Strategic metals ban rallies explorers

Underscoring the interconnected nature of the global mining market, not 48 hours after the John S. McCain National Defense Authorization Act was signed into law, the mining industry began wondering out loud how they were going to produce rare earth element, tungsten, tantalum and molybdenum in the near future.

Why these metals and why the worry now?

Because one of the many impacts the Defense Authorization Act will have on the U.S. economy is its ban on the U.S. Department of Defense's ability to purchase rare earth magnets and certain products made from the other metals from China, Russia, Iran and North Korea. The goal of the bill is to reduce our dependence on these nations for supplies of metals critical to national defense applications.

In order to reduce our dependence on foreign sources, the U.S. and other countries will need to ramp up domestic production of the raw metals and re-invent our long-lost manufacturing capabilities for value added products that contain these metals.

Since Alaska is well endowed with rare earth, tungsten, tantalum and molybdenum prospects and deposits, a geomercenary like me can't help but get lathered up over the possibilities implicit in the National Defense Authorization Act!

However, simply stating that we won't buy certain products from certain jurisdictions does not insure interest in, or profitability of, Alaska's strategic minerals, it simply changes the number of competitors that will be vying for what is in some cases a very small worldwide market.

If Alaska's mining industry is to gain by these recent events, it will need to focus on high quality targets with potential for future production costs in the lowest quartile. The challenge is there, the reward is there, the rest is just breaking rocks!

WESTERN ALASKA

Teck Resources Ltd. and partner NANA Inc. announced second quarter 2018 results from its Red Dog mine. During the quarter, the mine produced 153,600 metric tons of zinc in concentrate, a significant increase over the year previous production. Zinc ore grade was up significantly to 16.4 percent as were mill recoveries at 84.4 percent. The mine also produced 25,700 metric tons of lead in concentrate, a significant decrease due to lead ore grade decreasing to 4.7 percent while mill recoveries decreased slightly to 48.8 percent. The mine posted a C$161 million operating profit for the quarter, up significantly from the C$114 million profit in the year previous period. In accordance with the operating agreement between Teck and NANA, the mine currently pays NANA a royalty on net proceeds from production. Royalty costs for the quarter were C$22 million versus C$21 million in the year previous quarter. Full year production was increased over previous guidance and is now estimated at 535,000 to 550,000 metric tons of zinc.

Solitario Zinc Corp. announced that Teck American Inc., a wholly owned subsidiary of Teck Resources, commenced a field program on the Lik zinc project. The work program will consist of geologic mapping, relogging of existing core and conducting a gravity geophysical survey over a substantial portion of the 6,075-acre property. A total of 125,300 feet of core drilling in 229 holes has been completed on the property which has defined an indicated resource of 17.3 million metric tons grading approximately 12 percent zinc equivalent and an additional 2.9 million metric tons of inferred resource at approximately 11 percent zinc-equivalent. The project is situated approximately 14 miles northwest of Teck's operating Red Dog mine.

Graphite One Resources announced that it had closed a $4 million financing, primarily for use at its Graphite Creek graphite project near Nome. Shortly after that, the company reported the start of a field program at the project consisting of continued discussions with the communities closest to the project; approximately 2,000 meters of core drilling to tighten drill spacing within the identified mineral resource; collection of core samples to be used for additional metallurgical test work; assessment of various alternative project access routes, and reconnaissance level fish and wildlife surveys.

The big news of the month was the announcement that 50-50 partners Novagold Resources Inc. and Barrick Gold Corp. received major permits from two federal agencies on their Donlin Gold project. The project is on land owned by mineral estate owner Calista Corp. and surface estate owner The Kuskokwim Corporation. The U.S. Army Corps of Engineers and Bureau of Land Management issued a joint Record of Decision for the project four months after the publication of the Final Environmental Impact Statement, marking the completion of the multi-year federal environmental review process through the National Environmental Policy Act. The Corps issued a combined Clean Water Act Section 404 and Rivers and Harbors Act Section 10 permit while the U.S Bureau of Land Management issued the Offer to Lease for the right-of-way for those portions of the natural gas pipeline that would cross federal lands. Other key state and federal permits and approvals are scheduled to be finalized in the near future while the partners continue optimization work aimed at improving capital efficiencies. This new information will be needed to update the 2011 feasibility study.

