ppm antimony and 47.6 ppm mercury.

Soil samples returned values up to 37 ppb gold, 1.9 ppm silver, 244 ppm arsenic, 42.3 ppm antimony, 6.9 ppm mercury and 32.5 ppm lead.

Following release of these results, the company announced that it planned to complete 1,500 meters of core drilling in October focused on outlining additional high-grade gold mineralization at the Shumagin Zone along strike and at depth.

Interior Alaska

Northern Empire Resources Corp. announced assay results from rock chip-channel samples collected from the wall of the historically mined Democrat Pit at the company's Richardson gold project near Fairbanks.

The Democrat Pit was the site of a 77,000-ton bulk sample where 2,200 oz. of fine gold were recovered by gravity means from previous operators.

The rock sampling program was part of a summer program, which also included 1,298 soil samples and 277 line kilometers of geophysics.

Rock chip channel samples were collected on one-meter intervals across 130 meters of the exposed quartz feldspar intrusive on the Democrat Pit face.

Samples results varied from a low of 0.016 grams per metric ton gold to a high of 90.5 g/t gold, and from a low of 0.23 g/t silver to a high of 512 g/t silver.

Significant composite intervals included 5.73 g/t gold and 29.8 g/t silver over 32 meters including 6 meters of 18.33 g/t gold and 48.95 g/t silver, 3 meters of 20.84 g/t gold and 32.1 g/t silver and 6 meters of 2.57 g/t gold and 39.3 g/t silver.

Final results from soil sampling and geophysical surveys are pending and will be used to guide efforts in 2017.

Millrock Resources Inc. announced that, through a series of purchase and option agreements and claim staking, it has assembled a large land position that it calls the West Pogo project in the Goodpaster Mining District.

The company now holds six discrete claim blocks in the district covering an area of 15,847 hectares.

The claims cover soil geochemical anomalies, many of which are untested and drill intersections that are strongly anomalous in gold.

The company acquired a 100 percent interest in 2,315 hectares covering the Eagle, ER, Beverley, Cal Surf, SE Surf, Scot and Boundary prospects from Kiska Metals Corp. It acquired an option to purchase a 100 percent interest in the 1,716-hectare (4,240 acres) West Pogo Aurora claims from Aurora Exploration.

It acquired an option to purchase a 100 percent interest in the 259-hectare (640 acres) WP Hansen claims from Beau and Zeynip Hansen.

It acquired a 100 percent interest in the 1,279-hectare (3,160 acres) WP Raven claims from Corvus Gold Inc. It also staked about 10,278 hectares of contiguous claims.

The Goodpaster Mining District is an area subject to a collaboration agreement that Millrock signed with a major mining company in 2015.

The major company funded the work on the various land blocks that now comprise the West Pogo project including a recent US$250,000 exploration program conducted in 2016.

Work consisted of re-logging and sampling of existing drill core, infill soil sampling and geological mapping.

Assay results are pending.

Contango ORE Inc. announced final drill results from its 2016 Phase 2 drilling program at the Tetlin gold project, a joint venture with a wholly owned subsidiary of Royal Gold Inc. Significant results from the North Peak zone included hole 16255, which returned 9.42 meters grading 5.53 g/t gold, hole 16256 which returned 13.20 meters grading 48.59 g/t gold; hole 16267 which returned 50.85 meters grading 12.05 g/t gold and 5.89 meters grading 14.74 g/t gold; hole 16269 which returned 13.90 meters grading 13.97 g/t gold and 17.38 meters grading 9.7 g/t gold; hole 16270 which returned 15.57 meters grading 8.56 g/t gold and 5.76 meters grading 11.24 g/t gold; hole 16271 which returned 17.12 meters grading 51.89 g/t gold and 9.19 meters grading 41.02 g/t gold and 13.95 meters grading 24.28 g/t gold; hole 16272, which returned 9.83 meters grading 149.01 g/t gold and 7.96 meters grading 15.99 g/t gold.

In the recently expanded West Peak zone, significant intervals included hole 16262, which returned 8.53 meters grading 5.75 g/t gold; and 5.33 meters grading 4.56 g/t gold; and hole 16263 which returned 1.53 meters grading 10.65 g/t gold.

