Providing coverage of Alaska and Northwest Canada's mineral industry
December 2017

Vol. 22, No. 49 Week of December 03, 2017

Mining News: Turnaround lifts mood as miners gather

Sources of investment in exploration shift in Alaska, while the state’s producing mines boost output on strength of higher prices

Curt Freeman

Special to Mining News

For the first time in five long years, the mood at the recently held Alaska Miners Association Convention in Anchorage was buoyant, the result of a slow but steady turnaround on mineral investments in the state.

Additional new corporate interest in the state emerged during the past 30 days, and sources of exploration funds coming to Alaska continue to shift, with estimates for 2017 suggesting that 62 percent of this financing comes from Canadian concerns, 18 percent from U.S.-based concerns and a surprising 20 percent from Australia.

Strong base metal prices are contributing to profitable production from the Red Dog and Greens Creek mines, while stable precious metal prices support strong mining operations at Fort Knox, Pogo, Kensington and Greens Creek. The short and long-term view of most of the industry is a slowly strengthening industry demand for Alaska’s raw materials.

One final sure sign of a turnaround: At the recent RBC Annual Senior Gold Conference, major gold producers played down any significant interest in new mergers or acquisitions, making me think they are all looking for just that sort of opportunity!

Western Alaska

CopperBank Resources Corp. announced additional results from a 13 diamond-drill-hole, 3,690-meter, 2017 drill program on its 100-percent- controlled Pyramid copper project near Sand Point. Significant results include hole 17PY037, which is entirely outside the historical resource envelope and was mineralized from 7.3 meters over its entire length, returning 324.3 meters grading 0.31 percent copper. In addition, 17PY035 intersected a total of 251 meters grading 0.41 percent copper, including a near-surface intercept of 137 meters of 0.45 percent copper and a second deeper interval of 114 meters of 0.37 percent copper; and hole 17PY036 intersected 179.5 meters of 0.37 percent copper. The results from 17PY035 and previously reported drill holes confirm a minimum length of 800 meters for the Main Zone. The company also announced that it has commissioned a remote sensing radar and hyperspectral survey of the project to help map structural and alteration features of the deposit.

Interior Alaska

Kinross Gold Corp. announced third-quarter 2017 results from the Fort Knox mine near Fairbanks. The mine produced 101,041 ounces of gold at a cost of $641 per oz in the three months that ended Sept. 30, compared with 110,396 oz of gold at a cost of $743/oz in the year-previous period. Production decreased slightly compared to the same period a year ago, largely due to lower amounts of tonnage placed on the heap leach pad. Operating costs decreased year over year due to a decrease in operating waste mined and lower contractor costs as the site began to transition to the completing of more maintenance functions in-house. The mill treated 3,228,000 metric tons of ore grading 0.88 grams-per-metric-ton gold with a mill recovery of 81 percent. The heap leach saw additions of 6.088 million metric tons of ore, grading 0.26 g/t gold.

Freegold Ventures Ltd. reported results from its 2017 drilling program on the Shorty Creek copper-molybdenum-gold prospect near Livengood. Significant results from the Hill 1835 prospect include hole SC17-01, which returned 360 meters grading 0.24 percent copper, 0.07 g/t gold and 4.04 grams per metric ton silver, hole SC17-02, which intersected 339 meters grading 0.30 percent copper, 0.05 g/t gold and 5.72 g/t silver, and hole SC17-03, which intersected 105.2 meters grading 0.27 percent copper, 0.05 g/t gold and 6.75 g/t silver. Nine holes have been drilled within the 700 x 1,000-meter magnetic high at Hill 1835, which remains open both laterally and at depth. Porphyry-style mineralization is associated with potassic and pervasive sericite alteration, within hornfelsed sedimentary rocks that are cut by porphyritic dykes and sills. The copper mineralization is primarily chalcopyrite with subordinate bornite. Assays are pending on one hole completed in the center of a 2,500 meter by 2,000-meter magnetic anomaly at the Steel Creek prospect, 2,500 meters north of the Hill 1835 area.

Contango ORE Inc. announced that Peak Gold LLC, the company’s joint venture with Royal Alaska, a wholly-owned subsidiary of Royal Gold Inc. has funded $28.7 million to date of their optional $30 million capital investment in the joint venture with the phase 3 2017 limited drilling program at its Peak gold project near Tok. The phase 3 program, completed in mid-October, consisted of eight holes offsetting the previously announced West Peak Extension area, and while five of these holes intersected gold-bearing intervals, the thickness was not comparable to the phase 2 program hole that originally generated the interest in the zone. The company also announced that a stream sediment sampling program was completed on its Noah block, west of the main resource area. The sampling identified three areas with anomalous gold or gold/copper stream sediments where follow-up work is warranted.

Alaska Range

Alaska newcomer Quantum Resources Ltd. reported the acquisition of several prospects in the western Alaska Range. The company has indicated that it acquired the right to earn into several prospects from AK Minerals Pty Ltd., including the Chip-Loy nickel-copper-cobalt sulfide project and the Estelle gold project. The Chip-Loy prospect contains disseminated to massive sulfides, mainly pyrrhotite and chalcopyrite, with minor cubanite and sphalerite, and trace galena, bravoite, violarite, tetradymite as well as undetermined cobalt-nickel-iron arsenides. The prospect lies at the contact of a magnetic high and magnetic low zone adjacent to a southeast-northwest trending fault extending into the Roberts prospect. At Estelle, a series of gold and copper-gold prospects occur over a 20-mile north-south distance in Jurassic and Cretaceous marine sedimentary rocks that are intruded by the 65-66 Ma granodiorite of Mount Estelle plutonic complex. Under terms of the deal, Quantum will pay about US$155,000 in cash and can earn a 30 percent initial interest by spending US$300,000 on exploration over the first 12 months from the date of exercise of the option, a further 21 percent interest through spending an additional US$1million on exploration over the first 2 years from the date of exercise of the option, and a further 19 percent interest through spending an additional US$2 million on exploration in years three and four from the date of the exercise of the option. Quantum can continue to fund the projects through to completion of a bankable feasibility study, at which point if AK Minerals decides not to contribute proportionately, its interest will dilute to a minimum 15 percent and a 2 percent net smelter return production royalty. Welcome to Alaska Quantum Resources Limited!

