Good time to be in Alaskan mineral sector

As we transition from 2017 into 2018, the weight of evidence pointing to a long-awaited mining industry up-tick is being trumpeted from every financial institution, brokerage house and mining pundit across the globe.

For example, RBC Capital Markets' newly released "2018 New Year Preview" has this to say: "We are in the mid-stages of a stock market recovery and the early stages of an economic cycle recovery. Gold is already in a phase where it out-performs other financial instruments and base metals are just starting into that out-perform envelope. Gold is being support by strong ETP buying, Russian central bank buying and flat mine supply."

Zinc prices are expected to remain high as supplies continue to lag behind demand.

Copper demand remains strong and growing with demand expected to exceed supply in the near term.

A little farther out, nickel will be in a supply deficit position making nickel assets attractive for those with a long-term game plan.

RBC expects no absolute reserve growth for the major and intermediate producers since this turnip has been squeezed hard for the last five years and there is just not much more blood left in it!

Driven by the need to replace reserves, producers are being driven to invest exploration joint ventures. Single-asset producers are going to be prime merger-acquisition targets, particularly those with long-life assets in the lower quartile of production costs.

The market is expected to reward companies having success through the drill bit but this two-edged sword means punishment for those who drill dusters.

Producers have less scope to reduce costs further, particularly with rising petroleum prices, meaning new cost reductions will come largely from internally generated acquisition of lower cost producers.

All in all, it seems like an ideal time to be in the mining industry and a particularly good time to be in the Alaskan mineral industry.

WESTERN ALASKA

Northern Dynasty Minerals Ltd. announced through the Pebble Partnership that the U.S. Army Corps of Engineers (USACE) has accepted the Pebble project's permit application, commencing the permitting process under the National Environmental Policy Act (NEPA). The permit application entails a significant smaller mine plan and numerous environmental safeguards including the consolidation of most major site infrastructure in a single drainage, the North Fork Koktuli; the absence of any primary mine operations in the Upper Talarik drainage; more conservative Tailings Storage Facility ("TSF") design, including enhanced buttresses, flatter slope angles and an improved factor of safety; separation of potentially acid generating ("PAG") tailings from non-PAG bulk tailings for storage in a fully-lined TSF; no permanent waste rock piles and no cyanide use.

The mine plan calls for four years of construction activity followed by 20 years of mine life, including 14 years of mining using conventional drill-blast-shovel operations, followed by six years of milling material from a low-grade ore stockpile. The mining rate will average 90 million tons per year, with 58 million tons of mineralized material going through the mill each year (160,000 tons per day). Life of mine stripping ratio is an extremely low 0.1 to 1. Mineralized material will be processed via conventional froth flotation. On average, the process plant will produce about 600,000 tons of copper-gold concentrate, containing 287 million pounds of copper, 321,000 ounces of gold and 1.6 million ounces of silver, along with about 15,000 tons of molybdenum concentrate, containing 13 million pounds of molybdenum, each year.

Mine infrastructure includes a 230 megawatt power plant located on-site, an 83-mile transportation corridor from the mine site to a port site on the west side of Cook Inlet, a permanent, year-round port facility near the mouth of Amakdedori Creek on Cook Inlet and, a 188-mile natural gas pipeline from the Kenai Peninsula to the project site.

The project will directly employ about 2,000 workers during its four-year construction phase and approximately 850 full-time workers during its 20-year operations phase.