Riversgold Ltd. announced an update on its 2018 exploration at its gold projects in Southwest Alaska. The 2018 field efforts include collection of surface geochemical samples from the Luna/Quicksilver and Gemuk projects and completion of an induced polarization (IP) survey over the Luna and Luna East drill targets. The company also plans to drill test various targets at Luna/Quicksilver, the first time drilling has been conducted at these targets. Results of this work are pending.

Redstar Gold Corp. recently announced the release of an NI 43-101 technical report for its Unga gold project on Unga Island. This report noted that the project has more than 25 areas showing precious, base metal and porphyry copper-gold mineralization. The Shumagin vein system extends along strike for 1,750 meters with drilling and surface work confirming the presence of high-grade gold-silver mineralization that remains open at depth and along strike. The Zachary Bay copper-gold prospect is one of the least-explored gold showings of the project while the Centennial gold deposit provides potential bulk-tonnage-style gold mineralization. The company indicated that it is entertaining selective partnerships on the project.

INTERIOR ALASKA

Kinross Gold Corp. announced second quarter 2018 results from the Fort Knox mine near Fairbanks. The mine produced 71,463 ounces of gold at a cost of $969 per ounce in the second quarter versus 91,848 ounces of gold at a cost of $635 per ounce in the year previous period. Production decreased compared with second quarter of 2017 largely due to a decrease in ore grades. The mill treated 3,106,000 metric tons of ore grading 0.44 grams of gold per metric ton with a mill recovery of 80 percent. The heap leach saw additions of 4,279,000 metric tons of ore grading 0.18 g/t gold. On the exploration front, the mine continued development work on the Gilmore extension to the west of the main pit. The project is expected to extend mine life to 2030 at a low capital cost; generate an internal rate of return of 17 percent at a $1,200/oz gold price; and increase life-of-mine production by approximately 1.5 million gold-equivalent ounces. To the east of the main pit, drilling at the East Wall extension is ongoing and has yielded encouraging results from the first few holes. A review of the Gil Sourdough resource is also underway to evaluate its potential to add production to future operations at the mine.

Coeur Mining Inc. announced that it had entered into an agreement to acquire 100 percent of Northern Empire Resources Corp., primarily to obtain the rights to the latter's Sterling project in Nevada. However, Coeur also will obtain the rights to the Richardson gold project near Fairbanks. Plans for Richardson were not released.

Endurance Gold Corp. said it has begun a summer exploration program of trenching, geological mapping and sampling at the Trout and Wolverine prospect, two of the targets on its Elephant Mountain project in the Rampart-Eureka-Manley Hot Springs district. The 2018 trenching will be conducted on the Trout target, an area drained by the placer gold bearing South Fork Quail and Bonanza Creeks, tributaries of Quail Creek. Within a strong, 1,000-meter-long gold-in-soil anomaly at Trout, detailed power auger soil sampling has successfully defined a continuous area mapped as a deeply weathered oxidized intrusive-hosted shear zone in which gold values exceed 200 parts per billion gold over 175 meters of strike and 25 to 50 meters width. Within this gold contour, over 25 percent of the auger soil samples exceed 800 parts per billion gold, with peak values of 2,330 parts per billion, 2,190 parts per billion, 1,860 parts per billion and 1,000 parts per billion gold. In addition, work will be completed at Wolverine to expand and define the extent of visible gold bearing quartz vein stockwork and evaluate several other targets identified with earlier initial sampling.

