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Owners of Alaska's largest gold mine plan to incorporate a heap-leach operation and a pit expansion to the existing hard-rock operation, a capital investment designed to extend the Fort Knox mine life by at least seven years.
That's good news for the 400-person work force currently employed at Fort Knox, located about 25 miles northeast of Fairbanks. The open-pit mine and mill complex began gold production in 1996, surpassing the 3 million ounce mark in 2006.
Without the two capital projects, mining at Fort Knox would stop in 2010, with final gold processing two years later. The planned heap leach and the pit-expansion project will extend mining to 2014, with final gold processing concluding in 2019.
Currently owned and operated by Toronto-based Kinross Gold, Fort Knox continues to dominate Alaska's annual gold production, producing 333,383 ounces of gold in 2006.
To produce gold at that rate, Fort Knox miners moved up to 200,000 tons of material a day, sorted into three categories: rock that contains enough gold to be economic ore for the mill, rock containing smaller amounts of gold too costly to process through milling and barren rock.
Growing swiftly in the last few years at the mine complex are gray-colored stockpiles of gold-bearing rock not economic for milling, currently considered waste. But processing that low-grade material in a low-cost heap leach converts those stockpiles into valuable resources.
"There's an environmental benefit, as well as a business decision," said Robert Taylor, Kinross Gold's vice president of operations in North America, about the heap-leach project.
GOOD NEWS
Under the company's closure plan, the low-grade rock that is processed on the valley heap will eventually become part of the contours of the sloping Walter Creek drainage, rather than piles of waste. "It will all eventually be reclaimed," Taylor said. "And our shareholders get the economic value of the gold in the material."
What Kinross will spend to recover that gold value remains a secret. Taylor declined to divulge the estimated cost for the large-scale heap-leach construction project, which will require up to 100 temporary workers for a project expected to start slowly this fall, hit full-speed in 2008, wind down in spring of 2009.
"It's a large project," Taylor said. "We need to get a certain amount of work done during the summer to keep it from freezing in winter."
Taylor also declined to reveal the anticipated per-ounce production costs for the heap leach. Previously, Fort Knox managers said the heap leach would operate at one-quarter of the cost to mill gold. According to Kinross Gold's second-quarter report released Aug. 1, Fort Knox costs were $320 per ounce of gold.
How much gold the mine anticipates recovering using the heap leach was also not disclosed, although Taylor said the estimate is included in the company's measured and indicated resource report.
That geological estimate grew to 1.573 million ounces of gold reported at the end of 2006, up from 948,000 ounces reported at the end of 2005. Also included in both measured and indicated resource reports is the Gil project, located about seven miles east of Fort Knox, which has been explored by Kinross and property partner Teryl Resources.
Taylor and Larry Radford, the new general manager at Fort Knox, said that the average gold grade for the low-grade stockpile ranges from .009 to .012 ounces of gold per ton of rock, considerably lower than the current .025 ounces of gold grade being processed in the Fort Knox mill.
Cut-off grade at the Fort Knox mill is currently .015 ounces of gold per ton of rock.
"The heap leach will give us an opportunity to better use the milling time and its related energy use," Radford said.
THE DOWN SIDE
One downfall is that heap-leach processing is a slower process, estimated to reduce overall gold recovery to about 70 percent. "It's not as effective, but it's a cheaper process," Taylor said.
Currently, microscopic gold contained in Fort Knox ore is recovered through milling, which involves crushing the rock to a near dust-like substance. Then it is run through a semi-autogenous (SAG) mill and two ball bills before it is treated by cyanide in leach tanks. Activated carbon is used to absorb gold from the cyanide solution, then the precious metal is stripped from the carbon, plated onto a cathode by electrowinning and melted into dore bars.
The heap-leach process eliminates the extensive and expensive grinding process. Plans call for placing up to 160 million tons of low-grade gold-bearing rock on top of containment liners. A water and cyanide solution will be dripped through the pad, filtering through the stack. Gold attracts to the cyanide and the mineralized solution is captured at the bottom of the pile. Gold is pulled out for further refinement and the cyanide solution is either treated or reused in the heap leach.
Rather than a flat pad, Fort Knox plans to build a valley heap, which will form a v-shape in the Walter Creek drainage, located north of the mill complex and above or upstream from the Fort Knox tailings impoundment.
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"The 'valley' type facility is considered the best design for Alaska conditions due to very cold winters. This prevents freezing of the heap during the winter months," said Rich Hughes, mineral development specialist with the state Office of Commerce, Community and Economic Development. "The heap is above the tailings pond so any possible failure or unintentional fluids release will be fully contained in the tailings pond."
On Sept. 24, a handful of mine managers at Fort Knox posed in front of a Caterpillar D-10 bulldozer parked on a hillside just east of Walter Creek. After using survey tape for a ceremonial ribbon cutting to mark the start of work on the heap-leach project, the dozer operator began pushing down trees to clear an area for storing topsoil from the Walter Creek drainage.
LITTLE JOY
The celebratory moment in late September was short and low-key--that's because the project, which Kinross has been planning for nearly two years now--still lacked a wetlands permit from the U.S. Army Corps of Engineers. State regulators issued their permits for the heap-leach project at Fort Knox on July 3.
Pat Richardson, spokeswoman for the Corps of Engineers, said in late September that the federal agency is "getting close to a decision," adding that state regulators do "a lot of the process before the public notice goes out, where most of ours is after the public notice."
For the Fort Knox heap-leach project, regulators closed the public comment period at the end of July in 2006. Responding to those comments has contributed to the Corps' lengthy review period, Richardson said.
"The public review generated a lot of issues. The company was going through all issues and they got the last of that information to us on June 26," Richardson said. "We've been working really hard since June 26 to incorporate (the company responses) into our decision."
When asked to clarify, Richardson reiterated that Fort Knox had "provided the company response to some but not all of the comments prior to June 26."
Earlier this summer, Richardson said the permitting hold-up was a matter of paperwork--the Corps had received required information in a number of different documents that needed to be consolidated.
Fort Knox's environmental manager, Delbert Parr, said he was told the Corps had all of the necessary information from his company in late May.
"They have come back and asked us for more information, then asked more questions about that information. It's happened a number of times over the last year."
The Corps' permitting officer dealing with other mine projects, such as the Rock Creek gold mine near Nome and Kensington gold mine near Juneau, could also be a time competitor, Parr said.
"I do think the Corps is probably over-extended on the permitting front," he said. "Also, they are being especially cautious to get everything done just right, concerned about a third-party legal action filed against them. That caution has translated into spending a lot of time and detail that was not spent in the past."
BUMP IN THE ROAD
It has also translated into a significant delay in the Fort Knox project, which was anticipated to start construction in the fall of 2006.
Regulators also have been discussing whether the Corps had permitting jurisdiction over the Walter Creek drainage, as it flows into the Fort Knox tailings impoundment. Because the drainage does not connect to a waterway of the United States, land considered wetlands in the drainage may not be regulated by the Corps.
Top managers in the Corps and the Environmental Protection Agency in Washington, D.C., are considering the issue, Richardson said. As of late September, no final response had been received at the local office.
Taylor said the heap-leach project is key to extending the Fort Knox mine life, as it is economically linked with the proposed pit expansion, called Phase 7.
"It allows us to bring in lower grade ores, and treat waste rock as ore," he said. "They're not completely dependent, but they enhance the economics."
The cost to expand the existing Fort Knox pit on the west side, by roughly 500 to 600 feet, has not yet been revealed. Taylor also declined to say whether stripping and waste rock removal for the most recent pit expansion, called Phase 6, was completed within its estimated $60 million budget.
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