Quaterra Resources Inc. announced that drilling at the Groundhog copper prospect completed in 2017 has intersected intrusive rocks and sulfide mineralization commonly associated with porphyry copper mineralization. Four widely-spaced core holes totaling 4,073 feet were drilled to test induced polarization anomalies over an area measuring approximately six miles north-south by three miles east-west. Hole 3/3A intercepted propylitically altered Jurassic-age gabbro-pyroxenite-basalt basement rocks from 0 to end of hole at 1,178 feet. The strongly altered and pyritized core was uniformly anomalous in copper (25 to 612 parts per million) with scattered anomalous molybdenum (trace to 177 parts per million) and gold (trace to 827 parts per billion). The strong alteration and anomalous copper, molybdenum, and gold suggest that the hole may be above or adjacent to a porphyry copper system. In addition, hole 4 encountered pyritized and silicified multi-phase intrusive porphyry rocks over its entire 985 feet. The dominant rock was a crowded quartz-plagioclase-potassium feldspar porphyry intruded by more altered and mineralized feldspar porphyry, both of which were intruded by a late unmineralized intrusive breccia. The strongly altered and pyritized porphyritic rocks contain weakly anomalous copper and zinc values. The company is evaluating the results of drilling in light of known geophysical anomalies prior to planning work for 2018.

CopperBank Resources Corp. and underlying land owner Aleut Corporation announced the extension of their exploration agreement on the Pyramid and San Diego Bay copper projects near Sand Point. For the Pyramid project, the exploration agreement is extended for calendar years 2018 and 2019. CopperBank will make a minimum exploration expenditure of US$1 million for each year. On or before Jan. 1, 2020, CopperBank has the option to enter into a mine lease for portions of the Pyramid exploration lands on the same terms set out in the original option agreement signed in 2010. At the San Diego Bay project, a new exploration agreement specific to this project is part of the extension, and will be in effect for the years 2018, 2019 and 2020. CopperBank will make a minimum exploration expenditure of US$300,000 for 2018 and 2019, and US$500,000 for 2020. On or before January 1, 2021, CopperBank has the option to enter into a mine lease for portions of the San Diego Bay exploration lands on the same terms set out in the original option agreement signed in 2010. The company also announced its retention of SRK Consulting to prepare an NI 43-101-compliant report on the San Diego Bay project. The report will include a structural and hyperspectral study of the prospect. Work in 2017 indicated that that Balboa area on the western side of the prospect displays 2,700- by 500-meter multiple element soil anomaly in copper, gold, molybdenum and silver. This area includes the auriferous Oh Boy Vein in its southwestern part, historically described as a 30-meter-wide quartz vein zone. Strongly silicified andesite and volcaniclastic rocks cut by quartz veins bearing sulfides and hydrothermal breccia are the dominant lithologies at Balboa. The metal assemblage may reflect the presence of a porphyry-style mineralization. The area sampled near the intrusion at Renshaw Point on the eastern side of the prospect revealed a soil anomaly of nearly 400 meters in length returning silver values averaging more than 1 gram per metric ton and local gold values over 0.2 g/t along the intrusive contact.

Redstar Gold Corp. announced drill results from its fall 2017 drill program, at the Unga project near Sand Point. The program was comprised of 13 holes, totaling 2,641 meters, and was designed to test the Bunker Hill and East Zone within the Shumagin Gold Trend and one area within the Rising Sun Gold Zone in the Apollo-Sitka Gold Trend. Drilling in the Shumagin zone extended mineralization from 300 to over 1,750 meters along strike with each of the 111 holes drilled in 2017 encountering gold-silver mineralization. Significant results include hole 17SH042, which returned 0.7 meters grading 4.33 grams of gold per metric ton and 2.13 g/t silver; and hole 17SH047, which intercepted 0.5 meters grading 3.62 g/t gold and 10.2 g/t silver. At the Rising Sun Prospect, located 300 meters east of the Apollo open stope, mineralization consists of an approximate 25-meter-wide outcropping of multi-generation veins, vein breccias and stockwork identical in geology and sub-parallel to the Apollo vein system. The two holes completed at Rising Sun encountered Shumagin-style quartz-adularia-carbonate breccias and stockwork identical to those previously sampled in and around the Sitka Prospect. Narrow, 1.5- to 6.2-meter-wide crustiform to cockade textured breccias haloed by narrow quartz-sericite-pyrite alteration and strong silicification cut moderately propylitic altered basalt, andesite and hyloclasite flows. Drill hole 17RS01 intercepted 0.06 g/t gold and 17.3 g/t silver over 1 meter. Deeper drilling along drill hole 17RS02 returned similar values with the highest values returning 0.289 g/t gold and 18.05 g/t silver over 1.4 meter.

