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MINING NEWS: Drills turn on projects across Alaska Operating mines post strong financials as companies announce new acquisitions, joint ventures and new plays in prospective areas Curt J. Freeman For Mining News
The game is afoot all across Alaska with the drills turning to the right on projects all across the state. The operating mines turned in strong first-quarter results and several new acquisitions, joint ventures and new players were announced in the last month.
Western Alaska Teck Cominco American announced first quarter results from its Red Dog Mine. In the first quarter, the mine produced 138,500 metric tons of zinc in concentrate. Zinc ore grade increased to 21.3 percent while mill recoveries remained steady at 83.8 percent. The mine also produced 35,500 metric tons of lead in concentrate. Lead ore grade increased to 7.2 percent while mill recoveries decreased to 63.5 percent. The mine posted an $82 million operating profit for the quarter, down significantly from the $182 million profit in the year previous period. The decreased operating income was attributed to lower zinc prices, higher royalty payments to NANA, Inc. ($25 in first quarter 2008) and decreased seasonal sales volumes.
Zazu Metals Corp. announced plans for its LIK zinc-lead-silver deposit near the Red Dog mine. During 2008 the company plans to completed an updated resource for the LIK South deposit based on 26,000 meters of drilling already completed and up to 10,000 meters planned for 2008; complete geophysical programs to identify extensions to the resource, especially in the North LIK area; complete metallurgical testing; and commence design of a preliminary flow sheet and continue and expand environmental studies supporting the mine permitting process.
Northern Dynasty Minerals Ltd. announced updated progress on its Pebble deposit. The company reported that its joint venture partner, Anglo American plc, has approved a $140.1 million budget for 2008. The work includes a $61.6 million drilling program to upgrade a portion of the mineral resources in the Pebble East deposit to an indicated category to support the completion of a pre-feasibility study and also to test for the full extent of the deposit. The budget also included a $30.2 million engineering program to support the completion of a pre-feasibility study, including detailed metallurgical test work and infrastructure studies; a $24.9 million environmental program to complete the environmental baseline document for the project, to support the completion of a pre-feasibility study and continue ongoing monitoring; and a $14.8 million community engagement and public affairs program to advance stakeholder relationships, public education and project support. Exploration on-site began in February. About 157,000 feet of resource drilling is planned with six rigs currently working.
Millrock Resources announced that it has entered a joint venture agreement with Bering Straits Native Corp. on 395 square kilometers of land on the Seward Peninsula. The projects cover three areas, Council, Bluff and Ungalik, and included both intrusive and metamorphogenic gold prospects. The road accessible Council district has produced in excess of one million ounces of placer gold. The land position covers known vein gold occurrences, but little exploration has been conducted since the late 1980’s. The veins are preferentially hosted by graphitic, calcareous schist or quartzite and in addition to gold, also contain arsenopyrite and stibnite. At Bluff, structurally controlled gold mineralization occurs within an anticline. The prospective arcuate structure is mineralized over a distance of 6.4 kilometers. Prior drilling by BHP in the late 1980’s resulted in several significant intersections including 5.48 grams of gold per metric ton over 10.9 meters, 4.19 grams of gold per metric ton over 4.5 meters, and 1.93 grams of gold per metric ton over 16.3 meters. Ungalik is situated along a major fault system that sutures the older Seward Peninsula rocks to the rest of Alaska. The land package is centered on the source rocks of a placer deposit that has produced more than 300,000 ounces of gold. Gold bearing vein talus has been documented in the hills above the placer deposit. The veins occur along the contact of the Tertiary aged Christmas Mountain Intrusive Complex. Under terms of the agreement, Millrock has the exclusive right to explore for mineral deposits during an initial 5 year exploration period. The exploration agreement calls for total expenditures of $4 million, with a first year work commitment of $300,000. Annual option payments will total $550,000 over five years with $30,000 on signing. The agreement also calls for annual issuance of Millrock shares with the first 100,000 shares to be issued upon acceptance of the agreement by regulatory authorities. Millrock may exercise an option to lease the land at any time during the term of the agreement and can convert the agreement to an operating agreement if warranted.
Gold Crest Mines announced that it has signed a joint venture agreement with Alaska newcomer Electrum Ltd. on the former’s Kisa, Gold Lake, Gossan Valley, Little Swift and Gold Creek claim groups in southwestern Alaska. Under the terms of the joint venture agreement, Electrum can earn a 55 percent interest in Gold Crest’s properties by spending a minimum of $750,000 in year one, $1,250,000 in year two and $1,500,000 in year three. Electrum can earn an additional 25 percent interest, for a total of 80 percent, by spending an additional $2,500,000 over two years following the initial earn in period. Electrum will be the operator of the joint venture. In addition, Electrum has committed to make an investment of $250,000 to acquire 1,666,667 ordinary shares of Gold Crest. Welcome to Alaska Electrum Ltd.!
Full Metal Minerals and partner Highbury Projects announced commencement of drilling on their Moore Creek gold project in southwestern Alaska. The companies are commencing an initial 3,000 meter core drilling program, targeting a 300 meter by 400 meter open-ended area of gold mineralization. This program will test the potential for both a bulk tonnage gold system and high grade vein hosted gold deposit.
