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Providing coverage of Alaska and Northwest Canada's mineral industry
May 2007

Vol. 12, No. 21 Week of May 27, 2007

MINING NEWS: Mining News Summary: Noses to the ground as summer exploration season hits full swing

Curt Freeman

For Mining News

The author Curt Freeman, CPG #6901, is a well-known geologist who lives in Fairbanks. He prepared this column May 21. Freeman can be reached by mail at P.O. Box 80268, Fairbanks, AK 99708. His work phone number at Avalon Development is (907) 457-5159 and his fax is (907) 455-8069. His email is [email protected] and his web site is www.avalonalaska.com.

Alaska’s summer exploration season is in full swing with strong budgets on a number of projects around the state. Alaska’s mines also weighed in with strong quarterly results as metal prices remain strong.

The hot spots in the state this month include Southeast Alaska, Interior Alaska and the Alaska Range but don’t think that silence means there is nothing going on! We are entering the period where everyone has his nose to the ground and has little time for news releases or other public announcements. That will all come in time!

Western Alaska

St. Andrew Goldfields reported first-quarter production results from its Nixon Fork mine near McGrath. During the quarter the mine processed 8,198 tonnes of ore with an average grading of 21.8 grams of gold per tonne. Mill recovery rate for the quarter averaged approximately 76 percent producing 3,374 ounces of gold and 37,623 pounds of copper. During the quarter, the mine produced 172 tonnes of copper concentrate containing 2,789 ounces of gold. The company expects to develop additional working stopes in the second quarter which will allow production to reach sustainable levels.

Eastern Interior

Kinross Gold announced first-quarter 2007 production results from its Fort Knox mine. The mine produced 82,714 ounces of gold at a cash cost of $327 per ounce vs. 79,677 ounces at a cash cost of $318 per ounce in the year previous period. The 4 percent production increase was attributed to higher average head grades and improved mill recoveries. The mine processed 2,981,000 tonnes of ore grading 0.98 grams of gold per tonne with a mill recovery of 88.3 percent.

The company also announced that it had begun exploration drilling on a possible Phase 7 mine expansion and expects this work to continue through 2007.

Freegold Ventures announced additional results from a rotary air-blast drilling program on its Golden Summit project in the Fairbanks District. Highlights from the second and third drill fence include 12 feet averaging 2.35 grams of gold per tonne in hole 98; 6 feet averaging 2.5 grams of gold per tonne in hole 102; 9 feet averaging 3.45 grams of gold per tonne in hole 110; 6 feet averaging 4.76 grams of gold per tonne in hole 133; 21 feet averaging 7.82 grams of gold per tonne including 6 feet averaging 23.37 grams of gold per tonne in hole 151; and 3 feet averaging 12.63 grams of gold per tonne in hole 154. Additional drilling has been conducted with assays pending.

Full Metal Minerals announced that exploration had begun on the 40 Mile zinc-lead-silver project near Chicken. Initial drilling plans call for 3,300 meters of core drilling starting on the LWM prospect where 2006 drilling intercepted 12.1 meters of 15.7 percent zinc, 4 percent lead and 110.9 grams of silver per tonne. Additional drilling is planned for the Fish Lake prospect and reconnaissance exploration will also be conducted with possible drilling on one or more of these reconnaissance prospects.

Alaska Range

Pure Nickel Inc. announced a $4 million exploration program for its MAN nickel-copper-platinum group element project in the central Alaska Range. The exploration program will include 3,327 line-kilometers of VTEM airborne geophysical surveys, ground mapping, detailed soil and bedrock geochemical surveys and 4,000 meters of exploration drilling. Geophysical work is currently under way with other work scheduled to start early June.

Full Metal Minerals announced drilling results from its Lucky Shot gold project. Drill hole C07-92 encountered 54.6 grams of gold per tonne over 0.98 meters, and is a 100 meter offset from hole C06-89, which intersected 19.4 grams of gold per tonne over 0.4 meters. The results came from the Murphy zone, a northeastern extension to the past-producing War Baby-Lucky Shot mine. This new block extends the strike extent of known gold mineralization within the Lucky Shot shear to 2,000 meters and confirms the potential for an additional high-grade zone.

Mineralization takes the form of coarse gold and telluride mineralization with minor sulfides hosted within 1 to 10 centimeter wide quartz veins. Mineralization is hosted in a chlorite-carbonate altered shear zone within a tonalite intrusive. The shear is 270 meters to 300 meters below surface and appears to range from a 15 degree northwesterly dip to sub-horizontal.

Northern Alaska

Little Squaw Gold Mining announced the appointed Rod Blakestad as its new vice president of exploration. Rod is well known to the Alaska mining community and will take over exploration of the company’s Chandalar gold property in the southern Brooks Range. Welcome back to Alaska Rod!

