Recovery takes center stage in Alaska

If there is anyone still on the fence wondering if the minerals industry has started a recovery from the doldrums of the past four years, this month’s mineral industry activity in Alaska should settle the question with authority.

During the past month, we have seen two merger/acquisitions occur, one by Solitario Exploration & Royalty Corp., which acquired Zazu Metals Corp. and its interest in the Lik lead-zinc-silver deposit. Then we also had Coventry Resources acquire Vista Mineral Pty Ltd., with the new entity, Polaris Mineral Ltd., owning the former’s Caribou Dome sediment-hosted copper project and the latter’s Stellar copper-gold project.

Not to be outdone, White Rock Minerals announced its first mineral resource estimate at the Red Mountain lead-zinc-silver-copper-gold project in the Bonnifield District, while Trilogy Metals Inc. posted a revised mineral resource for its Ambler volcanogenic massive sulfide belt, one of two significant mineral resources in the Upper Kobuk Mineral project, a business relationship owned and controlled by Trilogy and NANA Regional Corporation Inc.

Perhaps equally important, like a grizzly walking through an alder thicket, companies large and small are visiting and acquiring new assets in Alaska, disturbing the ether of the state’s mineral industry to a degree that cannot be missed or ignored. So tighten your boots, add another can of Spam to your backpack and join the game!

WESTERN ALASKA

Teck Resources Ltd. and partner NANA Regional Corp. announced first-quarter 2017 results from the Red Dog mine near Kotzebue. Mill throughput in the fourth quarter was 6 percent lower than a year ago, primarily due to an extended winter, electrical failures that affected production and lower grades and mill recoveries. In the first quarter, the mine produced 120,500 metric tons of zinc in concentrate from ore averaging 14.7 percent with mill recoveries were down to 80.3 percent. The mine also produced 28,900 metric tons of lead in concentrate during the first quarter from ore grading 5.5 percent with mill recoveries decreasing to 51.6 percent. Gross operating profit for the first quarter was $121 million, compared with $64 million in 2016. During the first quarter, the mine paid partner NANA Regional Corp. and the State of Alaska royalties of $49 million versus royalties of $13 million in the year-previous period. During the quarter, ore from the higher-grade Qanaiyaq pit was introduced to supplement declining grade ore from the Aqqaluk pit as planned; however mill performance was adversely affected as these ores are metallurgically complex, particularly in the early stages of pit development where ores are highly oxidized. Qanaiyaq ore is expected to become less oxidized as the pit is deepened, with higher percentages of this higher-grade material being added in future years. Qanaiyaq ore has a significantly higher grade than the Aqqaluk ore and is planned to be a supplemental feed source for the next 10 years, representing about 15 to 20 percent of the planned feed mix. Because of these mill fee changes, expected 2017 production of contained metal is now estimated at 475,000 to 500,000 metric tons of zinc and 110,000 to 115,000 metric tons of lead metal contained in concentrate.

Alaska newcomer Solitario Exploration & Royalty Corp. has agreed to acquire all of the issued and outstanding common shares of Zazu Metals Corp. and with it the latter’s interest in the Lik lead-zinc-silver deposit. Specific plans for their newly acquired Alaska assets were not released. Welcome to Alaska Solitario Exploration & Royalty Corp!

Graphite One Resources Inc. announced that it has received a site assessment report for its advanced materials graphite refinery facility prepared by the Alaska Industrial Development and Export Authority with cooperation from the Alaska Department of Commerce, Community and Economic Development and the Department of Natural Resources. The report confirms the considerable interest Alaska localities have in serving as a base for a spherical graphite refinery fed from the company’s Graphite Creek project. AIDEA found that Homer, Kenai, Port Mackenzie and Seward currently have the electrical generating capacity in-place to meet the refinery’s power needs. All four potential locations have year-round ports with barge landings, docks, and container-handling capacity. These sites also provide year-round land and sea access to the contiguous 48 states. The full AIDEA report can be accessed at http://www.graphiteoneresources.com/_resources/Graphite-One-Resources-Report.pdf#page=6

Northern Dynasty Minerals Ltd. announced through its wholly-owned subsidiary, Alaska-based Pebble Limited Partnership that the Environmental Protection Agency has agreed to terminate previously initiated pre-emptive actions that would have prevented future development of the Pebble copper-molybdenum-gold deposit. The agreement ends all litigation between the parties and allows the project to move forward through the exploration, development and production processes currently in place at local, state and federal levels.

