The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
North of 60 Mining News - March 1, 2024
Over 290,000 oz of gold were poured at Fort Knox in 2023. Kinross anticipates that the annual total for this Alaska mine will climb to nearly 500,000 oz once the mill begins processing Manh Choh ore.
At a value of $1.5 billion, zinc held onto its throne as the most valuable metal produced in Alaska during 2023. With production forecasts and price trends headed in opposite directions for zinc and gold, however, the gleaming precious metal that drew fortune-seekers North at the turn of the 20th century could soon regain the crown as the most valued metal produced in the 49th State.
According to preliminary calculations completed by Alaska's Division of Geological & Geophysical Surveys (DGGS), the total value of metals produced at Alaska mines was approximately $3.76 billion during 2023. When you include sand and gravel mining for the construction sector, that value bumps up to around $4.1 billion, according to the U.S. Geological Survey (USGS).
When you add in the coal produced for in-state power plants, the total value of all the materials extracted from Alaska mining operations during 2023 comes in at around $4.25 billion.
In addition to a solid year of production from Alaska's one coal, seven hardrock metal, and 145 placer gold mines, mineral exploration spending continued to be strong across the Far North State remained strong during 2023.
Dave Szumigala, a mineral resources geologist at DGGS, informed attendees of an Alaska mining sector overview at the AME Roundup mining convention that roughly $230 million was spent at around 50 mineral exploration projects across the state last year.
According to preliminary data compiled by DGGS, nearly half of the 2023 mineral exploration spending was invested in discovering and expanding gold deposits, making the precious metal the top mineral commodity sought in Alaska.
Polymetallic volcanogenic massive sulfide deposits, such as those being mined at Hecla Mining Company's Greens Creek Mine on the Southeast Panhandle and Ambler Metals' Arctic mine project in Northwest Alaska, were also popular exploration targets in the state last year.
While the exploration for new sources of the minerals and metals needed for the lithium-ion batteries powering electric vehicles has not yet been as pronounced in Alaska as many of the other mining jurisdictions around the world, the search for graphite, nickel, and cobalt accounted for roughly 8% of exploration spending last year. Battery mineral exploration spending is expected to continue to rise as current projects expand and new projects emerge over the next couple of years.
Due in large part to the high-grade deposits at Teck Resources Ltd.'s Red Dog Mine in Northwest Alaska, zinc continues to be the top commodity mined in the state.
During 2023, Red Dog produced 539,800 metric tons (1.19 billion pounds) of zinc, which accounts for 4.5% of the 12 billion metric tons of all the zinc mined on Earth last year.
When you add in the 47,000 metric tons (103.6 million lb) produced as a byproduct at the Greens Creek silver mine, Alaska operations accounted for around 5% of the global supply of zinc, a metal considered critical to the U.S.
Alaska's share of the global zinc supply, however, could begin to slip as ore grades decline at the 35-year-old Red Dog Mine over the coming years.
"Over the next three years, production is expected to decrease due to declining grades at Red Dog," Teck Resources CFO Crystal Prystai informed analysts and investors on Feb. 22.
Red Dog delivered concentrates containing 155,300 metric tons of zinc and 25,400 metric tons of lead to the Delong Mountain Transportation System port during the fourth quarter of 2023.
While the 2024 zinc output at Red Dog is expected to remain on par with 2023 levels, Teck is forecasting a roughly 30% drop to around 382,500 metric tons (843 million lb) by 2027.
As of the beginning of 2023, Red Dog hosted 38.5 million metric tons of proven and probable reserves averaging 12.4% (4.03 million metric tons) of zinc, 3.6% (670,000 metric tons) of lead, and 66.2 grams per metric ton (81.9 million oz) silver.
This is enough ore to keep Red Dog in operation until 2031.
Teck's Aktigiruq, Anarraaq, and Lik deposits on state lands roughly 10 miles northwest of the current Red Dog operations could provide future supplies of high-grade ore to the Red Dog mill.