ALASKA RANGE

White Rock Minerals Ltd. announced additional drill results from its Red Mountain volcanogenic massive sulfide deposit in the eastern Bonnifield District. Significant results from the previously undrilled Hunter prospect include Hole HR18-01 cut 1.4 meters of massive sulfide averaging 17.4 percent zinc, 3.9 percent lead, 90 g/t silver and 1.6 percent copper 48.2 meters down-hole. This equates to 25.8 percent zinc-equivalent when you consider the value of all the metals encountered. Hole HR18-02, which was drilled from the same pad at a shallower angle, cut 1.8 meters averaging 13.8 percent zinc, 3.1 percent lead, 56 g/t silver and 0.9 percent copper, or 19.5 percent zinc-equivalent, 60.8 meters down-hole. Mineralization remains to depth and along strike in both directions. Mineralization occurs as massive sulfide over 500 meters of strike east-west within a 45 degree north-dipping carbonaceous phyllite that can be traced over 1,000 meters of strike. Hunter is one of seven new prospects – Dry Creek South, Dry Creek East, West Tundra, Ram, Megan's Draw, and South Platypus – identified by ground and airborne geophysics, mapping and geochemical sampling.

PolarX Ltd. announced results of copper and gold mineralization intersected in drilling 850 meters east of the current resource base at the Zackly prospect on its Alaska Range project. Hole ZX-18020 cut 54.6 meters grading 0.6 percent copper and 2.8 g/t gold starting at 2.5 meters depth. Additional drilling has been done in this area and additional drilling along strike is planned. Mineralization is hosted in garnet skarn above a fault which brings the mineralized skarn into contact with intrusive diorite. The company also announced an increased budget for the project in order to expand and follow up on drilling success at Zackly.

NORTHERN ALASKA

Alaska newcomer Valhalla Metals Inc. announced the completion of a Canadian NI 43-101-compliant mineral resource estimate for its fully owned Sun volcanogenic massive sulfide deposit (VMS) in the Ambler Mining District. Using a US$75 per metric ton cutoff value, the deposit is estimated to contain an indicated resource of 1.71 million metric tons grading 4.32 percent zinc, 1.48 percent copper, 1.11 percent lead, 60 g/t silver and 0.21 g/t gold; and an inferred resource of 9.02 million metric tons grading 4.18 percent zinc, 1.21 percent copper, 1.46 percent lead, 81.7 g/t silver and 0.25 g/t gold. This comes to 10.73 million metric tons of combined resource averaging 10.97 percent zinc-equivalent. The Sun property is comprised of 230 contiguous state mining claims covering about 14,892 hectares. The company owns a 100 percent interest in the claims and all historical technical data generated on the Sun deposit and adjacent lands. The deposit's mineralization occurs on the north limb of an overturned syncline in felsic volcanic rocks in the upper portion of a northeast-trending belt of felsic metavolcanic and metasedimentary rocks. Significant mineralization has been intersected on the property over a strike length of almost 3,500 meters, from the southernmost drill hole at the SW deposit northeast to the Picnic Creek prospect. The Main and SW deposits are comprised of multiple individual lenses that are spatially related; three primary horizons of massive-sulfide mineralization have been identified at the Main deposit, and two at the SW deposit. Mineralization is comprised primarily of sphalerite, tetrahedrite-tennantite, galena, chalcopyrite, bornite, pyrite, pyrrhotite, and arsenopyrite. The report recommended additional drilling within the current resource area to confirm and upgrade the existing resource base, refine the associated geologic model, and obtain samples for bench-scale metallurgical testing. In addition, exploration in other areas of the property was recommended, both to further refine existing prospects and generate new ones. Welcome to Alaska Valhalla Metals!

Goldrich Mining Company announced interim production figures from its Chandalar placer gold mine in the Brooks Range. The Chandalar mine is owned by Goldrich NyacAU Placer, LLC, a 50-50 joint venture between Goldrich and NyacAU, LLC. Total mine production from season re-start on May 31 through the end of July was 10,557 oz of raw placer gold, equivalent to approximately 8,657 oz of fine gold. This compares to total production through July 2017 of 7,262 total oz of raw placer gold, or approximately 6,050 oz of fine gold. The company indicated that normal operating season is June through mid-September. The company indicated that anticipated production figures for 2018 will not allow GNP to meet year-end gold deliveries to Goldrich at which point GNP will be dissolved and mining operations by GNP will cease. The parties have entered arbitration in an attempt to resolve differences.