Southeast Alaska

Kennecott (70.3 percent) and Hecla (29.7 percent) announced first-quarter 2007 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 $4.62 per ounce. Silver production was up 15 percent over the year previous period.

The average grade of ore mined during the quarter was 16.38 ounces of silver per ton, up from the average grade of 15.53 ounces per ton that was mined in the first quarter of 2006. During the first quarter the mine produced 2,371,093 ounces of silver, 16,320 ounces of gold, 5,230 tons of lead and 15,479 tons of zinc.

Total production costs for the quarter were negative $1.54 per ounce of silver produced vs. $1.95 per ounce for the first quarter of 2006. In addition to production, an aggressive underground exploration drill program, utilizing three drills, continued to expand the high-grade 5250 zone to the north. The drills are slated to move later in the year to the still-expanding West Gallagher zone, and to the NNW and East Ore zones to better define those existing resources.

Preparations for an extensive surface exploration and drilling program for this summer are under way and will include the drilling of the Little Sore, Upper Gallagher and West Gallagher prospects.

Coeur d’Alene Mines reported a first-quarter update of construction activities at the Kensington mine. Capital expenditures totaled $24.9 million for the first quarter with efforts focused on completion of the surface processing facilities and underground tunnels. With the exception of the tailings facility, which has been stalled by legal challenges, the company expects to complete the construction of all surface facilities by September of 2007.

The company expects to complete the main underground tunnel in July of this year. In addition, the company continues to progress with the required mine development work including ramps and horizontal tunnels that provide lateral access to the ore bodies.

Bravo Venture Group Inc. reported May 21 that the U.S. Forest Service has issued a Decision Memo approving Bravo’s Plan of Operations for the 2007 mineral exploration activities on its Woewodski Island project in Southeast Alaska. Pending final approval in early June, the company will commence the 2007 exploration program which will target both gold prospects along the western and southern margins of the project and volcanogenic massive sulfide targets in the central and southern portions of the island.

The company anticipates 2,400 meters of drill testing on three main target areas in 2007 as well as surface geophysical surveys and surface sampling and mapping on multiple gold and massive sulfide occurrences throughout the island. Initial work including surface gravity geophysics has already commenced in preparation for drill testing scheduled to begin by mid June.

Niblack Mining Corp. announced that all major draft permits and approvals have been received to conduct underground exploration at its Niblack volcanogenic massive sulfide property in southeast Alaska. The underground exploration program will provide drill access to deeper gold-bearing base metal mineralization defined at the Lookout zone. Underground workings would be accessed through a newly developed portal located near the Mammoth zone, which is also open to expansion from underground drilling.

The underground program contemplates a total of 6,000 feet of underground development, consisting of a 3,000 foot main access drift, and three cross-cuts, each approximately 1,000 feet in length. In addition to offering the ability to expand known zones to depth, the underground program provides access to over 5000 feet of highly prospective stratigraphy on the opposite fold limb to the Lookout zone that is inaccessible to drilling from surface.

Full Metal Minerals announced that it had acquired the CJ gold property on Prince of Wales Island from Juneau-based Red Diamond Mining Co. CJ is a sediment-hosted, structurally controlled high-grade vein system, located adjacent to the paved highway between Hollis and Craig. Several historically producing mines occur within a structural corridor that currently has a strike length of 3,200 meters and spans 500 vertical meters. The area has received only minor modern exploration since production ceased in 1940. The CJ prospect is thought to be an orogenic gold system hosted within a series of lower Paleozoic clastic and volcanic rocks, intruded by plutons of varying compositions and ages. Multiple, banded quartz veins range from continuous veins 0.2 to 4.3 meters thick, to vein swarms and sheeted vein sets within brecciated, siliceous argillite. Vein dips range from 35 to 60 degrees, dipping to both the east and west. Individual veins have been traced for over 1,600 meters along strike. Historic and recent assay data indicate gold-silver ratios ranging from 1:1 to 1:10, with mineralization occurring as native gold and fine grained sulfides.

Full Metal can earn a 100 percent interest in the property by spending $2.8 million over four years and making cash payments of $700,000. Upon earn-in, Full Metal will make annual advanced royalty payments of $150,000 until the commencement of commercial production.

Full Metal will also make a one-time cash payment of $1 million upon completion of a positive, bankable feasibility study. Upon commencement of commercial production, Full Metal will pay Red Diamond a 2 percent net smelter return royalty for the first four years increasing to 4 percent thereafter. After four years, Full Metal shall have the right to purchase one-quarter of the royalty for $2 million.






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