Gold Crest Mines also announced that it has signed two new joint venture agreements with Newmont North American Exploration on the former’s Ako and Luna claim groups and the Chilly claim group. Under terms of the agreements, Newmont can earn a 51 percent interest in the properties by spending $3,000,000 on exploration before December 31, 2011, completing a minimum of 3,000 meters of drilling on or before December 31 2011 and making cash payments of $25,000 on or before January 15, 2009 and $50,000 on or before January 15, 2010. Newmont has the option to increase its interest to 70 percent by spending an additional $6,000,000 in exploration work and completing a minimum of an additional 3,000 meters of drilling on or before December 31, 2015.
Full Metal Minerals announced that it has signed an option on the Granite Creek gold project in southwestern Alaska. Under terms of the agreement, Full Metal can earn a 100 percent interest in the property by paying an unnamed Alaska resident owner $375,000 in cash payments and incurring $3.25 million in exploration expenditures ($200,000 first year). Following exercise of the option, Full Metal will make annual $150,000 advance royalty payments until commencement of commercial production. Upon commencement of commercial production, Full Metal will pay a 2 percent NSR royalty, of which one half (1 percent) can be purchased at any time for $4 million. The property is underlain by multiple altered felsic dykes and stocks and intruding sedimentary rocks. Streams draining from and across the monzonite stocks, rhyolite dikes, and quartz-sulfide veins all contain pristine placer gold. Typical heavy mineral concentrates from the placer include cinnabar, stibnite, garnet, pyrite, and cassiterite. Two sample quartz-stibnite veins collected by Placer Dome in the mid 1990s averaged 17.5 and 10.5 grams of gold per metric ton. Full Metal is planning an exploration program consisting of mapping, geochemical sampling and mechanical trenching to identify drill targets.
Eastern Interior Kinross Gold Corp. announced first quarter 2008 production results from its Fort Knox mine. The mine produced 65,394 ounces of gold at a cash cost of $459 per ounce versus 82,714 ounces at a cash cost of $327 per ounce in the year previous period. The 21 percent production decrease was attributed to lower average head grades and harder ore. The mine processed 3,095,000 metric tons of ore grading 0.80 grams of gold per metric ton with a mill recovery of 82 percent. The company also announced that it has accelerated valley leach production schedules and now plans to see first production in mid-2009. The $175 million expansion will extend mine life to 2018 and increase production during the remaining mine life to 2.9 million additional ounces at a production rate of approximately 375,000 ounces per year.
Freegold Ventures Ltd. announced additional rotary air blast drilling results at its Golden Summit project. Drilling results from the Tolovana prospect included intervals of 24 feet grading 2.0 grams of gold per metric ton, 3 feet grading 21.8 grams of gold per metric ton, 6 feet grading 54.4 grams of gold per metric ton and 3 feet grading 24.2 grams of gold per metric ton. The company also reported that 23 diamond core holes have been completed in the Cleary Hill mine area and an additional 3 core holes were completed in the Tolovana prospect area. Assays for these core holes are pending.
Teck Cominco Ltd. and joint venture partner Sumitomo Metal Mining announced first quarter results from the Pogo mine. The mine produced 83,200 ounces of gold in the first quarter. Average grade mined was 15.8 grams of gold per metric ton with mill recovery of 85.5 percent. Total cash operating costs for the first quarter were $546 per ounce. The mine turned a $15 million profit in the first quarter. Despite record mill availability of 91.3 percent for the quarter, the mine remains below full capacity due to lower than designed equipment availability and mill throughput.
International Tower Hill Mines Ltd. announced the start of resource expansion drilling at its Livengood gold project. The Company plans to drill approximately 42,000 meters in 150-175 holes within the core target area, which covers an area of approximately 1.5 square kilometers. The resource expansion program will focus on the higher-grade Lillian Zone of the deposit and is designed to double the size of the 2.0 million ounce inferred gold resource in this area. The drill program, which is expected to continue until December, will utilize two large reverse circulation drills and one core drill operating 24 hours per day seven days a week. The plan is to grid drill an area of roughly 2 kilometers by 800 meters, with a nominal drill hole spacing of 75 meters. The program will test both the volcanic hosted and higher grade sediment hosted targets within the main structural corridor. Mineralization outcrops at the surface and extends to the current depth of drilling (approximately 250 meters). In addition, the company has also begun baseline environmental studies as well as an expanded metallurgical program to better characterize the primary ore types.
Full Metal Minerals Ltd. announced that drilling has commenced at the Forty Mile lead-zinc-silver project in east-central Alaska. The company has scheduled 15,000 meters of drilling using two core rigs targeting high-grade carbonate replacement deposits. At the high-grade LWM deposit, the company has allocated 10,000 meters for infill and step-out drilling. The company also has allocated 5,000 meters of drilling to test other prospects elsewhere on the project.
