Mobile Edition
Print
Get the Mag
Weekly UpdatesLet me start by apologizing for those projects not mentioned in this report: space limitations make it impossible to print the 15-page tome I had prepared for this special mining section. What remains are the highlights of what is shaping up to be a humdinger of a year for the Alaska mineral industry.
What's a "humdinger?" How about an Alaska gold project at the center of a $1.5 billion corporate takeover by the world's largest gold producer? Or how about 75 feet grading over 2 ounces of gold per ton? Or maybe silver production costs of a negative $1.74 per ounce? How about a mind-boggling 32 million ounces of gold in a single deposit or a $387 million new mine complex pouring its first gold?
And then there are the two other mines starting construction activities and the nearly a half-mile drill intervals of +1 percent copper-gold-molybdenum mineralization coming from another? These amazing achievements are being driven by increasing worldwide demand for raw materials and by historically high prices for these raw materials, both economic realities that seem unlikely to change in the near future.
WESTERN ALASKA
Teek Cominco's Red Dog lead-zinc mine has turned in a spectacular 18-month performance, thanks in part to robust zinc and lead prices. The mine produced 568,000 tonnes of zinc in concentrate and 102,000 tonnes of lead in concentrate during 2005.
As a result primarily of higher zinc and lead prices, the mine posted a $325 million operating profit for the year. During the first half of 2006, the mine generated 268,600 tonnes of zinc and 57,600 tonnes of lead in concentrate while posting operating profits of $240 million. Average zinc and lead grade mined in the first half of 2006 was 21 percent and 6.2 percent, respectively.
NovaGold Resources (70 percent) and new partner Barrick Gold (30 percent, who took over Placer Dome in late January) announced increased resources on their Donlin Creek gold deposit.
The deposit now hosts measured and indicated resources of 16.1 million ounces grading 2.33 grams of gold per tonne at a 0.76 gram per tonne cutoff grade. Inferred resources stand at 16.6 million ounces grading 2.27 grams of gold per tonne. All-in-all, this pushes the resources at the deposit to 32.7 million ounces, an increase of almost 4 million ounces since the last resource update earlier in the year.
In July, Barrick tendered an unsolicited takeover offer for NovaGold. Barrick offered $14.90 per share, valued at $1.53 billion for the outstanding shares of NovaGold. NovaGold's two main assets, the Donlin Creek gold deposit and the Galore Creek copper-gold deposit in British Columbia are the driving forces behind the offer. NovaGold's directors have recommended that shareholders reject the offer and recently sued Barrick in an Alaska court over regulatory compliance issues. The imbroglio does not look like it will be resolved any time soon.
NovaGold Resources also announced that construction has commenced at its recently permitted Rock Creek gold deposit near Nome. The 100,000-ounce-per-year open-pit operation will derive its 7,000-ton-per-day feed from Rock Creek and the Big Hurrah deposit with commercial production due to begin in mid-2007.
New resource updates at Rock Creek include indicated resources of 9.6 million tonnes grading 1.31 grams of gold per tonne (404,000 ounces) and inferred resources of 1.4 million tonnes grading 0.96 grams of gold per tonne (44,00 ounces). At Big Hurrah, indicated resources are 1.8 million tonnes grading 4.61 grams of gold per tonne (273,000 ounces) and inferred resources of 600,000 tonnes grading 3.05 grams of gold per tonne (56,000 ounces).
Early in the year, Northern Dynasty Minerals Ltd. announced new resource estimates at its East zone at the Pebble deposit near Iliamna. At a 1 percent copper equivalent cut-off, the inferred mineral resources are estimated at 947 million tonnes grading 0.77 percent copper, 0.48 grams per tonne gold and 0.040 percent molybdenum (1.28 percent copper equivalent), containing 16 billion pounds of copper, 14.5 million ounces of gold, and 830 million pounds of molybdenum.
The Pebble East deposit is open to expansion in all lateral directions and to depth. Highlights of the 2006 East zone drilling include hole 6338, which intersected 1,225-feet grading 0.45 percent copper, 1.03 grams of gold per tonne and 0.040 percent molybdenum. Hole 6339 intersected 2051 feet grading 0.84 percent copper, 0.49 grams of gold per tonne and 0.032 percent molybdenum.
In addition to the fieldwork, Northern Dynasty Minerals Ltd. announced that Kennecott Canada Exploration Inc. acquired a 9.9 percent stock interest in Northern Dynasty. Kennecott can increase its interest and can supply up to three technical advisors to complement Northern Dynasty's project management team. Total expenditures at the project through 2006 are expected to be approximately $110 million. The company is expecting $2 billion to $3 billion capital costs to bring Pebble to production, although exact design and capacity of the project remain uncertain until the East zone is completely defined.