The company indicated that phase 2 expansion and infill drilling were successful and the results also show good grade and thickness near the previously known limits in the eastern and southeastern portions of North Peak and in the western and northwestern margins of West Peak.

Further drilling in phase 3, which began in early October, will define and possibly expand the known limits of the North Peak zone.

Results from 2016 and previous drilling will be used to complete an updated resource estimate, expected by the end of the first quarter of 2017.

Alaska Range

Kiska Metals Corp. announced that it has received all of the drill results from its program at the Copper Joe porphyry copper-gold-molybdenum project in the southwestern Alaska Range.

The program was fully-funded by First Quantum Minerals.

The program consisted of one 806-meter-long diamond drill hole that targeted the center of a 1.4-kilometer-wide magnetotelluric geophysical anomaly coincident with other geological, geochemical and geophysical anomalies.

The drilling did not return any significant results, however it did intercept more than 400 meters of hydrothermal breccia with strong phyllic alteration, abundant pyrite, and sparse early quartz veins, magnetite-anhydrite-pyrite-chalcopyrite veins and banded molybdenite veins.

The wide zone of hydrothermal breccia with abundant pyrite is thought to be the cause of the conductivity low anomaly identified by the magnetotelluric survey.

The company indicated that First Quantum has withdrawn from the project, returning 100 percent interest to Kiska.

Northern Alaska

Goldrich Mining Co. provided an update on 2016 mining operations at its Little Squaw placer mine, being operated by Goldrich NyacAU Placer LLC. Year-to-date production numbers through Aug. 31 totaled 8,570 oz. of alluvial gold (roughly equivalent to 7,000 oz. of fine gold), representing a 95 percent increase in production versus the entire 2015 mining season.

Production during the month of August totaled 3,010 oz. of alluvial gold (roughly equivalent to 2,450 oz. of fine gold).

Production continued through Sept. 21 with final year-end production data pending.

Of the gold processed during this season, some 5,540 oz. of alluvial gold (about 4,520 oz. of fine gold) were from the upper half of Little Squaw Creek but outside the area of mineralized material previously delineated by the company.

This supports company's belief that the mineralized area is open beyond the area previously defined.

The partners have completed about 15,000 feet of drilling to date on the upper half of the placer project and outlined 10.5 million cubic yards of mineralized material at an average head grade of 0.025 oz. of gold per cubic yard, for an estimated total of about 250,000 contained oz. The partners have invested roughly US$26 million to develop mining operations.

Southeast Alaska

Hecla Mining Company announced preliminary third-quarter 2016 production results for its Greens Creek mine on Admiralty Island. The mine produced 2,445,328 oz. of silver and 11,988 oz. of gold, which represent a 23 percent increase and 17 percent decrease, respectively, over the year-previous period. Increased silver production resulted from higher grades and lower gold production from lower grades. The mill operated at an average of 2,201 tons per day in the third quarter. For 2016, estimated silver production is increased from prior estimates to 8.5 million oz., and estimated gold production remains unchanged at 53,000 oz.

Coeur Mining Inc. announced third-quarter 2016 production results from its Kensington gold mine near Juneau.

Third-quarter production is estimated at 26,459 oz. of gold, a slight decrease over the 28,688 oz. of gold produced in the third-quarter of 2015.

The mine processed 140,322 tons of ore grading 0.20 oz. of gold per ton during the quarter.

Average recovery was 94.8 percent.

Production declined 18 percent in the third quarter due to reduced mill throughput caused by a blocked tailings line, partially offset by a slight increase in head grades.

Work continued on the decline into the Jualin where production is expected to begin during the second half of 2017.

Estimated 2016 total production from Kensington is 120,000-125,000 oz. of gold.

The company also announced results from some of its exploration efforts.

Significant results from the Main Kensington deposit include results from the Zone 41 gap target, which returned 12.2 feet grading 1.21 oz. per short ton gold and drilling in the Zone 12 target, which returned 20.5 feet grading 0.37 oz. /t gold.

Underground drilling at Jualin accelerated following recent underground access to exploration targets.

An initial reserve from Jualin #4 vein, one of five known veins, is expected at year-end 2016.

The current resource at Jualin #4 is 179,000 oz. of gold at a grade of 0.619 oz. /t gold.

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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