The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
North of 60 Mining News - December 6, 2024
A Black Gold Transport truck specially designed and built to safely deliver Manh Choh ore to the Kinross Alaska mill at the Fort Knox Mine north of Fairbanks.
Contango Ore Inc. Nov. 29 reported that new weight restriction placed on the Chena Flood Plain Bridge is expected to impact the quantities of ore transported from the Manh Choh gold mine near Tok, Alaska, to Kinross Gold Corp.'s Fort Knox Mine north of Fairbanks for processing.
Under a joint venture partnership forged between Kinross (70%) and Contango (30%), the high-grade ore mined at Manh Choh Mine is being trucked roughly 240 miles to Fort Knox for processing. This direct shipping ore strategy helps to keep Fort Knox economically viable by providing a source of high-grade gold ore for the mill and lowers the cost and environmental footprint of the mine at Manh Choh by eliminating the need to build a mill and tailings storage.
The JV broke ground on the Manh Choh Mine in August 2024 and began stockpiling ore at Fort Knox late last year.
The quantities of ore to be transported, however, will be limited by lower weight limits the Alaska Department of Transportation placed on the Chena Flood Plain Bridge, which is on the Richardson Highway portion of the transport route about 20 miles from Fairbanks to 80 tons.
While this is only a slight reduction from the previous 82.5-ton limit, the moisture content of the Manh Choh ore is also higher than previously anticipated, which adds weight. The bridge weight restrictions and the extra water weight limit the overall amount of ore that can be transported annually by approximately 20% when compared to what was originally projected for Manh Choh
This translates to a roughly 13% drop in gold production and higher per-ounce costs.
As a result, Contango anticipates that its 30% share of the 2025 Manh Choh gold production will be around 60,000 oz, compared to the 67,500 oz annual gold production estimate.
The first bar of gold from Manh Choh ore was poured at the Fort Knox Mine on July 8.
When you add in Kinross' share, it is anticipated that around 128,000 oz of gold will be recovered from Manh Choh over roughly six months of production this year and approximately 200,000 oz in 2025.
"Overall, we are very pleased with the ramp up of Manh Choh production, expecting to produce 38,500 ounces of gold on Contango's account for 2024 and 60,000 ounces of gold for 2025," said Contango Ore President and CEO Rick Van Nieuwenhuyse.
The cost to produce those ounces of gold, however, is being pushed higher by the weight restrictions and inflationary pressures.
Contango said the all-in-sustaining-cost (AISC) for Manh Choh is now estimated at $1,400 per ounce of gold-equivalent, which accounts for the value of both the gold and silver recovered from the ore, which is about 25% higher than calculated before mining began.
A roughly $700/oz increase in the price of gold since mining began at Manh Choh, however, is offsetting the higher transportation and production costs.
At a $2,500/oz gold price, Contango projects that it will receive around $50 million from its share of Manh Choh gold and silver produced in 2025.
"While we are disappointed with these new weight restrictions impacting Manh Choh trucking operations, which has an impact on AISC, the Manh Choh Project is expected to be very profitable over its current four-to-five-year mine life, generating significant free cash flow to Contango," Van Nieuwenhuyse said.
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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