Southeast Alaska

Hecla Mining Company announced final production results for the third quarter of 2017 at its Greens Creek mine in Southeast Alaska. Output totaled 2,344,315 oz of silver and 12,563 oz of gold, compared with 2,445,328 oz of silver and 11,988 oz of gold, in the third quarter of 2016. The mill operated at an average of 2,391 short tons per day, a life-of-mine record for the operation. The average grade of ore mined during the quarter was 13.65 ounces per short ton silver, compared with 15.4 oz/t silver in the year-previous period. Average by-product grades were 0.089 oz/t gold, 2.77 percent lead and 7.47 percent zinc. During the third quarter, the mine produced 2,344,315 ounces of silver, 12,563 oz gold, 4,851 tons lead and 14,325 tons zinc. The cash cost per silver ounce dropped to a negative US15 cents, down dramatically from US$4.80 in the third quarter 2016. Less silver production resulted from lower grades due to mine sequencing. Lower costs were attributed to higher base metal prices and record mill production rates. 2017 silver production is estimated to total 7.8 million to 8.2 million oz, while gold production is pegged at 51,000-53,000 oz. On the exploration front, drilling in the third quarter targeted the Deep 200 South, East Ore, Gallagher and the Upper Plate zones. Exploration drilling on the Deep 200 South Zone extended the 200 South Bench mineralization south of current resources. Drilling on the East Ore, Gallagher and Upper Plate zones upgraded and expanded the known resource. Previous drilling on the East Ore, Gallagher and Upper Plate zones also delivered strong assay results. Significant intercepts in the East zone include 75.1 oz/t silver, 0.16 oz/t gold, 5.32 percent zinc and 2.67 percent lead over 9.5 feet in an area without previously identified resources and another exploration drill hole intercepted 11.0 oz/t silver, 0.13 oz/t gold, 12.8 percent zinc and 7.3 percent lead over 7.7 feet within an area of no previously identified mineralization. Additional exploration is planned for the East zone in 2018. Significant intervals from the Upper Plate Ore Zone included 75.2 oz/t silver, 0.09 oz/t gold, 6 percent zinc and 3 percent lead over 5.4 feet. This mineralization is close to underground mine infrastructure and only 300 feet below the mine portal. Drilling of the Gallagher Zone identified new mineralization between current resources and included 11.6 oz/t silver, 0.09 oz/t gold, 5.2 percent zinc and 2.5 percent lead over 32.3 feet. Surface drilling was completed on targets in the Gallagher, East Ore and 5250 zones. Drilling on the Gallagher Zone intersected mineralized sheared veins and breccia intervals of up to 100 feet thick containing higher-grade intervals of 1.5 feet to four feet wide that have up to 15 percent zinc and 4.0 oz/t silver. This mineralized structure appears to be the same Klaus Shear identified within the mine workings east of the Gallagher fault. The mineralized Klaus Shear now extends 1,500 feet west of the mine and over 3,000 feet north to south. Drilling successfully intercepted the main mine horizon of the 5250 Zone over 2,000 feet south of the known resource showing promising alteration at the contact.

Constantine Metal Resources Ltd. reported additional assay results for four drill holes from resource expansion and upgrade drilling at the AG Zone at its Palmer volcanogenic massive sulfide deposit near Haines. A total of 10,718 meters were drilled as part of the recently completed dual focus resource expansion and regional exploration drill program. The 2017 program included 10 holes for 3,221 meters at South Wall, 13 holes for 4,993 meters at the AG Zone, three holes for 1,006 meters at the Cap prospect, and six geotechnical holes totaling 1,499 meters. Drilling at AG Zone has continued to successfully define the zone with step-outs along strike and to depth from the initial discovery holes. Significant new results include 30.5 meters grading 7.3 percent zinc, 0.2 percent lead, 0.1 percent copper, 6 grams-per-metric-ton silver, 0.1 g/t gold from hole CMR17-92, 7.8 meters grading 6.69 percent zinc, 0.81 percent lead, 0.11 percent copper, 34.6 g/t silver, 0.26 g/t gold from hole CMR17-99, 41.3 meters grading 5.79 percent zinc, 0.15 percent lead, 0.14 percent copper, 9.2 g/t silver, 0.05 g/t gold from hole CMR17-96 and 127.6 meters grading 0.98 percent zinc, 0.32 percent lead, 0.04 percent copper, 184.2 g/t silver, 0.4 g/t gold from hole CMR17-94. Collectively, the drill-defined strike length is 225 meters, a vertical dip length of 275 meters and all sides are open to expansion. Mineralization consists of stacked stratabound zones, including a high-grade silver-gold upper zone, and a zinc-rich lower zone. The additional drilling also has shown that most of the AG Zone occurs on the steep, relatively planar limb, of a large-scale fold structure. Mineralization is stratigraphically correlative with high-grade surface prospects located hundreds of meters along trend to the northwest (Waterfall and CAP) and southeast (JAG).

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