Aktigiruq and Anarraaq are large deposits on lands held by Teck with grades on par with what is currently being mined at Red Dog.
Lik, which is being explored under a 50-50 partnership with Solitario Zinc Corp., hosts 17.6 million metric tons of potentially open-pit mineable indicated resource averaging 8.1% zinc, 2.7% lead, and 50.1 grams per metric ton silver; plus 2.8 million metric tons of inferred resource at 8.6% zinc, 2.7% lead, and 38.9 g/t silver.
Combined, these deposits have the potential to provide the Red Dog mill with ore for several more decades at current production rates.
To ensure Red Dog remains a globally significant source of zinc, Teck is carrying out extensive exploration across the district.
Falling zinc output from Red Dog opens the door for gold to be crowned as the most valuable metal mined in Alaska. Thanks to strong prices and rising production profiles at Alaska's largest gold mines, this precious metal could take the throne before zinc production falls.
During 2023, Alaska's hardrock and placer mines produced approximately 728,000 oz of gold in 2023. At the $1,940/oz average price during 2023, this puts the value of the gold produced in the state at around $1.4 billion, which is only a touch under the value of zinc produced at Red Dog and Greens Creek.
So far in 2024, the price for an ounce of gold has held above $2,000. While continued strength in the price of this precious metal would bolster the value of Alaska gold output this year, it is an expected increase in the number of ounces that could unseat zinc.
The largest gold producer in Alaska, Kinross Gold Corp.'s Fort Knox Mine, could also be the biggest contributor to gold production growth in the state in 2024 and beyond.
Last year, the iconic mine about 20 miles northeast of Fairbanks produced 290,651 oz of gold, edging out the 259,573 oz produced at Northern Star Resources Ltd.'s Pogo Mine about 90 miles southeast of Alaska's Golden Heart City.
The gold output from Fort Knox is expected to get a major boost from the much higher-grade ore being delivered from Manh Choh, a mine about 200 miles southeast of Fort Knox that is being developed under a partnership between Kinross (70%) and Contango Ore Inc. (30%).
Going into 2024, Manh Choh hosted 4.1 million metric tons of proven and probable reserves averaging 7.6 g/t (1 million oz) gold and 13.5 g/t (1.8 million oz) silver, which is an order of magnitude higher gold grade than the ore currently being fed into the Kinross Alaska Mill at Fort Knox.
Kinross reports that the development of Manh Choh is essentially complete, and ore is being trucked the roughly 250 road-miles to Fort Knox.
"In Alaska, construction of the Manh Choh project is essentially complete and is on budget and on schedule for initial high-grade production in the second half of the year," said Kinross Gold President and CEO Paul Rollinson.
With the higher-grade ore from Manh Choh, the annual production at Fort Knox is expected to increase to nearly half a million oz over the coming five years.
While not as steep a rise, Northern Star is anticipating more gold output from Pogo.
Since completing an expansion of the Pogo mill to 1.3 million metric tons per year in 2022, Northern Star has been working to ramp up the annual gold production at the high-grade underground mine to 300,000 oz.
Reaching this gold production target is premised on feeding ore through the mill at around its nameplate capacity of 325,000 metric tons per quarter and improving the grade of ore being processed.
Aside from the first three months of 2023, which was impacted by a six-week shutdown of the mill for repairs, the mill at Pogo ran near or above its nameplate capacity during 2023.
"So, lifting that average grade up is where we're going to get that uplift in the revenue," Northern Star Resources Managing Director Stuart Tonkin told analysts and investors during a Jan. 23 call.
The expected increases in gold production at Fort Knox and Pogo, along with steady output from the Kensington, Greens Creek, Dawson, and roughly 145 placer mines, could elevate Alaska's gold output to the realm of 1 million oz per year by 2025.
While the roughly $381.4 million of silver recovered at Alaska mines during 2023 pales in comparison to the value of zinc and gold produced in the state, the Greens Creek Mine near Juneau is the largest primary silver mine in North America and one of the biggest in the world.
