Freeman throws down rare earth gauntlet

Earlier this month Reuters reported that several agencies within the U.S. Federal government were "rapidly assessing" our domestic ability to mine and refine rare earth elements and utilize those 17 super cool elements in value-added products needed for a wide and ever-growing array of consumer and national defense products.

Not surprisingly, mining industry officials demurred when quizzed about supplying information on where rare elements might be mined in the U.S. and how soon such mining could be implemented. Reuters suggested this lack of response was indicative of the sensitivity surrounding rare earth element prognostication, particularly during the on-going murky and often contentious U.S.-China trade talks.

I think the lack of response was driven by much simpler dynamics, namely that the U.S. has no near-term domestic sources of these elements and no domestic ability to manufacture value-added products from rare earth element compounds. The U.S. outsourced its rare earth element mining and manufacturing capability over 20 years ago and has no deposits that are economically viable at current or projected metals prices. Furthermore, worldwide discovery-to-production timelines are on the far side of 12 years and creeping up with each passing year.

In the U.S. those numbers are likely even longer than 12 years, so even if we had hot prospects to put into the production pipeline, we'd have to face at least three more Presidential elections before we would expect initial production from one of those hot targets!

Long story short, the U.S. has no near-term sources of rare earth elements that can be brought into production rapidly and even if it did have a mineable source that could be developed rapidly, the U.S. no longer has the capability to make anything useful out of the raw mine products.

What about subsidies you may ask? The U.S. government is no stranger to subsidizing metals production in time of need, having done so on a wide variety of metals over the last 100 years. This sort of needs-based subsidization prompted President Ronald Reagan to make the following observation about how government works: "If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

Clearly, the rare earth element industry in the U.S is not moving, but subsidizing it is not the answer.

Since a rant without a recommendation is valueless, here is my recommendation: open up some rare earth element-enriched lands here in Alaska that were closed to mineral development by ANILCA (Alaska National Interest Lands Conservation Act).

For example, the Mount Prindle area in Interior Alaska and the Old Crow batholith in northeastern Alaska, both of which would fit the bill: 1) significant but untapped rare earth element potential; 2) with demand assured, there is no need to subsidize anyone to invest in exploration or development efforts; 3) these are 100 percent domestic sources; and 4) the Chinese do not own any interest in the prospective lands.

The gauntlet has been thrown!

WESTERN ALASKA

Novagold Resources Inc. announced second quarter financial results and updated progress on its Donlin gold deposit, a 50-50 joint venture with Barrick Gold. The project is on land owned by mineral estate owner Calista Corp. and surface estate owner The Kuskokwim Corporation. Following receipt of federal permits earlier this year the company continued to advance permits from State of Alaska agencies, including the Alaska Department of Natural Resources Division of Mining, Land, and Water, who issued preliminary land use decisions for the project's transportation corridor in January, including the access road and related material sites, airstrip, and upriver Jungjuk Port. The public comment period for these decisions closed on March 29 and final approvals are anticipated by the end of 2019. In January, the Alaska Department of Natural Resources Division of Oil and Gas, State Pipeline Coordinator's Section issued a preliminary decision to authorize the sections of the pipeline proposed for state lands. The public comment period for this decision closed on March 22 and final approval is anticipated by the end of 2019. The partners initiated safety training and camp preparations in May for the geotechnical field program required to support Alaska Department of Natural Resources' approval of the Alaska Dam Safety certificates for the tailings storage facility and water retention dams. This work will consist of drilling and field testing with installation of monitoring instruments, a pumping test program at the tailings storage facility, excavation of test pits, geophysical surveys, and laboratory testing. This work will help advance the engineering from feasibility level to the final construction packages. The company indicated that cost estimates for the project for 2019 remain unchanged at $26 million.

Northern Dynasty Minerals Ltd. reported that the US Environmental Protection Agency announced it will finally re-start the process of withdrawing a Proposed Determination affecting the Pebble copper-molybdenum-gold project initiated by the Obama Administration in 2014. The EPA had attempted an unprecedented pre-emptively veto of the project before it received the required regulatory review under the National Environmental Policy Act under Section 404(c) of the Clean Water Act. Meanwhile, the Environmental Impact Statement and federal permitting process for the project under NEPA continues to advance under lead agency US Army Corps of Engineers. The Corps has published a timeline at http://www.pebbleprojecteis.com that indicates it expects to finalize the Pebble Project EIS in early 2020 and issue a final Record of Decision by the middle of next year.