Quaterra Resources Inc. announced the signing of a lease agreement with Alaska-based Chuchuna Minerals Company giving it an option to purchase a 90 percent interest in the Groundhog copper prospect. The 40,000-acre property, located on Alaska claims, covers the northern extension of a 10-kilometer- (six miles) wide north-northeast trending structural zone that hosts a number of porphyry copper-gold prospects, including the Pebble porphyry copper-gold-molybdenum project, which is approximately three miles south of the Groundhog claim boundary. Regional magnetic data suggest that geology of the two areas is similar and extends under cover for an additional 30 kilometers (19 miles) northeast from the Pebble deposit. Previous work has identified a number of large, high-priority, magnetic and induced polarization targets. The company intends to evaluate these prospects this summer by mapping, sampling, conducting additional IP surveys and drilling. Under terms of the agreement, Quaterra is committed to funding US$1 million for exploration in the first year of the agreement, and a minimum of US$500,000 in each of the ensuing four years. Quaterra can earn its 90 percent interest by providing a total of US$5 million in funding for exploration over five years, and by paying Chuchuna a lump sum of US$3 million by the end of the fifth year.

Redstar Gold Corp. announced the completion of its planned ground magnetics and induced polarization programs and start of summer drilling at its Unga gold project near Sand Point. The company completed 15.73 line-kilometers of magnetics and 8.75 line-kilometers of IP across the Shumagin Gold zone, and 54.44 line-kilometers of magnetics at the Orange Mountain zone. The planned 5,000-meter drilling program is underway on the geophysical anomalies along strike to the southwest of the known Shumagin zone. These efforts are focused on tracing quartz-adularia-carbonate breccias along strike of the Shumagin Fault and the footwall splay along approximate 100-meter centers. Concurrent with drilling, detailed prospecting and soil sample grids will cover the entire footwall basalt/andesite within the areas of the northern footwall anomalies located geochemically anomalous areas along the structures that can be drilled at a later date. Drill results are pending.

INTERIOR ALASKA

Kinross Gold Corp. announced first-quarter 2017 results from its Fort Knox mine near Fairbanks. The mine produced 93,038 oz of gold at a cash cost of $617 per oz, versus 87,800 oz of gold at $708 per oz in the year-previous period. The increased production resulted from significantly higher mill grades compared to a year ago. The mill treated 2.933 million metric tons of ore, grading 0.75 grams per metric ton gold with a mill recovery of 83 percent. The mine heap leach facility saw additions of 3.885 million metric tons of ore grading 0.23 g/t gold.

Freegold Ventures Ltd. announced the start of drilling at its Golden Summit gold project in the Fairbanks District. The 2017 phase-1 program is designed to potentially increase the current oxide gold resource. Drilling during phase 1 will be focused to the north of the current mineral resource where previously completed RAB (rotary air blast drilling) has identified the potential for higher- grade material. About 20-25 holes with an average depth of 80 meters are currently planned. Expansion of the oxide resource from the inferred mineral resource to the measured and indicated category also will be necessary in order to further advance the project through to pre-feasibility. In addition, further oxidation treatment on all identifiable sulfide materials as well as ultra-fine grind test work is being undertaken in an effort to explore grind size versus recovery relationships.

Contango ORE Inc. reported additional drill results from its phase-1 winter drill 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 17320 which returned 6.62 meters grading 7.81 grams per metric ton gold; hole 17325 which returned 4.79 meters grading 3.63 g/t gold; hole 17326 which returned 6.26 meters grading 11.98 g/t gold; hole 17331 which returned 16.85 meters grading 8.68 g/t gold; hole 17335 which returned 25.51 meters grading 4.87 g/t gold, and an additional 12.31 meters grading 14.04 g/t gold; hole 17344 which returned 22.56 meters grading 3.64 g/t gold; and hole 173345 which returned 3.66 meters grading 9.07 g/t gold. The partners’ efforts were focused on definition drilling at the North Peak zone as well as limited drilling at the West Peak and True Blue Moon prospect. The companies anticipate release of an updated mineral resource in the near future and start of their phase-2 exploration efforts, designed explore targets both near the Main Peak-North Peak resource area as well as more remote targets relative to existing infrastructure.

ALASKA RANGE

White Rock Minerals announced its first mineral resource estimate at its Red Mountain lead-zinc-silver-copper-gold project in the Bonnifield District. Using a 3 percent zinc cut-off grade, the Dry Creek Main deposit contains 2.4 million metric tons grading 4.7 percent zinc, 1.9 percent lead, and 0.2 percent copper, 69 grams per metric ton silver and 0.4 g/t gold. The nearby West Tundra Flats deposit contains 6.7 million metric tons grading 14.4 percent zinc, 6.2 percent lead, 0.1 percent copper, 189 g/t silver and 1.1 g/t gold. Mineralization on both targets crops out at surface and remains open at depth. The company has identified more than 35 targets in its 143-square-kilometer land package that have similar conductivity signatures as Dry Creek and West Tundra Flats. White Rock’s plans for 2017 include surface geochemical sampling and ground geophysics over known conductivity targets to define drill targets for follow-up