"Greens Creek is a premier silver mine," said Hecla Mining President and CEO Phillips Baker, Jr. "It's actually the 11th largest in the world, and I just want to congratulate the team on delivering excellent and consistent results and giving it a great future, because this is truly a world-class asset."
This world-class mine about 20 miles south of Alaska's capital accounted for 9.7 million of the approximately 16.3 million oz of silver produced in the state last year. The balance was produced as a byproduct at Red Dog.
The silver-forward Greens Creek and zinc-forward Red Dog mines also produced a combined 113,000 metric tons (249 million lb) of lead as a byproduct last year. Roughly 93.5 million metric tons (206.1 million lb) of this lead was recovered at Red Dog, with the balance coming from Greens Creek.
Going into 2024, Greens Creek hosted 10.02 million tons of proven and probable reserves averaging 10.05 ounces per ton (105.2 million oz) silver, 0.09 oz/t (881,000 oz) gold, 6.6% (1.32 billion lb) zinc, and 2.5% (501.2 million lb) lead.
This is enough to keep North America's largest producing silver mine in operation for roughly 14 years at 2023 mill throughput rates – and Hecla keeps finding more ore.
"When Greens Creek started, the mine had a mine plan of seven years and now 37 years later, the mine plan is 14 years," Baker informed investors and analysts on Feb. 15. "This past year's underground exploration had good success in seven of the eight zones drilled with four of those zones in the fourth quarter."
In addition to adding underground silver reserves, Hecla is revisiting the critical minerals potential it has been stockpiling on the surface over the past 37 years.
In addition to silver, zinc, lead, and gold, Greens Creek ore is enriched with at least seven critical minerals – antimony, arsenic, barite, bismuth, gallium, germanium, and indium.
During a Nov. 8 keynote presentation at the Alaska Miners Association convention in Anchorage, Baker said the tailings at Greens Creek contain an estimated $3 billion worth of metals, including "lots of critical minerals that you don't really think of" during initial mining.
Hecla is currently studying the viability of transporting these tailings contained within a dry-stack storage facility on Admiralty Island to an off-site location for reprocessing.
In addition to offering a domestic source of critical minerals, this idea would lessen Green Creek's environmental footprint on the Southeast Alaska island where the world-class silver mine is located.
Alaska's oldest continuously operating mine does not produce gold, zinc, or silver. Instead, this operation about 115 miles south of Fairbanks provides the coal that keeps the lights and heat on during the long, cold, and dark winter nights in the state's Interior region.
Established in 1943 to provide coal to U.S. military installations in Interior Alaska, Usibelli Coal Mine (UCM) has grown into a family-owned enterprise that delivers roughly 1 million tons of fuel to six Interior Alaska power plants.
Usibelli Coal Mine delivers roughly 1 million tons of fuel to six Interior Alaska powerplants per year.
One of these things that Usibelli is most proud of is the exceptional safety record of the more than 100 workers that deliver this coal.
In early September, UCM celebrated 1,000 consecutive days without a lost time accident.
"This achievement reflects our commitment to safety as a core value and the foundation of our company culture," said Usibelli Coal Mine President Joe Usibelli Jr. "Every team member is accountable for their safety and the safety of their fellow coal miners."
Like many other coal deposits around the nation, the coal seams on UCM's properties are enriched with rare earths, germanium, and other critical minerals.
Looking for value-added opportunities, UCM is investigating the potential to recover these critical minerals from materials above and between the coal seams, coal that is not of high enough quality for power generation, and ash from a power plant at the mouth of the mine.
Whether producing coal or exploring the Interior Alaska project's critical minerals potential, UCM is continuously investing in advanced technologies and best practices to ensure its operations align with the highest environmental standards.
"Beyond our commitment to safety, we also recognize our responsibility to the environment and the communities we serve," said Joe Usibelli Jr. "We strive to leave a positive legacy for future generations."
