Mining News: 2008: A truly memorable year for mining

Despite industry’s tumultuous year, a decades-old truism that ‘good projects get funded and good mines make money’ offers comfort

Curt Freeman

For Mining News

As 2008 winds inexorably to a close, I found myself looking for words adequate to describe what will go down in history as one of the most memorable years in many a moon. Words like tumultuous, unpredictable, singular, turbulent, chaotic, confusing, and unsettling hardly do justice to the past year’s events.

As usual, the mining industry played its small but vital role in the scheme of world events. The first half of the year brought stratospheric commodity prices, while the second half sent prices for all but a select few of those same commodities into the financial tailings impoundment.

In January, the mining industry’s ability to raise venture or debt capital seemed limitless as evidenced by transactions such as BHP Billiton’s $188.2 billion takeover offer for Rio Tinto. By March, the smell of financial disaster was in the air, and by early September, public mining companies watched in horror as the value of their stocks dropped 5-10 percent per day and mergers such as the BHP-Rio Tinto transaction were withdrawn. As this financial winter deepens, I find wisdom in two observations that have been truisms for many decades: Good projects get funded and good mines make money.

Western Alaska

Zazu Metals Corp. announced results from 14 additional drill holes at its Lik zinc-lead-silver deposit in the western Brooks Range. Highlights include drill hole 174 with 5.65 percent zinc, 5.38 percent lead and 61.52 grams per metric ton of silver over 8.23 meters; hole 175 with 9.92 percent zinc, 4.06 percent lead and 4.1 g/t silver over 15.85 meters; drill hole 176 with 9.89 percent zinc, 5.75 percent lead and 117.51 g/t of silver over 17.68 meters; drill hole 182 with 9.12 percent zinc, 2.8 percent lead and 97.5 g/t of silver over 43.89 meters; drill hole 160 with 6.26 percent zinc, 2.52 percent lead and 37.72 g/t of silver over 65.53 meters; and drill hole 201 with 9.77 percent zinc, 5.0 percent lead and 114.56 g/t of silver over 20.57 meters. Due to the shallow dipping, stratiform nature of the Lik South deposit, true thickness is estimated to equate to 85 percent to 90 percent of the core intercepts.

Arctic Oil & Gas Corp. and Shell Trust Dredge Engineers have agreed to pool their respective interests in offshore mining leases in Norton Sound near Nome. Shell holds options over leases in offshore state waters with drill-indicated gold reserves of about 500,000 ounces and onshore placer resources with an additional 500,000 ounces of gold resource. The companies hope to commence production in one or more of their lease areas in the 2009-2010 time frame with initial production targeted at 250,000-500,000 ounces of alluvial gold per year. Initial efforts will go toward the Denali placer gold project, involving fully permitted onshore claims with 500,000 ounces of drill-indicated reserves and mining equipment already on site. The joint venture has plans to upgrade production equipment at this project to a 60,000-ounce-per-year operation in 2009. The other project which the partners are planning to advance is the Norton Sound Alaska Oceanic placer gold project, which encompasses 720 square miles of OCS leases and 2,000 acres of state leases offshore.

Northern Dynasty Minerals and partner Anglo American plc provided an updated resource estimate at the Pebble copper-molybdenum-gold deposit near Iliamna. The report provides the first integrated resource estimate for both the near-surface Pebble West portion of the deposit and the deeper Pebble East portion of the deposit. At a 0.30 percent copper-equivalent cutoff, the Measured and Indicated resources include 5.1 billion metric tons grading 0.43 percent copper, 0.35 grams per metric ton of gold and 256 parts per million molybdenum, containing 48.5 billion pounds of copper, 57.2 million ounces of gold and 2.87 billion pounds of molybdenum. In addition, Inferred Mineral resources stand at 4.0 billion tonnes grading 0.27 percent copper, 0.29 g/t of gold and 220 parts per million molybdenum containing 23.7 billion pounds of copper, 36.9 million ounces of gold and 1.92 billion pounds of molybdenum.

Pacific North West Capital Corp. announced the termination of its exploration agreement with Stillwater Mining Co. and Calista Corp. on the Goodnews Bay platinum property. The 2008 exploration program culminated with the completion of a seven-hole, 1,706-meter drill program completed at the Last Chance and Susie West geochemical anomalies. No significant platinum-palladium mineralization was identified during the program.

