The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Like the rest of the world, 2017 marked the first year of increased mineral exploration spending in Alaska since 2011 North of 60 Mining News – April 1, 2018
EPA's annual Toxic Release Inventory implies that waste rock dug up and then stored at the Red Dog Mine is a pollutant that is released into the environment.
Best known for its copper and zinc, the volcanogenic massive sulfide deposit at Constantine Metal's Palmer project in Southeast Alaska is roughly 25 percent barite, a mineral considered critical to the United States.
In 2017 Alaska’s mineral exploration industry saw its first up-tick in exploration spending since 2011, an increase that S&P Global Market Intelligence’s “World Exploration Trends” indicates was mirrored on the world-wide level.
According to S&P’s data, the worldwide exploration industry spent $8.4 billion in 2017, the first such increase in spending since 2012. S&P also forecast a 15-20 percent increase in exploration spending for 2018 as well.
The study also showed that demand is forecast to remain strong although core inflation rates are expected to rise in 2018.
Five-year demand estimates for copper, zinc, nickel, and coal are expected to increase dramatically while iron and gold demand is expected to trade within recent demand limits. As a consequence, metal prices are expected to remain stable or increase as stockpiles become depleted and demand continues to outstrip supply.
However, early-stage “grassroots” exploration continues to be a hard sell, with percentages spent on such exploration falling to a 20-year low of only 25 percent of total exploration spending. Also alarming, was the fact that major mining companies spent only 1.8 percent of their total revenue on exploration in 2016 and estimates for 2017 look similar.
Most-favored nation status fell to Canada and Australia, who each garnered 14 percent of worldwide exploration spending, followed by the U.S. and Chile with 8 percent each.
Most-favored metals were gold, with just over half of all exploration spent looking for that metal, while base metal exploration garnered a distant 30 percent of the exploration budgets.
The darling metals d’jour included lithium with $157 million spent on exploration in 2017 while cobalt came in at $36 million spent on exploration in 2017.
Despite strong and rising prices and a very shaky supply scenario, platinum group metals garnered less than 1 percent of all exploration spending in 2017.
And finally, mimicking what we are seeing in Alaska so far in 2018, the global drilling rates increased steadily in 2017, finishing the year with the highest number of drilling programs active since the 1st quarter of 2012.
WESTERN ALASKA
In a joint letter to National Geographic, Teck Resources Ltd. and partner NANA Regional Corp. took the organization to task for its wildly inaccurate article on the Red Dog mine and the town of Kotzebue. The first embarrassing geographic blunder that National Geographic made with respect to Kotzebue was stating the “Alaskan town released an astonishing 756 million pounds of toxic chemicals into the environment.” It followed that completely wrong statement with an equally inaccurate whopper, stating that “all of Kotzebue’s reported emissions came from the Red Dog Mine.” Notwithstanding the fact that Red Dog and Kotzebue are over 80 miles apart, and the fact that Kotzebue receives none (zero, cero, null) of the mine products produced by Red Dog, the most misleading part of the article concerned the equally misleading Toxic Release Inventory (TRI) that is published by EPA. The inventory is a perennial sore point in the mining industry because it implies that waste rock moved by a mine is somehow the same as pollutants released to the environment. The Red Dog partners rightly corrected this misinformation and pointed out that not only are all of Red Dog’s mine products contained in highly regulated and monitored storage systems but the Alaska Department of Fish and Game “has confirmed that the closest waterbody to the mine – Red Dog Creek – is healthier today than before mining began. Prior to mining, naturally occurring concentrations of metals made it impossible for fish to survive; today the creek is home to a thriving fish population.”
Well done Red Dog partners, on all fronts!
Graphite One Resources Inc. announced that the State of Alaska Senate has taken up a bill that would allow the Alaska Industrial Development and Export Authority (AIDEA) to issue bonds to finance infrastructure and construction costs of the Graphite Creek graphite project on the Seward Peninsula. In February 2017, Graphite One and AIDEA entered into a memorandum of understanding to assess potential Alaskan sites for the advanced materials processing plant, which will produce spherical graphite, a key component in electric vehicle batteries and other energy storage systems. Graphite is considered a critical mineral by the U.S. Geological Survey because of the United States’ reliance of imports for 100 percent of the graphite it uses.