Alaska Range Pacific North West Capital Corp. announced the results from the 2007 exploration program conducted at its 100 percent controlled Tonsina copper – nickel – platinum group element property located in Southcentral Alaska. Highlights from the 2007 exploration program include chromite bearing outcrop grab samples containing up to 2.3 grams per metric ton platinum and 1.6 grams per metric ton palladium; chip channel samples of chromite and sulfide bearing outcrop containing up to 0.86 grams per metric ton platinum and 1.1 grams per metric ton palladium over a 2 meter interval; sulfide bearing outcrop grab samples containing up to 0.97 percent nickel and 0.58 percent copper and chip channel samples of sulfide bearing outcrop containing up to 0.75 percent nickel over a 2 meter interval. Nickel, copper and platinum group element mineralization is hosted in dunite and lherzolite within the Tonsina Ultramafic Complex. The mineralized rock units comprise a north dipping magmatic layer. Sulfide and chromite mineralization within this layer define a distinct horizon up to 30 meters thick that has been mapped and sampled over a strike distance of 900 meters. Examination of thin sections confirms the presence of widespread pentlandite together with millerite and lesser covellite. The company plans to continue outcrop sampling and mapping and complete an induced polarization geophysical survey to trace the north dipping mineralized horizon under cover to the west and north.
International Tower Hill Mines announced the results from a recent high resolution airborne magnetic and electromagnetic survey completed over key mineralized areas of its BMP project. The results have outlined several large geophysical anomalies spatially associated with the outcropping polymetallic (copper-gold-silver) skarn deposits that were discovered in 2007. The largest anomaly is associated with the 6120 target area and covers approximately 1 square kilometer forming at an important structural intersection. Twenty rock samples collected from a 150 meter diameter area of outcropping skarn at the 6120 target averaged 2.3 percent copper, 3.4 grams of gold per metric ton, 33 grams of silver per metric ton, 0.16 percent nickel and 0.07 percent cobalt. The Dall and Little Bird prospects, located on the northern target block (approximately 5 kilometers north), also appear to be associated with skarn and distal skarn type mineral systems. The Dall target was drilled by Anaconda Mining Co. in the 1980s with two diamond drill holes, each of which intersected very significant high-grade mineralization (4.0 percent copper, 370 grams of silver per metric ton, 1.0 percent zinc and 0.3 percent lead over a true thickness of 3.5 meters and 0.9 percent copper, 6.0 percent zinc, 177 grams of silver per metric ton and 1.0 percent lead over a true thickness of 5.5 meters.
Northern Alaska Citing advice from the investment community, Little Squaw Gold Mining Co. announced that it has changed its name to Goldrich Mining Co. The company also announced its initial placer gold resource estimate for its Little Squaw project. The study concludes gold-bearing gravels on Little Squaw Creek contain a minimum of 216,602 ounces of recoverable gold within a global resource of 243,621 ounces that could be extracted at a cash cost of about $503 per ounce. Overall grade was pegged at 0.0243 ounces of gold per cubic yard with a 0.88 to 1 stripping ratio. The envisioned mine plan would produce an average of about 20,000 ounces of gold annually for at least 10 years. The company believes the deposit can be substantially expanded through additional drilling.
Southeast Alaska Hecla Mining announced first quarter 2008 production from the Greens Creek mine on Admiralty Island. The total cash cost per ounce of silver produced at Greens Creek for the quarter was a negative $5.10 per ounce. The average grade of ore mined during the quarter was 13.57 ounces of silver per ton, down from the average grade of 16.38 ounces per ton that was mined in the first quarter of 2007. During the first quarter the mine produced 1,667,854 ounces of silver, 16,316 ounces of gold, 4,836 tons of lead and 15,048 tons of zinc. Total production costs for the quarter were negative $1.32 per ounce of silver produced versus negative $1.54 per ounce for the first quarter of 2007. In addition to production, a total of 17,992 feet of exploration and definition drilling was conducted in the first quarter. Exploration drilling was focused on the Gallagher zone while definition drilling was completed on the Gallagher, NWW and 5250 North zones. Hecla also announced updated resources for Greens Creek, which included probable reserves of 8.454 million tons grading 13.7 ounces of silver per metric ton, 0.11 oz/t of gold, 3.8 percent lead and 10.2 percent zinc. Indicated resources included 348,000 tons, grading 5.6 oz/t of silver, 0.13 oz/t of gold, 3.4 percent lead and 7.9 percent zinc. Inferred resources included 2,266,000 tons, grading 14.5 oz/t of silver, 0.13 oz/t of gold, 4.08 percent lead and 10.5 percent zinc.
Coeur d’Alene Mines Corp. announced that the U.S. Forest Service has determined that an environmental assessment is the preferred level of review for the revised paste tailings disposal plan previously submitted for the Kensington project in Alaska. This review could allow for a conclusion of permitting for an alternative tailings facility later this year.
Ucore Uranium Inc. reported that drilling has commenced at its Bokan Mountain uranium project on Prince of Wales Island. The goals of the work are to verify uranium and REE reported from 2007 and earlier drilling, test the current geological model for the style of mineralization, explore previously untested portions of the I&L prospect and determine if the I&L prospect mineralization persists to depth and/or along strike, especially to the southeast where radiometric data suggest high radioactivity levels for a strike length of 3 kilometers, or 1.8 miles.
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