INTERIOR ALASKA

Kinross Gold announced acquisition of new lands, called the Gilmore land, immediately adjacent to its Fort Knox mine near Fairbanks. This parcel of land, on which the company completed approximately 73,000 meters of core and reverse-circulation drilling in 205 holes, has added 2.1 million gold ounces in estimated measured and indicated resources and an additional 300,000 ounces of estimated inferred resources. The company has commenced a Gilmore feasibility study that will analyze a layback of the current Fort Knox pit to access known mineralization on both land blocks. Further drilling and engineering are planned at Gilmore to evaluate the potential of upgrading a significant portion of the site's estimated measured and indicated resources and adding to its inferred mineral resource estimate. The company expects to provide an update on the feasibility study in mid-2018. With addition of the Gilmore resources, the mine now carries proven reserves of 23.97 million metric tons grading 0.48 grams per metric ton (366,000 ounces) gold with probable reserves of 68.2 million metric tons grading 0.43 g/t (949,000 ounces) gold. The company also carries measured and indicated resources of 238.1 million metric tons grading 0.42 g/t (3,229,000 ounces) gold and inferred mineral resources of 56.69 million metric tons grading 0.38 g/t (690,000 ounces) gold. Looking back to day one at Fort Knox and working our way to today, adding up all of the ounces depleted through production from 1996 through 2017 and then adding in the new reserves and resources, my estimates indicate the Fort Knox deposit contained over 14 million ounces of gold prior to start up.

ALASKA RANGE

White Rock Minerals Ltd announced planned exploration activities for the 2018 field season at their Red Mountain volcanogenic massive sulfide project in the Bonnifield District. The program includes up to 6,000 meters of diamond core drilling that will test for thickened intervals within the Dry Creek and West Tundra Flats deposits (5-10 holes); numerous extension targets defined by geochemical and geophysical vectors (5-10 holes); as well as a number of the new targets as ground surveys early in the field season firm-up target locations for drill testing (15-30 holes). In addition, the company plans to fly 1,800 line-kilometers of airborne electromagnetic geophysics to identify conductivity anomalies associated with massive sulfide mineralization to depths of 500 meters below surface. The company will also run orientation ground geophysics over the Dry Creek and West Tundra Flats deposits to determine the best ground geophysical methods for identifying massive sulfide mineralization in the area. These methods can then be applied to other prospects on the project to help identify anomalies for subsequent follow-up work. At a 3 percent zinc cut off, the combined Dry Creek and West Tundra Flats deposits contain inferred resources of 9.1 million metric tons grading 5.8 percent zinc, 2.6 percent lead, 0.1 percent copper, 157 grams per metric ton silver and 0.9 g/t gold.

PolarX Limited announced a series of late 2017 field results from its Stellar gold-copper project in the Alaska Range. Drilling from the Zackly prospect skarn returned significant results including 18.44 meters grading 1.3 percent copper and 1.2 grams per metric ton gold from 169.5 meters in ZM‐17010; 5.85 meters grading 1.2 percent copper and 2.2 g/t gold from 88.8 meters in ZM‐17015; 33.43 meters grading 1.2 percent copper and 1.3 g/t gold from 98.27 meters in ZM‐17002; and 20.43 meters grading 2.1 percent copper and 1.7g/t gold from 28.96 meters in ZM‐17007. These results are comparable to or exceed the grade-thickness intervals from historical drilling conducted in the 1980s, primarily due to larger core diameter and better recovery in the PolarX drilling. Additional drilling results are pending from six additional drill holes.

Marching Moose Capital Corp. (MMCC) announced that it has received conditional regulatory approval to close its previously announced acquisition of Avidian Gold Inc. by way of a three cornered amalgamation between MMCC, Avidian and MCCC Amalco Ltd., a wholly owned subsidiary of MMCC. Avidian's most advanced asset is the Golden Zone project in the central Alaska Range. The resulting corporation then changed its name to Avidian Gold Corp.