The number of active companies exploring in Alaska decreased by one this month but only because two active explorers have plans to merge into a new entity. Coventry Resources announced that they will acquire 100 percent interest in Vista Mineral Pty Ltd. with the new entity, Polaris Mineral Ltd. owning the former’s Caribou Dome sediment-hosted copper project in the Valdez Creek District and the latter’s Stellar copper-gold project. The resulting contiguous property position will cover a 35-kilometer- (22 miles) long block of claims in the central Alaska Range. Resources at the combined entity will include the recently released Caribou Dome resource of 2.8 million metric tons grading 3.1 percent copper using a 0.5 percent copper cut-off and the historic resource at the Stellar-Zackly deposit of 1.5 million metric tons grading 2.9 percent copper and 4.5 g/t silver. Both resource areas crop out at the surface and remain open to expansion. Millrock Resources Inc., underlying owner at the Stellar project, has converted its ownership into new shares of Polaris and future royalty interests and will become a significant shareholder of the new entity.

NORTHERN ALASKA

Trilogy Metals Inc. announced a revised mineral resource for its Ambler volcanogenic massive sulfide belt, one of two significant mineral resources in the Upper Kobuk Mineral project, a business relationship owned and controlled by Trilogy and NANA Regional Corporation Inc. At a base case 0.5 percent copper-equivalent cut-off grade, the Arctic deposit is estimated to contain in-pit indicated resources of 36 million metric tons at 3.07 percent copper, 4.23 percent zinc, 0.73 percent lead, 0.63 g/t gold and 47.6 g/t silver for 2.4 billion pounds of contained copper and 3.4 billion lbs. of contained zinc. In addition, Arctic is estimated to contain in-pit inferred resources of 3.5 million metric tons at 1.71 percent copper, 2.72 percent zinc, 0.60 percent lead, 0.36 g/t gold and 28.7 g/t silver. At the ranges evaluated, the resource is not sensitive to cut-off grade; for example, a 300 percent increase in cut-off grade results in less than a 1 percent decrease in contained copper and zinc metal at higher average grades. The in-fill drilling done as part of the resource expansion resulted in a 50 percent increase in resource metric tons in the indicated category at substantially the same average grades as the previous estimate and the new resource contains over 40 percent more copper and zinc metal. The company indicated that it is now in a position to conduct work toward its planned pre-feasibility study to be released in the first quarter of 2018.

SOUTHEAST ALASKA

Hecla Mining Company posted final first-quarter 2017 production results for its Greens Creek mine on Admiralty Island. The mine produced 1,929,297 ounces of silver and 14,022 oz. of gold, which represent a 22 percent and 12 percent decrease, respectively, over silver and gold production levels during the year-previous period. Lower silver and gold production was expected and principally due to lower ore grades mined during the first quarter. The mine also produced 4,809 tons of lead and 13,406 tons of zinc. Average grades mined include 12.71 oz per ton silver per ton, 0.10 oz/t, 3.07 percent lead and 7.82 percent zinc. The mill operated at an average of 2,190 short tons per day in the first quarter. Cost of production was US65 cents/oz of silver compared with $3.96/oz. in the year-previous period. As part of an ongoing effort to increase recoveries, the first staged-flotation-reactor was installed in the zinc rougher circuit. This unit will be commissioned in the second quarter and is expected to improve recoveries and to increase distribution of metals to concentrates with higher payable terms. On the exploration front, first-quarter efforts refined resources of the 9A, NWW, Southwest Bench, East Ore and West zones for possible conversion to reserves. Drilling of the 9A Zone intercepted mineralization comparable to the existing resource model, including 52.1 oz/t silver, 0.03 oz/t gold, 10.5 percent zinc and 5.3 percent lead over 21.7 feet and 60.5 oz/t silver, 0.02 oz/t gold, 15.1 percent zinc and 7.3 percent lead over 14 feet. Drilling of the southern extension of the NWW Zone continues to define mineralization along the lower fold. Mineralization is represented by multiple distinct bands of massive sulfides and mineralized argillites and has similar geometry and dimensions to the current resource model. Significant results include 87.1 oz/t silver, 0.32 oz/t gold, 15.4 percent zinc, and 7.5 percent lead over 27.9 feet and 48 oz/t silver, 0.13 oz/t gold, 22.2 percent zinc, and 13.1 percent lead over 11.7 feet. Drilling of the Upper Southwest Zone identified mineralization that extends north of previous mining. Significant results include 35 oz/t silver, 0.02 oz/t gold, 5.9 percent zinc, and 3.2 percent lead over 15 feet. Drilling of the East Ore Zone shows that north and south of a weakly mineralized gap in the middle of the model, the mineralization defines a “pinch and swell” configuration where some recent intersections match or exceed the resource model. Significant results include 33.8 oz/t silver, 0.11 oz/t gold, 3.2 percent zinc 1percent lead over 11.9 feet.

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