On a more personal note, Goldrich Mining announced the sad news that Charles G. "Riz" Bigelow recently passed away. Riz was a valued board member of the company since 2003 and a larger-than life personality in Alaska for well over 50 years. Goldrich stated that "From 1962 to 1972, he managed Kennecott Corporation's Alaska mineral programs. His projects culminated in the making of five of the six most notable metal mines to enter production in Alaska over the last 100 years (Greens Creek, Red Dog, Fort Knox, Pogo and Valdez Creek). Mr. Bigelow discovered the Ambler District and Chandalar Copper Belt, which share the southern Brooks Range mineral belt with the Company's Chandalar Gold property." Riz had an infectious enthusiasm, a quick wit and an ability to distill a prospect's potential into Twitter-length summaries or 100-page reports as the situation demanded. He will be missed by all who he touched in his long and fruitful career.

SOUTHEAST ALASKA

Hecla Mining announced updated second quarter 2018 production results for its Greens Creek mine on Admiralty Island. The mine produced 1,999,791 oz of silver and 13,720 oz of gold, compared to 1,913,232 oz of silver and 13,118 oz of gold produced in the year previous period. The higher silver and gold production was due to higher ore grades as a result of mine sequencing. Operating costs decreased significantly to a -$3.47/oz of silver versus $1.86/oz of silver in the year-previous period. The average grade of ore mined during the quarter was 12.46 oz/t silver, up from the 12.11 oz/t ton average mined in the second quarter of 2017. During the second quarter the mine also produced 5,305 tons of lead and 14,179 tons of zinc. The mill processed 208,409 tons of ore during the quarter, down from 210,788 tons milled in the year-previous period. Increased silver production resulted from higher average grades offset by lower mill throughput, which averaged 2,290 tons per day versus 2,316 tons per day in the year-previous second quarter. On the exploration front, drilling has upgraded and expanded the Deep 200 South, Gallagher, East Ore, Upper Plate and Southwest Bench zone resources. Drilling of the southern portion of the Deep 200 South Zone, included intersections of 101.4 oz/t silver, 0.09 oz/t gold, 4.2 percent zinc and 2.1 percent lead over eight feet. Mineralization is present as two flat-lying, high-grade lenses that have been upgraded to indicated resource status. Exploration drilling south of the current resource has extended 200 South Bench mineralization another 250 feet with an intersection of 31.8 oz/t silver, 0.01 oz/t gold, 2.2 percent zinc and 1 percent lead over 23.6 feet. Deeper drilling has defined a third, lower mineralized horizon along the mine contact that has been folded to depth relative to the bench mineralization. Recent intersections outside the modeled ore zone to the west include 22.8 oz/t silver, 0.38 oz/t gold, 2.7 percent zinc and 1.3 percent lead over three feet. Shallow, east-dipping mineralization more than 250 feet west of the modeled ore zone includes 39.9 oz/t silver, 0.02 oz/t gold, 1.3 percent zinc and 0.7 percent lead over 9.2 feet. Drilling of the Gallagher Zone confirmed may have increased the resource and mineralization further to the west. Intersections from this program include 10.6 oz/t silver, 0.04 oz/t gold, 2 percent zinc and 1 percent lead over 23.9 feet. Drilling of the Upper Plate Zone suggests that there are two, flat-lying ore zones near the mine portal elevation. South of the current lower band, step-out drilling has intersected 42.9 oz/t silver, 0.04 oz/t gold, 3.1 percent zinc and 1.5 percent lead over 24.1 feet. The upper band is thicker than the resource model, including 21 oz/t silver, 0.02 oz/t gold, 9.7 percent zinc and 5.8 percent lead over 20.8 feet, and recent drilling has also extended this mineralization to the west and south. Drilling from surface in the third quarter could expand this resource further to the west and north. Drilling of the Lower Southwest Zone indicates that the newly-defined lower ore band extends farther to the north and higher in elevation than modeled. Recent drilling of the upper remnant limb of the lower Southwest Zone shows the mineralization in this section is much thicker than anticipated. In the East Ore Zone intersections from definition drilling, including 18.8 oz/t silver, 0.24 oz/t gold, 12.4 percent zinc and 4.7 percent lead over 24.1 feet, confirm previously modeled resource estimates, particularly at higher elevations.