Constantine Metal Resources announced completion of an industry standard technical report that included results from resampling conducted in 2018 at its Johnson Tract polymetallic project located near tidewater 125 miles ‎southwest of Anchorage. The objective of the program was to confirm the location and grades of historic mineralization documented in drilling completed between 1982 and 1993. A total of 426 samples were taken across nine holes. The re-assay efforts largely confirmed the gold, silver, copper, lead and zinc grades reported from historical drilling. The technical report indicated that the most obvious place to grow resources is in the Northeast Offset Target, interpreted as the fault displaced extension of the deposit. Limited historical drilling at this target has documented alteration and mineralization that shares the same characteristics as the main discovery area. Elsewhere on the project, potential for additional mineralization is supported by the presence of other mineral prospects, most notably the Difficult Creek prospect where similar tenor mineralization to the Johnson Tract prospect was documented. A total of 1,344 meters of drilling were completed at Difficult Creek in 1983, outlining a large alteration system and up to 36.6 meters of 3.57 grams of gold per metric ton, 1.8 percent zinc, 0.2 percent copper, 0.4 percent lead and 15.5 grams of silver per metric ton in drill hole DC83-002. Other prospects such as Easy Creek, Kona and South Valley show promising surface results and require further field work to establish drill targets. The company also indicated that efforts are progressing as planned to spin-out the Johnson Tract prospect and other assets into HighGold Mining, Inc. while keeping its flagship Palmer project in Constantine Metal Resources.

INTERIOR ALASKA

Avidian Gold Corp. announced exploration plans for a trenching program on its Amanita gold project in the Fairbanks District. Gold on the project is hosted in micaceous quartzite and quartz biotite muscovite schist of the Fairbanks Schist unit near its contact with the Mid-Cretaceous Gilmore Dome pluton. Host rocks are cut by northeast trending structures that appear to influence mineralization. Historical exploration defined a 1,500 -by 3,700-meter gold-in-soil anomaly that contained associated anomalous arsenic, bismuth, antimony and tungsten. Mapping indicated the presence of a 300-meter wide, sub-parallel zone known as the Tonsina Trend hosting mineralized steeply dipping northeast faults. A total of 4,700 meters of reverse-circulation drilling was completed in 39 holes on the project, with 30 of the 39 holes intersecting grades of greater than one gram of gold per metric ton over widths of at least 1.5 meter, with several of the holes reported to contain visible gold. Significant drill results from the Tonsina Trend include 4.57 meters grading 11.49 g/t gold, 22.86 meters grading 1.01 g/t gold, 12.19 meters grading 2.28 g/t gold and 13.72 meters grading 3.02 g/t gold. Drilling results from outside the Tonsina Trend include 10.57 meters grading 1.08 g/t gold and 3.05 meters grading 0.96 g/t gold.

ALASKA RANGE

White Rock Minerals Ltd. and its joint venture partner Sandfire Resources NL announced a budget increase of $1.5 to its in-progress exploration efforts at its Red Mountain volcanogenic massive sulfide project in the Bonnifield District. The additional funding expands the total 2019 budget committed to exploration at the project to over AU$8 million, or approximately US$5.63 million. Drilling is focused on testing new targets defined from the ongoing field activities that include geological reconnaissance, surface geochemistry, ground geophysics and modelling of the recent 2019 airborne electromagnetic survey. The partners indicated the additional funding will extend drilling efforts into September.

PolarX Ltd. and joint venture partner Lundin Mining Corp. announced that drilling at the Saturn copper‐gold porphyry target within its Alaska Range project is set to start in July. The initial program efforts will consist of eight to 10 deep holes at Saturn for a total of about 5,000 meters. In preparation for the Saturn drilling program, the JV partners carried out an induced polarization survey at Saturn. The data from the IP survey is being combined with existing detailed aeromagnetic data to finalize drill collar positions. The partners previously approved a $3.02 million exploration budget for the project. Three‐dimensional inversion modelling of the magnetic data has highlighted that the Saturn anomaly represents a steeply south plunging, upward flaring cylinder. The magnetic body is approximately 2,000 by 1,000 meters in areal extent and is covered by 10‐15 meters of post‐mineral gravels and is therefore blind to surface geochemistry. In parallel with the drilling at Saturn, PolarX has planned a drilling program to define additional near‐surface, high‐grade copper‐gold mineralization at the Zackly skarn. Zackly lies within the Alaska Range project but along with the Caribou Dome deposit is specifically excluded from the Lundin Mining farm‐in agreement. PolarX retains 100 percent ownership of the Zackly Skarn and all of its interest in Caribou Dome. PolarX aims to start this resource extension drilling program on the Zackly prospect during August.

Nova Minerals Limited provided an exploration update on their Estelle gold project in the western Alaska Range. Induced polarization ground geophysics surveys at the Oxide prospect revealed that mineralization is confined to two trends having significant geophysically modeled length (1,000 to 2,000 meters), width (500 to 850 meters) and depth (150 to over 300 meters). The two trends are also cut by a large-scale structure that runs east-west within the project area. The company indicated that over 500 meters of reverse circulation drilling had been completed on one geophysical target with additional drilling on-going. Assay results are expected in August.