Geoinformatics Exploration announced a summary of its 2008 activities and that it has earned a 100 percent interest in the Whistler copper-gold project. During 2008 the company completed a total of 11 diamond drill holes (4,303 meters). Five of these holes (2,462 meters) tested extensions of the Whistler Zone/Main Zone resource. The remaining 1,841 meters (6 holes) tested 6 “blind” regional targets all located within 2.5 kilometers of the Whistler Zone/Main Zone resource. These efforts extended mineralization to a vertical depth of 625 meters on the Main Zone with drill hole WH-08-08 returning 726.8 meters grading 0.48 g/t of gold, 0.87 g/t silver and 0.14 percent copper. This work also identified a higher-grade zone north of the Main Zone which returned 76 meters grading 0.61 g/t of gold, 0.27 percent copper, and 4.16 g/t silver in drill hole WH-08-10. Mineralization encountered in three regional targets in 2008 included one hole at the RainTree West prospect, which returned 160 meters grading 0.59 g/t of gold, 6.02 g/t of silver, 0.10 percent copper, 0.20 percent lead and 0.46 percent zinc, including 24 meters grading 1.37 g/t of gold, 6.32 g/t of silver, 0.13 percent copper, 0.36 percent lead and 0.80 percent zinc in drill hole RN-08-06. Drilling at RainMaker prospect returned 151.6 meters grading 0.37 g/t of gold, 0.18 percent copper and 1.83 g/t of silver in drill hole RM-08-01. Drilling at RainTree East prospect returned 20 meters grading 0.38 g/t of gold and 0.15 percent copper in drill hole RN-08-05. Exploration at the Bonanza Prospect returned values up to 69.12 g/t of gold, 424 g/t silver and 1.96 percent copper.

Pacific North West Capital Corp. announced that it has acquired an option, exercisable until Feb. 15, to purchase a 100 percent interest in Mystery Creek Resources, Inc., a wholly owned Alaska subsidiary of St Andrews Goldfields Ltd. Mystery Creek’s assets include the Nixon Fork gold mine near McGrath. Pacific North West has paid $100,000 on signing of the agreement. Subject to regulatory approval and the satisfactory completion of its due diligence review, Pacific North West may exercise the option by paying a further $400,000, of which $100,000 is required to be paid on closing of the purchase of the Mystery Creek shares and the balance is required to be paid in three equal installments May 1, July 1 and Sept. 1. Nevada Goldfields Inc. operated the high-grade underground gold mine from 1995-1999, recovering 137,749 ounces of gold and 2.1 million pounds of copper, with additional silver credits. The average production grade was 42 g/t of gold, with an average production cost of $266 per ounce. The mine was closed due to declining gold prices. St Andrews Goldfields purchased the mine in 2003. From 2004 through 2008, about $15 million was expended on upgrades to the processing facilities and mine infrastructure. During this time 9,381 meters of reserve-resource definition drilling was conducted, an updated reserve-resource estimate was completed and additional metallurgical testing was conducted. Limited production in 2007 resulted in recovery of 6,775 ounces of gold and 78,644 pounds of copper. Pacific North West will conduct a comprehensive re-evaluation of mine reserves/resources, metallurgy, mining scenarios, and permitting during 2009. A financial analysis of the mine will also be completed. These studies will form the basis for making a decision regarding a restart of mining operations.

Eastern Interior

International Tower Hill Mines Ltd. also announced results from exploration at its West Pogo gold project in the Goodpaster District. Six of the 24 rock samples taken from this new zone returned greater than 1 gram of gold per tonne, ranging in grade from 1.2 to 118.5 g/t of gold from sericite-altered granite and quartz vein material. A train of mineralized granite float was encountered 150 meters northeast of a 2003 drill site. Visible gold was identified in several pieces of float. Additional mineralized rocks and anomalous soils were found over an area extending for 700 meters to the east of the visible gold discovery. The mineralization consists of vuggy quartz veins and breccias in granite with strong sericitic and local tourmaline alteration. Associated metals include moderate to strong arsenic values and moderate antimony values.

Full Metal Minerals Ltd. announced final drill results from its 39-hole program at the LWM carbonate replacement project near Chicken. Results include hole LWM08-55 which returned 1.5 meters true width averaging 12.4 percent zinc, 30.0 percent lead and 186.3 grams of silver per tone; hole LWM08-56 which returned 5.7 meters true width averaging 7.5 percent zinc, 11.8 percent lead and 167.6 g/t of silver; hole LWM08-57 which returned 1.2 meters true width averaging 24.8 percent zinc, 10.0 percent lead and 192.4 g/t silver; and hole LWM08-58 which returned 0.9 meters true width averaging 0.4 percent zinc, 37.5 percent lead and 648 g/t of silver. Two subparallel zones of massive carbonate-replacement mineralization have been traced over 700 meters of strike length and over 300 meters below surface. The deposit is open for expansion in all directions. Drill holes LWM08-55, 56 and 58 are at the southwest limit of drilling. Additional drilling is planned in 2009.

Alaska Range

Southeast Alaska