The next generation of Alaska mines will likely be the product of some of the roughly 50 mineral exploration projects in the state.
According to data compiled by DGGS, roughly $230 million was invested in exploring for gold, silver, zinc, copper, graphite, nickel, cobalt, platinum group metals, rare earth elements, and other minerals during 2023.
While this level of exploration spending is not as high as what was invested in the state 10 to 15 years ago, it is still robust, especially considering that two of the largest mineral exploration projects in recent years scaled back 2023 spending.
The $9.2 million program carried out last year by Ambler Metals, a 50-50 joint venture between Trilogy Metals Inc. and South32 Ltd., is less than a third the size of the $28.5 million exploration program in 2022.
One of the main reasons for the lower spending from Ambler Metals is from awaiting the U.S. Bureau of Land Management's decision on the permits for a 211-mile road that would connect its Upper Kobuk Mineral Projects in the Ambler Mining District to Alaska's highway system and the markets beyond.
BLM pulled previously approved permits for the Ambler Road to ensure that Alaska Native tribes have been properly consulted and impacts to subsistence activities have been thoroughly evaluated. In October, the federal agency published findings of the more thorough review in the form of a supplement environmental impact statement (SEIS).
The federal land manager expects to publish a final SEIS and record of decision on the reevaluated Ambler Road later this year.
Arctic, the first UKMP project slated to become a mine, is expected to produce 1.93 billion lb of copper, 2.24 billion lb of zinc, 334.8 million lb of lead, 423,000 ounces of gold, and 36 million oz of silver over an initial 13 years of mining.
The only resource drilling in the Ambler District this year was carried out on Valhalla Metals Inc.'s Sun zinc-copper-silver-gold project alongside the route of the proposed Ambler Road.
"If the Biden Administration wants critical metals, we know where to find them!" said Valhalla Metals Chairman Rick Van Nieuwenhuyse.
The other big mineral exploration project to dial back exploration spending in 2023 was Donlin Gold LLC – a 50-50 joint venture between Novagold Resources Inc. and Barrick Gold Corp.
The $34 million program completed by Donlin Gold in 2023 was nearly half the $64 million program carried out the year before. The main reason for this reduction is the smaller scope of work needed to complete an updated feasibility study for the 40-million-oz gold project in Southwest Alaska.
The previous feasibility study, completed in 2011, detailed plans for a mine at Donlin that would produce more than 1 million oz of gold annually over an initial 25 years of mining.
A growing interest in Alaska's potential to supply minerals and metals needed for the lithium-ion batteries powering EVs helped offset much of the reduced spending by Ambler Metals and Donlin Gold.
The U.S. Department of Defense is investing $37.5 million for the exploration and other work needed to finalize a feasibility study for establishing a mine at the Graphite Creek project in western Alaska.
In July, the U.S. Department of Defense awarded Graphite One Inc. $37.5 million to help complete a feasibility study for an advanced graphite material supply chain that will begin at the Graphite Creek project about 35 miles north of Nome, Alaska.
"This Department of Defense grant underscores our confidence in our strategy to build a 100% U.S.-based advanced graphite supply chain – from mining to refining to recycling," said Graphite One CEO Anthony Huston. "The World Bank Group reports that the production of minerals, including graphite, could increase by nearly 500% by 2050, to meet the growing demand for clean energy technologies."
While graphite is the single largest ingredient in the lithium batteries for electric vehicles and renewable energy storage, it is not the only critical energy metal being sought in Alaska.
At least two new exploration companies – Alaska Energy Metals Inc. and KoBold Metals scoured promising projects in Alaska's Wrangellia Terrane for deposits enriched with nickel, cobalt, copper, and other metals critical to the energy transition.
"Alaska Energy Metals is positioning itself to supply domestic markets with a source of critical and strategic metals," Alaska Energy Metals President and CEO Greg Beischer said upon the early 2023 launch of AEM.
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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