Miranda Gold Corp. announced that it has entered into a binding letter of intent with partner Gold Torrent Inc. to sell its 14 percent interest in the Lucky Shot gold project near Hatcher Pass. Terms of the deal include payment by Gold Torrent of $1 million in stages, issuance of 500,000 shares of Gold Torrent stock and payment of a $4.00 per ounce production royalty from production over 120,000 ounces up to 400,000 ounces. Recent estimates call for $26.2 million in capital costs to bring Lucky Shot into production in 2019 at an annual production rate of 20,000 ounces per year ramping up to 25,000 ounces in 2020.

NORTHERN ALASKA

Trilogy Metals Inc. and funding partner South32 Limited announced initial high-grade copper results from this summer's exploration diamond drilling program at the Bornite deposit at its Upper Kobuk Mineral project, a business relationship owned and controlled by Trilogy and NANA Regional Corporation, Inc. The 2017 exploration program included a total of nine holes comprising 8,437 meters. Due to inclement weather, two holes (RC17-241 and 242) were stopped before reaching target depth and cemented in preparation for re-entry during the 2018 drill program. Results from four new holes include hole RC17-237 which intersected two mineralized intervals totaling 30.5 meters averaging 0.73 percent copper, hole RC17-238W which intersected four mineralized intervals totaling 32.4 meters averaging 1.03 percent copper, hole RC17-239 which intersected three mineralized intervals totaling 50.6 meters averaging 1.36 percent copper and hole RC17-240 which intersected one mineralized interval totaling 25.1 meters averaging 0.96 percent copper. The 2017 drilling has doubled the size of the mineralized footprint which now measures 1500 meters by 2500 meters that is defined by a 50-meter-thick zone averaging 1 percent copper or better. The grade-times-thickness map suggests northeast and northwest-oriented controls on higher grade copper mineralization. Cobalt hosted in carrollite is present in core. Electron microprobe and metallurgical work will be conducted during the winter months with the objective of determining if the cobalt can be concentrated into a saleable product. The company also announced that metallurgical work on Bornite mineralization demonstrates that a high quality, 30 percent copper concentrate containing no deleterious metals can be produced. Grindability test work indicates an average Bond Work Index of 9.8 kiloWatt-hours per tonne, which is considered soft and therefore will reduce grinding costs and power consumption. A majority of the copper mineralization is well liberated at 100 microns, however, a minor fraction of the contained copper consists as very fine-grained copper sulfide minerals occurring in pyrite (5 to 15 percent of the overall copper). And last but not least, the company has announced that South32 has approved a $10 million exploration budget for the Bornite project in 2018

Trilogy Metals Inc. and funding partner South32 Limited also provided an update on the 2017 program at the Arctic volcanogenic massive sulfide deposit at its Upper Kobuk Mineral project, a business relationship owned and controlled by Trilogy and NANA Regional Corporation, Inc. The 2017 field program included 785.2 meters of diamond drilling to collect representative sample material to conduct bulk ore sorting studies for the Arctic deposit. An additional 273.8 meters of sonic drilling was completed to collect geotechnical, hydrological, geothermal, and hydrogeological information for the tailings management facilities and waste rock dump for the project in support of the upcoming Pre-Feasibility Study, anticipated for release in early 2018. Significant drill results include hole AR17-0159 which intersected four mineralized intervals, including 31.11 meters of 1.58 percent copper, 2.84 percent zinc, 0.69 percent lead, 0.38 grams per metric ton gold and 30.79 g/t silver, and 15.25 meters of 2.91 percent copper, 4.34 percent zinc, 0.96 percent lead, 0.66 g/t gold and 44.27 g/t silver; and hole AR17-0160 intersected four mineralized intervals, including 25.95 meters of 2.43 percent copper, 1.19 percent zinc, 0.16 percent lead, 0.59 g/t gold and 46.31 g/t silver, and 17.23 meters of 4.42 percent copper, 5.32 percent zinc, 1.37 percent lead, 0.13 g/t gold and 43.92 g/t silver. The company also completed 11 sonic drill holes (273.8 meters), 26 test pits, and 2 pump tests during the 2017 field season. This program was developed to collect geotechnical, hydrological, geothermal (permafrost), and hydrogeological information for the various tailings management facilities and waste rock dump areas for the Arctic project. Four of the sonic drill holes were instrumented with thermistors, piezometers and data loggers that will allow for long term baseline monitoring information to be gathered that will be required for a future permitting document. The Company continues to advance the acid-base-accounting static and kinetic test work at the deposit, with 2017 efforts including collection of six on-site barrel samples to support the kinetics program. Maintenance and monitoring of all kinetic tests continues into 2018.