Coeur Mining Inc. reported updated second quarter 2018 production results from its Kensington mine. The mill processed 168,751 tons of ore, a slight increase over the 158,706 tons of ore produced in the year previous period. The mine produced 25,570 oz of gold from ore grading 0.16 oz/t gold with an average recovery of 92.6 percent. Total production, grade and recovery were down slightly compared to the second quarter of 2017. These lower production figures were anticipated due to mine sequencing. Higher grades, recoveries and production are anticipated for the remainder of 2018. Average production costs were $1,195/oz versus $1,010/ oz in the year previous period. The company also indicated that development work and dewatering of the high-grade Jualin deposit is progressing with production increases expected in the second half of 2018. The company expects full-year 2018 production from the mine at 115,000 to 120,000 oz of gold. On the exploration front, the Seward vein outcrops on surface approximately 1,900 feet above the mine access ramp. Drilling was completed at ramp level to test for down-dip continuity and two holes have cut the mineralized structure opening the door for further drilling. Drilling also tested the lower and upper portions of the Raven structure, where results are encouraging. Deeper zones were drilled within the Kensington Main deposit, referred to as Blocks M and L. A new drill campaign began in early July at the new Elmira Zone, located above Kensington Main. Historic drilling in the Elmira Zone predated NI 43-101 standards and, as a consequence, infill holes are necessary in order to be in a position to declare resources in the zone. Along with this new zone, the nearby Johnson Vein will be tested and potentially drilled later in the year.

Constantine Metal Resources Ltd. and joint venture partner, Dowa Metals & Mining Company Ltd., announced additional drill results and initial results from metallurgical work at its Palmer VMS deposit. Significant drilling results from the South Wall zone include 15.5 meters grading 1.6 percent copper, 4.8 percent zinc, 25 g/t silver, 0.1 g/t gold in a 50-meter step-out. This interval includes 4.1 meters at 15.9 percent zinc and 6.1 meters at 3.6 percent copper. The results expand the zone to the west and confirm continuity of grade and width to the west and down-plunge toward the deeper South Wall EM zone. At the AG zone drilling intercepted 21.1 meters grading 0.5 g/t gold, 92 g/t silver, 1 percent zinc, 0.4 percent lead, 55 percent BaSO4 (barite) in a 90-meter step-out to the southeast, doubling the known strike of the AG zone to 450 meters. Mineralization remains open to expansion. On the metallurgical front, initial tests confirmed that a high-quality barite concentrate can be produced as a co-product of copper-zinc-gold-silver recovery. Results indicate that 91.1 percent of the barite can be recovered to a clean, high-grade concentrate with a high specific gravity of 4.44. The barite can be recovered by flotation from the tails of copper and zinc flotation. As a result of these tests, barite will now be modelled and reported along with copper, zinc, silver and gold in the new mineral resource update that is currently in progress. Tests also showed zinc recovery of 93.1 percent to a concentrate grading 61.3 percent zinc, an 8.2 percent improvement in recovery and an increase in zinc concentrate grade over previous locked cycle tests. Tests also showed high copper recoveries of 88.9 percent to a concentrate grading 24.5 percent copper, reproducing similar results to previous locked cycle tests. Combined total silver and gold recovery to copper and zinc concentrates of 90.6 percent and 69.6 percent respectively, the large majority of which reports to the copper concentrate. Grindability tests indicate a low Bond Work Index of 6.3 kilowatt-hours per metric ton, which is considered very soft, promising low grinding cost and power consumption.

Curtis J. Freeman CPG #6901

Avalon Development Corp.

P.O. Box 80268

Fairbanks, AK 99708

Phone: 907-457-5159, Fax 907-455-8069

Email: [email protected]

Website: http://www.avalonalaska.com

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