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Mining News: Interior Alaska mines put people first From Gov. Parnell to updates from Usibelli, Fort Knox and Pogo, people as the No. 1 resource permeated talks at mining symposium Shane Lasley Mining News
FAIRBANKS – The Arctic International Mining Symposium in Fairbanks afforded Interior Alaska mines the opportunity to provide an update on the latest developments at local operations.
While the mines touted individual achievements in 2013 – record gold at Fort Knox, new discoveries at Pogo and a new deposit at Usibelli – a commitment to and appreciation of people was a common thread spun through messages from all three operations.
“Without the people you might as well shut the doors – that’s your No. 1 resource,” said Chris Kennedy, general manager, Sumitomo Metal Mining Pogo.
Beyond the Interior Alaska operations, this theme of people as a resource for mining permeated the presentations at the symposium.
“We think that our people are the best news going,” Alaska Gov. Sean Parnell said during a keynote address.
“We have great people in the industry, it drives the industry, and it has really made the industry and its reputation in this state,” Pebble Partnership Chairman John Shively concurred.
Parnell said mining in turn is a resource for the people of Alaska.
“Mining provided about 4,600 direct jobs and 9,100 indirect jobs and a payroll of over US$460 million – that is a lot of good in this state; that is a lot of families making their payments; that is a lot of families being fed,” he observed.
“It is our tradition to mine, and mining will remain important for our future,” Parnell added.
Long-time coal miners Roughly 130 of direct mining jobs in Alaska are provided by family-owned Usibelli Coal Mines, which has been delivering coal to Interior Alaska for more than 70 years.
“The big thing at our mine is the people; they make us who we are,” Usibelli Vice President of Engineering Fred Wallis said during an April 10 presentation.
Wallis informed the audience that he and fellow Usibelli Coal miners recently completely on their 650th day without a lost-time incident.
The average tenure of workers at Usibelli is 11 years. Wallis said this is somewhat lower compared to previous years due to the retirement of some the long-time coal miners. But, with 2nd, 3rd and 4th generation miners making up some 30 percent of the work force, future generations are filling the hardhats of retirees.
“It is a pretty tight-knit community and a lot of people that come there, stay there quite a long time,” he explained.
Usibelli’s Healy operation is expected to mine some 1.6 million short tons of coal in 2014. Roughly 1 million tons of this coal will fuel heat and electrical generation in Interior Alaska; the balance will be exported to customers in Chile, South Korea and Japan.
Coal-generated electricity, at about US5 cents per kilowatt-hour, runs about one-sixth the cost of diesel and less than half the cost of natural gas-fired power in Interior Alaska, according to figures provided by Golden Valley Electric Association, the electrical utility for the region.
“Energy and Economic Impacts of Coal in Interior Alaska,” a report compiled by the McDowell Group, estimates that if coal was removed from the energy mix the cumulative annual cost of powering and heating homes and businesses in Interior Alaska would surge by US$200 million.
With roughly 700 million tons of coal in reserves, Interior Alaska has plenty of the low-cost fuel in its back yard.
A big chunk of these reserves are located in the Jumbo Dome Mine area.
“Roughly 80 million tons of coal is permitted to be mined there,” Wallis informed the symposium attendees.
At the current mining rate, this coal would provide fuel for Interior Alaska and Pacific Rim customers for 40 to 50 years and Wallis said the Jumbo Dome is open for expansion in two directions.
To get to the new mining area, Usibelli began building the Jumbo Dome Mine Road in 2008. Six years and more than 13 million cubic yards of dirt later, the new haul-truck highway is nearly complete.
“We want to get some coal coming out of the Jumbo Dome Mine areas later this spring,” Wallis said.
Heart of gold Kinross Gold Corp.’s Fort Knox Mine is the single-largest consumer of the electricity fueled by Usibelli coal. In fact, the power bill for the Interior Alaska gold mine ran around US$120,000 per day, or some US$43 million per year, during 2013.
“Like any mine, or any of us at home, utilities are a big cost,” Fort Knox Environmental Superintendent Mark Huffington told the symposium attendees.
Adding the US$54 million that Kinross spent on fuel at the Fairbanks area mine, the total energy costs for the mine climbs to a whopping US$97 million.
While energy costs have climbed, so too has the Fort Knox’s gold production. During 2013, the mine produced a record 428,822 ounces of gold.
“We reclaimed the No. 1 gold producer in Alaska in 2013,” Huffington touted, poking a friendly jab at the Pogo Mine, which had held the title since 2008.
To retake the title, Fort Knox workers mined roughly 63 million tons of rock, or some 173,000 tons per day, in 2013. Of this, 14 million metric tons of higher grade ore was processed by the mill and 33 million tons of rock with lesser amounts of gold was stacked on a heap leach pad.
