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While the public focus on the Pebble project has involved heated debate between environmental activists and pro-development advocates, exploration work on the Southwestern Alaska copper-gold-molybdenum deposit continues in 2007 at a swift pace.
Eight diamond-core drill rigs are working at Pebble, including three that were specially designed to tap the recently discovered Pebble East mineralization, which can run deeper than a mile below the surface.
Exploration crews plan to work well into December, according to Sean Magee, vice president of public affairs at Northern Dynasty Mines Inc., the owner and operator of the Pebble project.
"Our goal is to drill 240,000 feet this year and we're behind schedule for getting that done, so some will probably leak into 2008," he said in late September. "We're working as aggressively as we can, and don't plan to reduce manpower or drill rigs working into the fall."
More than 180 people were on site in late September, according to Northern Dynasty. So far, drill crews completed 22 holes, with seven more in progress, for a total of about 120,000 feet, Magee said.
Even in a year where exploration work throughout Alaska is growing by leaps and bounds, Pebble stands out--in terms of spending, employment and results.
GIGANTIC MINERAL RESOURCE
Based on drilling completed through 2006, Pebble's developers have identified a total of 67.3 billion pounds of copper, 81.7 million ounces of gold and 4.054 billion pounds of molybdenum in the near-surface Pebble West mineralization and the deeply buried Pebble East zone.
Those numbers estimating the total contained metals will likely increase as drilling crews continue to tap mile-plus deep holes into the Pebble East zone to identify the north-south width of the high-grade, deeply buried mineralization.
The value of known mineralization at Pebble is more than 11 times that of the Alaska Permanent Fund, which topped $40 billion in July.
Based on recent market prices of $3.60 per pound for copper, $732 per ounce for gold and $35 per pound for molybdenum, Pebble currently has a potential market value of nearly $450 billion.
Steadily climbing metal prices in the last three years, combined with the discovery and continued success in finding more mineralization in the Pebble East zone, has helped grow that value, and the economic feasibility, of the hard rock mine project.
To create the value growth through geological work, in addition to completing required engineering and environmental baseline data gathering, Northern Dynasty has been spending significant dollars. This year, Pebble's budget is $95 million, on top of spending $130 million from 2002 to 2006 and all without capturing a single ounce of gold or pound of copper.
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Earlier this summer, Northern Dynasty announced its partnership with mining giant Anglo American Plc, to advance Pebble to development. For its 50 percent stake in Pebble, Anglo must make phased cash investments of $1.425 billion.
"The purpose of the partnership is to engineer, permit, construct and operate a modern, long-life mine at the Pebble Project," the July 31 partnership press release stated. The companies hope to complete a pre-feasibility study in December 2008 in order to initiate the permitting process.
A feasibility study, taking the project to a mine construction decision, is targeted for 2011. Construction of a mine and processing facilities, estimated to range up to $4 billion, is targeted for completion by 2015.
ACCELERATED DRILLING IN 2007
Developing geologic knowledge about the deep Pebble East zone, initially discovered in 2004, is helping to propel the property into a more economically feasible project.
As geologists followed the new zone to the east, mineralization began to trend deeper below the surface. Mineralization was encountered deeper than 1,600 feet in many holes, extending as deep as 4,200 feet, according to drill results released in 2006. To improve drilling capability at depth, Northern Dynasty commissioned the design and construction of three drill rigs from North American Recon. The drilling contractor brought the new rigs, each capable of drilling up to 6,500 feet deep, to work at Pebble in the summer of 2007.
Geologists also began testing the north and south areas in Pebble East, looking for the extreme boundaries of the mineralized zone. So far, that work in 2007 has identified a north-south strike length more than 9,000 feet long, which is open to the southwest and the northwest, according to an early October press release.
"Drill holes continue to intersect long intervals of higher grade copper-gold-molybdenum mineralization and have established a very high level of deposit continuity," Northern Dynasty said in the press release.
Drill hole 7359 intersected 2,228 feet grading 1.41 percent copper equivalent, demonstrating the strength of the mineralizing system in the southern part of Pebble East, the company said.
Several of the furthest north and furthest south drill holes identified bornite, a brightly colored rock containing an extremely high percentage of copper. That indicates "... proximity to mineralizing centers which are open to extension and appear to be strengthening to the north and to the south," Northern Dynasty said in January.
Additionally, the company released in February an inferred mineral resource calculation for the Pebble East zone, based on 132 core drill holes drilled from 2004 through 2006.
Within a 3.4 billion tonne inferred resource with a 1 percent copper equivalent grade, Pebble East contains 42.6 billion pounds of copper, 39.6 million ounces of gold and 2.7 billion pounds of molybdenum.
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Inferred resource is a geological and economic term that is determined by the amount of widespread spacing between drill holes, indicating less certainty about the buried deposit.
Some metal make-up and grade in the Pebble East is higher compared to Pebble West. Gold grades held about the same in the two areas, in the .012 ounces per ton range. But copper and molybdenum grades more than doubled in Pebble East, compared to the modest grades found in Pebble West.
"With Pebble East, the deposit is significantly deeper. On average, the grade is twice as high and in many cases, more," Magee said. "It definitely has an impact on the project economics, which are improved markedly. The interest from global mining companies was definitely based on the potential that Pebble East represents."
In addition to the stronger grades in Pebble East, a booming metals market has helped. Prices for gold, copper and molybdenum have climbed significantly in the last 5 years. Copper sold for as low as 60 cents per pound and molybdenum as low as $5 per pound. In 2002, gold prices were less than half of recent sales, as low as $320 per ounce.
"One of our strengths is that this is a multi-metal project," Magee said. "We have been saying for some time that Pebble is a copper project. Not only is 60 percent or better of the contained value in copper, but a great deal of the enhancement in minerals from Pebble East is in copper."
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