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November 2009

Vol. 14, No. 44 Week of November 01, 2009

Mining Explorers 2009: Pebble team focuses on engineering

Developers budget US$20 million toward 2009 exploration drilling; rest pre-feasibility work

Shane Lasley

Mining News

The Pebble Partnership, a 50-50 venture between Northern Dynasty Minerals Ltd. and Anglo American plc, put together a 2009 budget of US$70 million focused on completing a pre-feasibility study for the enormous copper-gold-molybdenum project in Southwest Alaska.

While $70 million is a robust program, it is only about half of what the Anchorage-based Pebble Partnership spent in 2008.

Pebble spokesman Mike Heatwole told Mining News that the reduced budget is due primarily to the scope of work needed at the project this year. While the 2008 program involved much more of the expensive field work needed to gather data for the engineers, in 2009 much of the scope of the work will be compiling that data for the pre-feasibility study.

“The level of investment we’re seeing for Pebble this year, in a period of global economic downturn, demonstrates the commitment of the Pebble Partnership to move this project forward in a timely way,” Pebble CEO John Shively said. “Our work scope for the year really reflects the project’s evolution from exploration to engineering and project permitting.”

The pre-feasibility study, once completed, will outline the size and scope of a potential mine at Pebble and will be the basis for permitting the project.

Never enough holes

Shively told Mining News in September that about US$20 million of the 2009 spending will go toward exploration drilling adding to the nearly 260,000 meters previously drilled into the 9.1 billion-metric-ton ore body.

“Geologists never have enough holes,” the Pebble leader quipped.

The Pebble mineral resource totals 5.1 billion metric tons of measured and indicated, and 4.0 billion metric tons of inferred resource and contains an estimated 72 billion pounds of copper, 94 million ounces of gold and 4.8 billion pounds of molybdenum.

The around 11,000 meters of drilling primarily focused on the northern part of the Pebble East deposit, but the company is also exploring other areas as well. The Pebble Partnership completed a geophysical survey of the Pebble deposit using Anglo American’s proprietary Spectrum System.

Jorge Betzhold, Anglo American US manager of technical services, explained to Mining News that the Spectrem System is a multi-geophysical (electromagnetic and magnetic) survey with a volumetric measuring system.

What sets Spectrem apart are the tools Anglo American uses to interpret the data.

“You can imagine all the technology you need to put together to keep control on the airplane; altitude, positioning and all kinds of corrections for unwanted factors as well,” Betzhold explained.

Shively said the partnership has studied the results of this specialized equipment to identify additional drill targets.

The goal of the resource drilling is to provide information that can be used in the development of a mine plan.

“As we look at doing a mine-development plan; the more we know about how the mineralization is distributed, the better off we are,” Shively explained.

Building an environmental base-line document

The primary focus of the environmental program for the project is on drafting an environmental base-line document, which will be the basis of permitting for the project.

About US$14 million is being spent in 2009 on the continued environmental base-line studies as well as compiling the massive amount of data collected into the base-line document.

The environmental studies at Pebble include testing for more than 390,000 parameters from more than 9,000 samples collected by consultants studying the environment of the Pebble region. The Pebble CEO said the extensive environmental information collected will be a benefit that the Pebble project provides Alaska even if a mine is never developed.

Environmental consultants are pouring over the results of the environmental tests, and once analyzed, they will be included in the baseline document. Heatwole said work on the base-line document is expected to continue into 2010.

Project design

Due to the complexities of the multifaceted project, the Pebble Partnership anticipates having the project design completed by the end of 2010.

Designing the Pebble project involves integrating four large projects; the mine, a road, a port and power.

The Pebble property currently can only be accessed by helicopter, and if the project is developed, an 86-mile road to the coast would need to be built, and the developers also would need to construct a deep-water port to bring in supplies and ship out concentrated ore produced at the mine.

To get the ore to the port, the partnership plans to build two pipelines; one would carry the concentrate as slurry to the port; water removed from the slurry would then be shipped back to the mine site via the second pipeline.

The most challenging piece of the infrastructure may be supplying the mine’s energy needs. It is estimated that a mine at Pebble would consume more than 600 megawatts of electricity, about the current usage of Anchorage, Alaska’s largest city with a population of more than 250,000 people.

The current plan is to generate the power at a natural gas-fired plant near Nikiski on the Kenai Peninsula and transmit DC power to the project and convert it to AC power for use at the facility. The transmission line would be nearly 200 miles long, 50 miles of which would need to be buried beneath the waters of Cook Inlet.

Engineers are also working on the best way to extract the ore. A combination of open-pit mining in the Pebble West deposit and underground block-cave mining in the richer, but deeper Pebble East deposit is being considered.

“Putting all these pieces together takes time,” Shively explained.

Once engineers put all the Pebble pieces together, the company will take the mine proposal to the people who live in Southwest Alaska.

“Primarily we will want the people in the region to see what we are doing and how we are addressing the concerns that we know they have,” the Pebble leader said.

Anticipating legal challenges

The permitting process, which is expected to start in 2011, will take about three years. The Pebble Partnership anticipates legal challenges along the way.

Shively, who was the Alaska Department of Natural Resources Commissioner from 1995-2000, said, “Certainly the permitting process, although stable, is very complex. The biggest problem isn’t with the permitting process itself, but with the litigation that often takes place afterward.”

The Pebble leader said groups and individuals need to be held accountable for initiating lawsuits. He said, in many cases entities are compensated if they win a suit, but there is no liability for loosing a suit. He said government leaders, particularly on the federal level need to look at placing risk on those that bring forward lawsuits.

The Pebble CEO knows that building a mine at Pebble is going to be a challenge, but he believes it can be done.

“We are still working under the assumption that we can build a project that meets the very high environmental standards that all of us know we have to meet, and it is still economic,” Shively concluded.






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