Novagold Resources Inc. released 2017 drilling results for its flagship Donlin gold project, owned 50 percent with Barrick Gold. The project is on land owned by mineral estate owner Calista Corp. and surface estate owner The Kuskokwim Corporation. The 2017 core drilling included 16 core holes (7,040 meters) in a number of areas of the project. Significant results included hole DC17-1821, which intersected 130.5 meters grading 5.93 grams of gold per metric ton starting at 205 meters; DC17-1821, which intersected 39 meters grading 9.34 g/t gold, starting at 342 meters; DC17-1827, which intersected 43.9 meters grading 7.6g/t gold, starting at 453.2 meters; DC17-1832, which intersected 64 meters grading 5.09 g/t gold starting at 547 meters; and DC17-1824, which intersected 30.4 meters grading 10.3 g/t gold, starting at 208.6 meters. This drilling not only confirmed pervious drilling that currently is inside projected open pit limits but it encountered significant mineralization outside of the open pit limits, justifying the value of optimization drilling. The company also reported that permitting activities for the project are on schedule with expected issuance of the final Environmental Impact Statement (EIS) by the U.S. Army Corps of Engineers in the coming months. The Corps’ Record of Decision (ROD) is expected to follow in the second half of 2018. Decisions on other key federal and state permits and approvals are expected to occur concurrently with or shortly after the Corps’ ROD.
Northern Dynasty Minerals Ltd. announced that it filed a technical report on its Pebble copper-gold-molybdenum project near Iliamna. At a 0.3 percent copper-equivalent cut-off, the deposit contains 6.456 billion metric tons in the combined measured and indicated categories at a grade of 0.40 percent copper, 0.34 grams of gold per metric ton, 240 ppm molybdenum and 1.7 g/t silver, containing 57 billion pounds of copper, 71 million ounces of gold, 3.4 billion lb of molybdenum and 345 million oz of silver. In addition, the deposit contains 4.454 billion metric tons in the inferred category at a grade of 0.25 percent copper, 0.25 g/t gold, 226 ppm molybdenum and 1.2 g/t silver, containing 25 billion lb of copper, 36 million oz of gold, 2.2 billion lb of molybdenum and 170 million oz of silver. The new resource is slightly larger than previous resource estimates, primarily due to revised metallurgical processing designs that resulted in higher expected metal recoveries.
CopperBank Resources Corp. announced that it has released a technical report on its San Diego Bay copper project near Sand Point. The report recommends trenching, mapping and geochemistry over areas marked by widespread hydrothermal activity. A magnetic survey over the entire property is also being considered to identify deep structures and the presence of intrusions under cover. The project hosts a 17-square-kilometer (6.6 square miles) area of strong hydrothermal alteration and intrusive rocks, consistent with an alteration halo over a porphyry system. All porphyry alteration facies have been described, including zones of potassic, advanced argillic and phyllic zones. Satellite images have identified widespread zones of high-temperature clay alteration. Strongly anomalous precious and base metal values were collected by previous operators in several areas of the prospect.
INTERIOR ALASKA
International Tower Hill Mines Ltd. announced that it had raised approximately US$12 million via a non-brokered private placement which will see institutional investor Electrum Strategic Opportunities Fund II, L.P. become a new shareholder, with 10.7 percent ownership of the company after completion of the private placement. The company intends to use the proceeds of the offering for the continuation of optimization studies at its flagship Livengood gold project in efforts to further improve and de-risk the project, continue required environmental baseline studies, and for general working capital purposes. The company also approved a 2018 budget of US$5.1 million, including expanded metallurgical studies started in 2017 to continue to define and refine the project flowsheet. Using the improved mineralization and alteration models now available for the deposit arising from the work completed in 2017, 4,000 kilograms of metallurgical composites have been shipped to SGS Vancouver to determine if different recovery or cost parameters should be applied to different portions of the orebody. Work is also planned to advance the environmental baseline efforts needed to support future permitting.