The company reported that a total of 609 employees worked on the Pebble project in 2005 with 457 of those being Alaska residents and 112 of the total coming from communities in the immediate vicinity of the project.
Following receipt of all permits earlier in the year, St. Andrew Goldfields reported that its Nixon Fork copper-gold mine will begin production in late summer at a rate of 150 tonnes per day.
Gold production for 2006 is expected to reach 20,000 ounces with annualized production expected to be approximately 45,000 ounces. The company also indicated that it expected to reprocess approximately 116,000 tons of tailings from previous mining operations that contain an average grade of 0.26 ounces of gold per tonne. Tailings reprocessing is planned for 2007 and 2008 when the new cyanide recovery circuit is online.
Underground diamond drilling was conducted at the Mystery Creek deposit in order to delineate and confirm additional mill feed beyond current reserves.
TNR Gold Corp. announced results from drilling at its Shotgun project in Southwest Alaska. Hole 06-45 in the Winchester zone returned 77.5 feet grading 1.90 grams of gold per tonne. Hole 06-43 in the Shotgun Ridge zone returned 1.29 grams of gold per tonne over 690.5 feet.
Mineralized zones at Shotgun Ridge are interpreted to be dipping southwest and would not have been fully tested by previous drilling. Estimated Inferred Resources at Shotgun Ridge are 980,000 ounces grading 0.93 grams of gold per tonne at a 0.5 gram per tonne cut-off.
EASTERN INTERIOR
Kinross Gold announced that in 2005 the company produced 329,320 ounces of gold from its Fort Knox mine near Fairbanks. During the first half of 2006, the mine produced 179,114 ounces of gold at a cash cost of $287 per ounce. The mine reached a noteworthy milestone on May 10 when it poured its 3 millionth ounce of gold since production began in late 1996.
At year-end 2005, proven and probable reserves at Fort Knox stood at 82,172,000 tonnes grading 0.74 grams gold per tonne, equivalent to 1,953,000 ounces. An additional 48,862,000 tonnes grading 0.60 grams gold per tonne, equivalent to 948,000 ounces, are classified as measured and indicated resources.
Kinross Gold also announced that it has submitted initial draft permits to conduct a valley leach system as part of its overall operations at Fort Knox. The operation will be constructed in five stages using 130 million tons of run-of-mine rock from the Fort Knox Pit and at least 29 million tons of ore from the Barnes Creek and Fish Creek stockpiles. Details relating to the project can be acquired at www.dnr.state.ak.us/ mlw/mining/largemine/fortknox.
Freegold Ventures Limited announced results from trenching at its Cleary Hill mine on their Golden Summit project. In the eastern extension of the Clear,/Hill, trenching along 185-foot strike length of 4-inch to 18-inch-wide vein returned 39.5 grams of gold per tonne, including a 75-foot section grading 83.4 grams of gold per tonne. On the nearby Waekwitz vein, trenching discovered a new 5-foot-wide zone averaging 16.4 grams of gold per tonne over 235 feet including 85 feet grading 34.8 grams of gold per tonne.
In addition, a newly discovered 10 to +15-foot-wide shear zone 50 feet to the south of the Waekwitz vein returned 2.2 grams of gold per tonne over 220 feet. The company plans to conduct an additional 2,500 feet of trenching and collect a 10,000-ton bulk sample from three of the previously completed trenches.
Teck Cominco and partner Sumitomo announced that the Pogo mine became Alaska's most recent operating mine when it poured its first gold bar in February. The mine went on to produced 22,000 ounces in the first half of the year as it began mine and mill shakedown of operating systems.
For those of you counting, the Pogo deposit was discovered in 1994 and has been under continuous exploration and development since then. Total construction costs for the mine are now estimated at $378 million, a 35 percent increase over original capitalization costs. The mine will continue to operate at 60 percent of design capacity until the end of the first quarter of 2007 when additional process filtration capacity will be brought online.
Midas Resources Limited announced preliminary drill results from its Uncle Sam gold project in the Richardson District. The program comprised 831 meters of drilling in eight drill holes.
Preliminary results from six of the 2006 holes included 12.2 meters grading 1.47 grams of gold per tonne in hole USR055 and 6.1 meters grading 1.15 grams of gold per tonne in hole USR056. Anomalous gold was hosted in quartz stockwork in sericite altered quartz-mica schist accompanied by pyrite-arsenopyrite-stibnite and pyrrhotite.
FEED