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MINING NEWS: Mining news update: Exploration and development preparations ramping up
Preparations for exploration and development activities ramped up again in the last month as budgets were approved and committed on projects extending from Southeast Alaska to the Seward Peninsula to Interior Alaska. Commodity and equity markets for the metals mining industry have remained strong in anticipation of continued high demand and restricted supplies.
To put things into a global perspective, the Worldwatch Institute (www.worldwatch.org) recently published information about the growing demand for goods and services in China and India, the world’s two fastest growing economies: If China and India were to consume resources at the current U.S. per-capita level, it would require two planet Earths just to sustain their two economies alone! In case you don’t see what I’m driving at, I think this means we better turn up the heat and get some new projects in the pipeline! Western Alaska NovaGold Resources announced year-end details on its Rock Creek and Big Hurrah projects near Nome. Initial budgets of US$16 million have been approved for ongoing development work, design, engineering, permitting and purchase of critical equipment and consumables, as well as a planned 10,000 meter drilling program. Detailed engineering and permitting is planned for completion in mid-2006. In the event of a timely approval of permits and construction start, development budgets of $37 million are anticipated for the remainder of 2006.
NovaGold also announced that Barrick Gold Corp. has assumed management of the Donlin Creek project following its acquisition of Placer Dome. Drilling recommenced on the project in February with four diamond drills on site. Current plans call for 2006 expenditures of approximately $30 million on drilling, feasibility studies and permitting.
Linux Gold Corp. announced that a $1.5 million exploration budget for 2006 has been proposed for its Granite Mountain project on the Seward Peninsula. The initial phase will consist of an airborne magnetic survey followed by diamond drilling of several targets defined by the 2005 sampling program as well as prospective targets identified by airborne magnetics.
Interior Alaska Kinross Gold announced year-end 2005 resource updates from its Fort Knox mine near Fairbanks. Proven and probable reserves at year-end stood at 82,172,000 tonnes grading 0.74 grams gold per tonne, equivalent to 1,953,000 ounces. An additional 48,862,000 tonnes grading 0.60 grams gold per tonne, equivalent to 948,000 ounces, are classified as measured and indicated resources. The company also announced that it has terminated its option agreement on the Ryan Lode project and that reserves at the True North and Gil deposits were reclassified to resources due to changes in mining cost assumptions.
Select Resources announced initial drill results from its Richardson gold project near Fairbanks. In November the company completed an eight-hole diamond drilling program totaling 3,052 feet. Drilling was concentrated on testing altered quartz-feldspar porphyry hosted gold targets over a segment of the Richardson lineament. Quartz feldspar porphyry is the main host for gold mineralization at this area. Two holes tested the Camp Pit area, five holes were drilled in the Democrat mine area and one hole in the Democrat Pup area.
Holes RI05-03 through RI05-07, in the Democrat mine area, encountered altered quartz feldspar porphyry containing gold and associated silver, arsenic, molybdenum, tin and tungsten mineralization. Hole RI05-03 intersected the best gold and silver grade of 1.5 grams of gold per tonne and 44.5 grams of silver per tonne over a 38 foot interval including 3.0 grams of gold per tonne over three feet. Hole RI05-03 cut the highest silver grade encountered at 17.9 ounces of silver per ton over a three-foot interval below the main gold-bearing zone. Gold grades of less than 500 parts per billion are common below 100 feet depth in all holes.
Based on the drilling results, gold and pathfinder elements appear to be concentrated in the upper part of the quartz feldspar porphyry system. All five holes in the Democrat Mine area ended in altered and mineralized quartz feldspar porphyry indicating a larger intrusive system than previously believed. Holes RI05-1 and 2 were drilled in the Camp Pit area and did not encounter significant gold mineralization. Hole RI05-08 was collared 1,000 feet southeast of the Democrat mine in the Democrat Pup area. This hole drilled schist, did not intersect quartz feldspar porphyry and was barren.
Midas Resources Ltd. announced that reverse circulation drilling had begun on its Uncle Sam gold project in the Richardson district. The 16-hole, 2,000 meter program is designed to test six previously identified targets on the project.
Previous drilling by property owner Kennecott Exploration intersected both low grade gold mineralization (11 meters at 2.4 grams of gold per tonne and 8 meters at 2.1 grams of gold per tonne) along with higher grade intersections (6 meters at 10.6 grams of gold per tonne and 5.5 meters at 4.9 grams of gold per tonne).
Alaska Range Piper Capital announced that major shareholder Hidefield Gold plc had acquired all of Piper’s rights to the Golden Zone and South Estelle gold projects in the Alaska Range. The share and cash transaction is designed to consolidate ownership of the projects in Hidefield, a London-based exploration company with assets in Argentina and Brazil. Plans for 2006 were not released.
Northern Alaska Little Squaw Gold Mining announced that it has raised $2.3 million via a brokered private placement in order to fund exploration on its Chandalar gold project in the Brooks Range. The company expects to complete about 12,000 feet of reverse circulation drilling in 30 to 35 holes on 10 targets this summer. All these targets have significant surface gold mineralization.
In addition, geologic mapping, a large soil sampling survey and excavator trenching will be conducted on other parts of the property.
NovaGold Resources announced that an updated resource estimate is in progress for is Ambler volcanogenic massive sulfide deposit in the Ambler District. In 2005 over 3,000 meters of drilling was completed confirming additional high-grade copper and precious metal mineralization. In addition, the company announced that airborne geophysical and ground follow-up work helped identify the Center of the World prospect, a new discovery which will be drill tested in 2006. The company hopes to complete a Preliminary Economic Assessment study in the second half of 2006.
Southeast Alaska Coeur d’Alene Mines announced year-end results, including an update on its Kensington gold project near Juneau. During the second half of 2005, the company began an extensive exploration program at Kensington designed to increase the size and geologic continuity of gold mineralization currently in indicated and inferred mineral resources. The company completed 34,000 feet of core drilling from 74 drill holes. Of these holes, 87 percent encountered gold mineralization equal to or greater than 0.12 ounces of gold per ton, the cut-off for its mineral resources. In addition, 5,000 feet of core drilling was completed on its adjacent Jualin property.
The company continues to drill at both properties and expects to update its mineral reserves and mineral resources during 2006. The company also indicated that it was expecting reinstatement of its U.S. Army Corps of Engineers permits that were temporarily suspended in late 2005.
As a result of increased earthwork requirements, increased storm water management programs, the costs associated with challenges to the project’s permits and the general increase in labor and materials costs worldwide, the company currently estimates the total cost of construction to be approximately $190 million. The project is expected to have an annual production rate of 100,000 ounces and the estimated cash operating cost is expected to be $250 per ounce. The company expects capital investment on the project to total approximately $77 million during 2006.
Other If you have not already seen it, log onto the Alaska Miners Association website (www.alaskaminers.org) and download a copy of the McDowell Group’s economic impact profile on the Alaska mineral industry. It is packed with information relating to the impacts that the mining industry has around Alaska. Even for those of us died-in-the-wool mining fans, there is new and revealing information about how, how much and where these impacts are improving Alaska’s economy and its residents.
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