Doubling the capacity of the carbon-in-column facility to 16,000 gallons per minute played a key role in pushing Fort Knox’s gold production to record highs last year. This added capacity has increased the mine’s ability to process the gold-laden solution recovered from the heap leach pad.
Fort Knox management is anticipating the recovery of 390,000 ounces of gold in 2014. Some 245,000 ounces of it is expected to come from the mill, the heap leach facility is projected to account for the balance.
By the end of 2014, about 140 million tons of ore will be stacked on the heap leach pad. Huffington said this is near the maximum ore permitted to be placed on the pad through stage 5. The company was recently permitted for stage 6-8 expansions, which would more than double the capacity to 307 million tons of ore.
Huffington said the 630 hard-working and safety-dedicated employees at Fort Knox is the key to past and ongoing successes at the Fairbanks area mine.
As of the end of 2013, employees at Fort Knox had logged 1.8 million man hours without a lost-time incident.
“It is a great company to be working for because safety is No. 1; and in a close second behind that is close protection of the environment,” touted the environmental superintendent.
The pay isn’t bad, either.
During 2013, the Fort Knox Mine paid US$81 million in wages and benefits, or an average of roughly US$128,570 for the 630 employees of the mine.
Huffington, whose presentation was titled “Fort Knox – Heart of Gold,” was proud to tout his fellow Fort Knox workers’ involvement in the Fairbanks region.
“It is just unbelievable what our employees do for the local community and, at the same time, the thousands of dollars they donate to organizations in this community,” he beamed.
Extending Pogo’s horizon “They say ‘you never run out of gold you can mine, you just run out of gold you can afford to mine,’” Pogo General Manager Kennedy told symposium participants.
Situated some 60 miles (100 kilometers) southeast of Fairbanks, the underground mine at Pogo currently has enough ore in reserves to last until 2019. Expansion of East Deep and North, two zones adjacent to the mill, will almost certainly add years to gold that Sumitomo can afford to mine and a number of other deposits and prospects stretching to the south have the potential to further extend this horizon.
“We are going to be here a long time,” Kennedy asserted.
To ensure Sumitomo Metal Mining does not run out of gold that it can afford to mine at Pogo, the company has budgeted US$17 million for exploration in 2014.
“Some of the companies are reducing their exploration costs; we aren’t doing that,” Kennedy said. “Without (exploration) you have got no future, and we want to be here for a long time.”
Since the Pogo gold mine went into production in 2006, the feedstock for the mill has primarily been mined from the Liese zone – three flat-lying, parallel quartz veins that carry high-grade gold.
In 2010, drilling at Pogo tapped East Deep, a previously undiscovered zone of quartz-vein structures with grades and thickness that are strikingly similar to those that have provided feedstock for the Pogo mill over the past six years.
Sumitomo Metal Mining Pogo received permits for East Deep in 2013, and mining has begun in this expansion area.
Since 2010, drilling has provided evidence that the Liese and East Deep zones were likely once a contiguous ore body that became separated when a gold-barren mass of igneous rock (diorite) split the two zones some 95 million years ago. These zones remain linked at the North zone, a high-grade gold deposit located at the northwestern end of the diorite.
“A lot of potential still lies within the East Deep and in the North zones,” Kennedy informed the audience.
Evidence is beginning to emerge that these zones could extend several miles to the south.
Drilling on the south end of the Liese zone in 2012 has already intersected three new veins in a zone dubbed Pogo South.
The 4021 zone, a known gold deposit located roughly 2.5 miles southeast of Liese, furthers the southward expansion potential. Kennedy explained that 4021 has shifted to the east along a major fault separating it from the Liese zones. If the geological units are lined up to their original positions, 4021 is on strike with the Liese zone. This opens up the prospect of gold mineralization between these two known zones.
“It is going to be a lot of work, a lot of drilling, but we are up to that,” Kennedy said.
The general manager said this exploration along with all the other projects being carried out in and around the Pogo Mine keeps the 140-man contractor camp at full capacity throughout the busy summer months.
“We really do a lot of work out there – we do a lot of exploration out there every year; we got a contractor doing some of our development work out there – and all the beds are full all the time.”
This is on top of the 300-man camp housing Sumitomo Metal Mining’s direct onsite workforce.
The McDowell Group, which last year published a report on the socioeconomic impacts of Pogo, found that the 329 direct employees of Sumitomo Metal Mining Pogo averaged US$116,916 before benefits during 2012.
Roughly 217 of these six-figure paychecks were taken home by Alaskans, including about 167 going to employees living in the Interior region of the state.
Kennedy said Pogo is rich in its No. 1 resource, a plentiful supply of good people who will ensure that the Interior Alaska mine does not run out of gold it can afford to mine for years to come.
“We are going to be here a long time but it takes a group effort,” he added.
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