ALASKA RANGE
White Rock Minerals Ltd announced plans to conduct 4,500 meters of core drilling and other exploration work at its 100 percent owned Red Mountain volcanogenic massive sulfide deposit in the Bonnifield District. The initial drilling campaign will focus on infilling and extending Dry Creek and West Tundra Flats, deposits with a combined resource of 16.7 million metric tons grading 4.1 percent zinc, 1.7 percent lead, 0.2 percent copper, 99 grams of silver per metric tons and 0.7 g/t gold, including a high-grade component of 9.1 million metric tons at 5.8 percent zinc, 2.6 percent lead, 0.1 percent copper, 157 g/t silver and 0.9 g/t gold. In addition to resource definition drilling, the company also plans ground orientation electromagnetic geophysical surveys and possibly geochemical exploration across the two already identified deposits, application to its other targets of the best geophysics and geochemistry exploration tools determined from the on-ground orientation work and follow-up diamond drilling on the best of the more than 30 already identified exploration targets.
NORTHERN ALASKA
Trilogy Metals Inc. announced the positive results of a pre-feasibility study (PFS) for its Arctic copper-zinc-lead-silver-gold project on the Upper Kobuk Mineral project, a business relationship owned and controlled by Trilogy and NANA Regional Corporation. Under an option agreement between Trilogy Metals and affiliates of South32 Limited, South32 has the right to form a 50/-50 joint venture with respect to Trilogy’s Alaskan assets including the Arctic deposit. Proven plus probable mineral reserves used in the PFS are 43.04 million metric tons grading 2.32 percent copper, 3.24 percent zinc, 0.57 percent lead, 0.49 grams of gold per metric tons and 36 g/t silver. Highlights of the PFS include a pre-tax net present value (NPV), calculated at 8 percent discount rate, of US$1.94 billion calculated at the beginning of the three-year construction period and an internal rate of return (IRR) of 38 percent for the base case. The after-tax NPV was US$1.41 billion and after-tax IRR of 33.4 percent for the base case. At US$2.00 per pound copper price, after-tax payback is three years. The PFS estimates approximately 400 year round jobs during mine operations. Initial capital costs were estimated at US$779.6 million and sustaining capital of US$65.9 million for total estimated capital expenditures of US$845.5 million over the estimated 12-year mine life. In addition, closure and reclamation costs are estimated at $65.3 million. A minimum mine life of 12-years supports a maximum 10,000 metric-ton-per-day conventional grinding mill and flotation circuit to produce copper, zinc and lead concentrates containing significant gold and silver by-products. Life of mine strip ratio of 6.9-to-1. Total “all-in” cash costs (initial/sustaining capital, operating, transportation, treatment and refining charges, road toll, and by-product metal credits) are estimated at US63 cents per pound of payable copper. Improvements in the NPV and IRR of the project over the 2013 preliminary economic analysis (PEA) include an improved mine plan that moves approximately US$100 million in the pre-stripping costs forward which allows for a more aggressive mine ramp up over two years, rather than four years estimated in the PEA. Other cost improvements include use of liquefied natural gas (LNG) versus diesel to generate the average 12.6 megawatts of power needed, reducing power generation costs and saving approximately US$2 per metric ton in operating costs on processing, improved metallurgical recoveries and an almost 20 percent increase in resource tonnes along with an improvement in grade resulting from in-fill drilling programs conducted over the past few years.
SOUTHEAST ALASKA
Constantine Metal Resources Ltd. announced the initiation of a metallurgical test program to determine if a marketable barite concentrate can be produced as a co-product from the Palmer copper-zinc-gold-silver deposit near Haines. Barite constitutes about a quarter of the rock mass of the defined mineralized zones, and if recoverable has the potential to materially enhance the value of the already high-value mineralization. It’s recovery as a potential ore-mineral would also reduce ore processing waste. Current resources on the project include an inferred mineral resource of 8.1 million metric tons grading 1.41 percent copper, 5.25 percent zinc, 0.32 grams of gold per metric ton and 31.7 g/t silver. Barium content within the resource area averages approximately 13 to 15 percent, which equates to a barite mineral content of approximately 22 to 25 percent by weight. Approximately 80 percent of the barite consumed in the United State is imported from foreign sources, making barite a critical mineral according to the U.S. Geological Survey.
Curtis J. Freeman CPG #6901
Avalon Development Corp.
P.O. Box 80268
Fairbanks, AK 99708
Phone: 907-457-5159, Fax 907-455-8069
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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