Goldrich Mining Company announced the 2018 budget for its Chandalar placer mine in Alaska, as provided by our joint-venture partner NyacAU, LLC. The proposed budget is based on production of approximately 21,000 ounces of gold over a 100-day operating season with the plant operating an average of 20 hours per day. The proposed work will require utilizing the winter trail to bring in additional equipment and complete winter stripping to allow operations to begin at the earliest opportunity in the spring.

SOUTHEAST ALASKA

Hecla Mining Company announced final 2017 production results for 2017 at its Greens Creek mine. For 2017 the mine produced 8.4 million ounces of silver and 50,855 of gold. For the fourth quarter, production was 2.1 million ounces of silver and 11,565 ounces of gold. Lower silver and gold production, when compared to 2016, was due to the expected lower grades but the silver production still exceeded original estimates. The mill operated at an average of 2,300 tons per day in 2017, a record which is about 15 percent greater than when the company became the operator in 2008.

Coeur Mining Inc. announced year-end 2017 production results from its Kensington mine. The mine produced 115,094 ounces gold during the year, a significant year-over-year decrease due primarily to lower than expected grades in the first nine months of the year. Fourth quarter gold production increased 27 percent quarter-over-quarter to 34,932 ounces, the highest quarterly production since the fourth quarter of 2013. This was primarily the result of mining the higher-grade Raven zone, which returned average grades 29 percent higher to 0.22 ounces of gold per ton. For 2017 the operation milled 668,727 tons of ore grading 0.18 oz/t gold with a gold recovery of 93.5 percent. During the fourth quarter, mining of development ore continued at Jualin, where production is expected to accelerate throughout 2018. Higher grade ore from Jualin is expected to be accompanied by higher grade production in 2018 from the Raven zone. The company is estimating full-year production of 115,000 to 120,000 oz of gold. The company also provided an exploration update for the operation which indicated that exploration of deeper portions of Kensington Main continues to indicate an expansion of the zone's resource, with drill results including 7.8 feet at 0.62 oz/t gold and 2.3 feet at 1.66 oz/t gold from Block M. New drill stations have been added and drilling in the adjacent Block L has resumed. At Jualin, two rigs have been active from underground focused on upgrading existing resources and two have been drilling from surface. Limited assays are available. Significant results include 4.5 feet of 4.48 oz/t gold and 4.5 feet with 6.68 oz/t gold. Portions of Jualin Vein #4 are believed to continue at depth and to the northeast based on current drill results. Drilling also has resumed on the nearby Raven vein, where high-grade narrow-vein mining continues to augment Kensington's overall production. Significant drill results include 5.0 feet of 3.23 oz/t gold.

Grande Portage Resources Ltd. announced additional results from a 12-hole, 3,700-meter drill program at its Herbert gold project near Juneau. Drill hole 17Y-2 intersected the Deep Trench Vein over 500 meters below the surface exposure of the vein, which is 250 meters deeper than any prior drilling and hit 0.95 meters grading 12.35 grams per metric ton gold. The Main Vein system was also intersected about 120 meters deeper than any earlier testing. Drilling to date has discovered no depth limitations to the mineralized structures of the Deep Trench, Main, or the Goat Veins. The primary veins were intersected in the predicted locations, and the drilling intersected numerous subsidiary veins off the main structures which locally showed very strong values and hold promise for additional mineralization.

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