NORTHERN ALASKA

Trilogy Metals Inc. and funding partner South32 Ltd. announced an update for its Bornite copper-cobalt deposit and the Arctic volcanogenic massive sulfide deposit at their Upper Kobuk Mineral project, a business relationship owned and controlled by Trilogy and NANA Regional Corporation, Inc. The partners indicated that exploration activities began at the beginning of June with almost 2,000 meters of drilling completed at Bornite by early July. The main goal of the $9.2-million program will be to drill approximately 8,000 meters in 12 holes, including both infill and expansion drilling. The results from this drilling campaign are anticipated to be included into a future updated resource estimate. The results from the first few holes of this program are expected to be released in late summer. At the Arctic deposit, a $7 million engineering and environmental program has commenced with two drill rigs. Work at Arctic is focused on completing feasibility-level geotechnical and hydrological work. The main goal of this year's work program is to complete engineering and environmental studies to prepare a National Instrument 43-101 compliant Feasibility Study. The partners expect to complete the feasibility study in the first half of 2020. On the exploration front, results from their earlier announced district-wide VTEM (versatile time domain electromagnetic) and ZTEM (z-axis tipper electromagnetic) airborne geophysical surveys indicated numerous electromagnetic anomalies that either expand or lie outside previously identified massive sulfide prospects. The new VTEM and ZTEM surveys will be integrated into an extensive database encompassing geology, geochemistry, and geophysics plus over 150,000 meters of historical drilling. Prioritized targets will be identified for drill testing later in the summer after the Arctic environmental and geotechnical drill programs have been completed.

SOUTHEAST ALASKA

Hecla Mining announced preliminary second quarter 2019 production results for its Greens Creek mine on Admiralty Island. The mine produced 2,372,270 ounces of silver and 13,256 ounces of gold, a 19 percent increase and a 3 percent decrease, respectively, compared to 1,999,792 oz of silver and 13,720 oz of gold produced in the year previous period. Higher silver production, the highest in three years, was due to higher ore grades related to mine sequencing. The mill operated at an average of 2,301 tons per day in the second quarter of 2019.

Coeur Mining Inc. reported updated second quarter 2019 production results from its Kensington mine. The mill processed 160,510 tons of ore, a slight decrease over the 168,751 tons of ore processed in the year previous period. The mine produced 34,049 ounces of gold grading 0.23 oz of gold per ton with an average recovery of 93 percent. Gold production during the second quarter increased 14 percent compared to the prior quarter and year-over-year gold production increased 33 percent. Average gold grade was approximately 15 percent higher quarter-over-quarter and 44 percent higher year-over-year driven by additional ore feed from the higher grade Jualin deposit. The Jualin deposit contributed about 17 percent of the gold during the quarter and is expected to contribute 20 percent of the mine's total production for 2019. The company indicated that it expects full-year 2019 production from the mine at 117,000 to 130,000 oz of gold.

Constantine Metal Resources Ltd. announced 2019 exploration plans on the Palmer polymetallic project, a joint venture between Constantine and Dowa Metals & Mining Co. Ltd. Plans for 2019 include a phased diamond drill program of up to 8,000 meters to target resource expansion at the AG Zone and Palmer deposits, as well as new geological and geophysical targets within a 2,000-meter radius. Structural folding has resulted in over 10 kilometers (six miles) of the key mineralized horizon stratigraphy being compressed into a relatively compact area such that multiple deposits can potentially be accessed by a single, centrally located portal. Drill targets for 2019 include the AG Zone deposit; an airborne geophysical EM target located down-dip of RW Zone in the Palmer deposit; and new targets in the HG-CAP-Waterfall Syncline Complex. Other summer activities will include the construction of surface infrastructure in support of a proposed underground development ramp and exploration drift. Work will include portal site preparation, access road completion, and installation of waste rock and water management facilities. Permit applications for the underground program were submitted earlier this year and are currently under review by Alaska regulatory agencies. Regional and detailed geological mapping, engineering and environmental baseline work to support future economic studies are ongoing.

Northern Cobalt announced metallurgical results from Snettisham vanadium and iron project south of Juneau. Metallurgical test work demonstrates the potential to produce a high-grade magnetite product with vanadium credits. A 63 percent iron concentrate with 0.64 percent vanadium oxide and 5.36 percent titanium oxide was produced from surface samples. Diamond drilling, planned for a mid-August start, will test the grade and continuity of high-grade mineralization and supply samples for further metallurgical test work.

Curtis J. Freeman CPG #6901

Avalon Development Corp.

P.O. Box 80268

Fairbanks, AK 99708

Phone: 907-457-5159

Fax: 907-455-8069

[email protected]

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