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The mining newspaper for Alaska and Canada's North
Gold miner seeks projects to deliver ore to Fort Knox mill Mining Explorers 2020 - Published January 19, 2021
With Fairbanks Chamber of Commerce President Marisa Sharrah (left) and Fort Knox General Manager Jeremy Brans (right) looking on, Fort Knox Projects Manager Jason Perino cuts the ribbon on the Barnes Creek Heap Leach Facility at Kinross' Fort Knox gold mine in Interior Alaska.
Under its new operating strategy, Kinross is looking to acquire smaller Alaskan gold projects that can deliver high-grade ore to its 14-million-metric-ton-per-year mill at Fort Knox.
Kinross Gold Corp. has rolled out a strategy to double gold production at its Fort Knox Mine by feeding higher grade ore into the underutilized 14-million-metric-ton-per-year mill at the open-pit operation about 20 miles north of Fairbanks, Alaska.
"We have enhanced our production profile, ramping up from approximately 200,000 ounces per year to approximately 400,000 ounces per year," Fort Knox General Manager Jeremy Brans told Mining News.
While some of this new mill feedstock responsible for this rejuvenation of Fort Knox will come from deposits on the property, the majority is expected to come from smaller but much higher grade projects along Alaska's road, rail and river systems that can deliver high-grade ore to Fort Knox.
"There is an economic radius around Fort Knox given the mill capacity that makes a good chunk of Alaska attractive for potential bolt-on," said Kinross Gold Chief Technical Officer Paul Tomory.
In September, the company invested US$93.7 million to acquire a 70% operating interest in Peak Gold, which is expected to be the first such bolt-on project within this economic radius to deliver high-grade gold ore to Fort Knox.
Contango Ore Inc., which discovered Peak Gold and developed a 1-million-ounce high-grade gold resource there, owns the remaining 30% joint venture interest in the project.
Two deposits that come to the surface at Peak Gold – Main Peak and North Peak – host 9.2 million metric tons of measured and indicated resources averaging 4.08 grams per metric ton (1.21 million ounces) gold and 14.19 g/t (4.2 million oz) silver.
Based on this resource, Kinross expects to produce 1 million gold-equivalent oz, which includes the value of both the gold and silver recovered, from Peak Gold ore over an initial 4.5-year mine life, or roughly 222,000 oz per year.
"The relatively high-grade, low-cost Peak Gold project is an excellent addition to our portfolio, as it allows us to leverage our existing mill and infrastructure at Fort Knox and strengthens our medium-term production and cash-flow profile," said Kinross Gold President and CEO Paul Rollinson.
And as Kinross eyes the potential of Peak Gold ore boosting Fort Knox gold production to nearly half a million ounces per year, the Toronto-based gold miner is seeking other Alaska projects to deliver more future ore to the Fort Knox mill.
"We see a great future ahead for Kinross and we expect our continuous improvement culture will continue to provide opportunities to extend mine life and optimize mine plans," Brans said. "It has also led to a shift in thinking: It is no longer just 'Kinross Fort Knox'; it is 'Kinross Alaska...with Fort Knox at its heart'."
Substantial capacity
Before implementing the Fort Knox Alaska strategy, Kinross was contemplating shutting down the mill in favor of the heap-leach gold recovery that has accounted for increasingly large portions of the annual gold production at the Interior Alaska operation over the past decade.
Aside from limited mill-grade ore available on the Fort Knox property, this shift to the lower cost heap-leach gold recovery was prompted by a dearth of storage capacity for the tailings coming off the mill.
Recently, however, Kinross has invested very heavily in dewatering the current tailings storage facility and has gained permits to begin stacking tailings in the open-pit at Fort Knox.
Having the pit that has supplied ore to the gold mine for 25 years available for storage provides an enormous amount of room for tailings from milling ore on the Fort Knox property and trucking higher grade feedstock from satellite deposits across much of Alaska.
"We are now viewing this asset as having a very substantial capacity for future mill production," said Tomory.
Without the need to outline a project large enough to support the time and money investment to build gold recovery and tailings disposal system, the Kinross Alaska strategy changes the dynamics of exploring and evaluating the mining potential of gold properties within Fort Knox' economic radius, which extends for at least 300 miles around Fairbanks.
Peak Gold template
Kinross' JV could provide a template for other Fort Knox bolt-on gold projects.
Tomory said the cost to truck Peak Gold ore the roughly 250 highway miles to Fort Knox is estimated to be roughly the value of 1.3 g/t gold. This make the 6 g/t Peak Gold ore equivalent to having 4.7 g/t gold stockpiles stacked next to the mill, or eight times the average grade of ore fed into the Fort Knox mill over the previous year.
With little in the way of onsite infrastructure needed, Peak Gold permitting and construction are expected to take less than four years and the first Peak Gold ore is expected to be delivered to the Fort Knox mill in 2024.
"Trucking high-quality ore from Peak Gold to Kinross' Fort Knox mill is an ideal solution to fast-track the project to a production decision," said Van Nieuwenhuyse. "By not having to permit and construct a mill and tailings facility on site, we would greatly reduce the costs, environmental footprint, permitting and construction risks, and reduce the timeline to potential production for Peak Gold."
The lessened financial and permitting burden offered by the Kinross Alaska strategy changes the dynamics of dozens of higher grade gold projects in Alaska. This shift will have exploration companies with accessible gold projects across much of the state recalculating the economics of their deposits based on gold grades versus the costs of delivering ore to the Fort Knox mill. It is also expected spur a new wave of gold exploration in Alaska as explorers seek new discoveries and dust off historical high-grade gold deposits along highways, rail and rivers radiating out from the Kinross Alaska mill.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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