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Mining Explorers 2009: Kinross partners with dynamic juniors Owner of Alaska’s largest gold mine invests in exploration ventures that seek new discoveries in the prospective Tintina Gold Belt Shane Lasley Mining News
Kinross Gold Corp. – operator of the largest gold mine in the Tintina Gold Belt – has embarked on a treasure hunt in hopes of identifying another Fort Knox-like deposit in this gold-rich province.
The Tintina belt is a boomerang-shaped swath of land that spans the breadth of Alaska, through the Yukon Territory and into northern British Columbia.
While Kinross works to extend the mine life of Fort Knox after 13 years of production through drilling, the Toronto-based miner is also investing in junior explorers with promising prospects and grubstaking others to hunt for new discoveries throughout the Tintina’s 145 million acres.
“One aspect of our investment in those companies is they have dynamic personnel. The people in those companies impress us in terms of their knowledge of the region and the care they have in being good citizens in the region, being there for the long term,” Al Kirkham, Kinross director of North America exploration, told Mining News.
The miner’s strategy of sinking cash into juniors is intended to maximize its exposure to new prospects and experienced explorers for a relatively small investment. The mutually beneficial partnership provides tenacious explorers with operating capital and exposure to Kinross’ extensive historical database of gold prospects in the region.
Fort Knox exploration The majority of Kinross’ $10.5 million Alaska exploration budget for 2009 was spent on an aggressive 29,000-meter drill program at Fort Knox, which is located about 20 miles, or 32 kilometers, north of Fairbanks. An $8 million drill program is using two core rigs to add reserves in a phase-8 expansion in the northwest sector of the mine’s open pit. The exploration is also targeting deep phase-6 and phase-7 extensions on the southwest side of the pit, as well as South Wall resource expansion.
The drill program, along with a heap-leach facility currently under construction, is expected to extend the mine’s productive life by at least six years to 2018 and to double life-of-mine production to 2.9 million ounces of gold.
Kinross also plans to drill another 3,000 meters on various properties in the Fort Knox area, including Steamboat (a satellite deposit to Fort Knox), and a grassroots prospect located on BlackShell Creek about 50 miles southeast of the Interior Alaska gold mine.
The Blackshell area is reported to be geologically similar to Fort Knox.
Gil exploration continues This year Kinross and Teryl Resources plan to spend US$1.644 million on ground geophysics, reverse circulation and core drilling at the Gil property, about five miles, or eight kilometers, east of Fort Knox.
A ground magnetometer survey will focus on delineating mineralized zones on Sourdough Ridge, while 3,000 meters of RC drilling and 1,800 meters of core drilling will target mineralized zones outlined by the geophysical work.
The joint venture partners (Kinross 80 percent and Teryl 20 percent) have spent about US$7.5 million outlining some 10.1 million tons of ore at Gil with an average grade of 1.25 grams of gold per ton, or 404,000 ounces of gold, at the property which is next door to Fort Knox.
Strategically aligned with Full Metal
Kinross has built a strategic partnership with the exploration team that manages and operates Vancouver, B.C.-based junior Full Metal Minerals Ltd.
The first formal deal between the global gold miner and the savvy exploration team began in February 2008 when Full Metal and Kinross formed an exploration alliance to seek out gold deposits in the Tintina Gold Belt.
“We’ve got a really good relationship with Kinross, so it made a lot of sense. We like their technical people, and we felt a strategic alliance in Alaska would work for us,” Full Metal President Michael Williams told Mining News.
As a result of the strategic alliance Full Metal identified the Russian and Horn Mountain gold-silver targets about 25 miles, or 40 kilometers, southwest of the enormous Donlin Creek gold deposit being developed by joint venture partners Barrick Gold Corp. and NovaGold Resources Inc.
Full Metal recently started a 2,000-meter core drilling program. The 10- to 15-hole drill program will test multiple targets, primarily at Russian Mountain.
“This is the first time that these two areas have been drilled, so its first-pass-reconnaissance-type drilling, testing multiple targets on wide drilling centers. We’ll look for width and strike potential, as well as gold and silver grades of the mineralized prospects,” Full Metal CEO and Vice President of Exploration Rob McLeod explained.
Surface mapping, soil sampling and ground geophysics are also being completed to identify future drill targets.
Edge at White Gold Kinross also has purchased a stake in Full Metal’s sister company, Underworld Resources Inc., giving the major interest in that junior’s exciting new White Gold discovery in the Dawson district of Yukon Territory.
When Underworld said last fall it would raise money to explore the little-known property, Kinross invested C$1 million to acquire 9.7 percent ownership of Underworld, a stake the major has the right to maintain through subsequent financings.
“The investment in Underworld is part of Kinross’ strategy to maximize exposure to new prospects and experienced explorationists at a relatively small capital investment by partnering with promising junior companies on a select basis,” the major explained.
The strategy could pay big dividends for the gold miner. Underworld’s 2009 drilling at White Gold appears to be unveiling a major gold system. Drilling this year at the property’s Golden Saddle Zone has produced multiple 100-meter intersections with assays of more than 3 grams of gold per ton.
Kinross recently increased its interest in Underworld and currently holds nearly 12 percent of the junior, giving the major a competitive edge when it comes to new developments at the White Gold Project.
Grubstake for Millrock Millrock Resources Inc. is another promising junior with which Kinross has allied. In May the major invested C$350,000 to purchase a 6.46 percent interest in Millrock.
“Millrock will use these funds to carry out reconnaissance surveys and property acquisitions in a particular area of mutual interest in Alaska, a state in which Kinross is a premier gold producer and in which Millrock has substantial expertise in the discovery and exploration of gold deposits,” the junior’s president, Greg Beischer, said.
In 2009 Millrock followed up on gold discoveries made in 2008 at the Estelle project in the Rainy Pass region of the Alaska Range. The junior said it has identified geological signs of a large-scale disseminated, porphyry-style gold deposit at Estelle. This year’s rock sampling program at Estelle will identify drill targets for 2010.
Millrock also has four gold exploration prospects near Nome on the Seward Peninsula and 6,560 acres of gold properties in the Fortymile District near the Alaska-Yukon border.
Fort Knox twin Kinross has also claimed a stake in the Eagle Gold Project in central Yukon. The miner acquired its position in the property when Victoria Gold Corp., a company in which Kinross owns about 28 percent, merged with StrataGold Corp.
Eagle Gold, which appears to be a geological twin to Fort Knox, boasts an estimated NI 43-101-indicated resource of 2.7 million ounces of gold in about 98.6 million metric tons grading 0.849 grams per metric ton gold.
Victoria Gold plans to complete an NI 43-101 pre-feasibility study for Eagle Gold by the end of 2009 and submit a project proposal to the Yukon Environmental and Socio-economic Assessment Board in the second quarter of 2010.
Adding diamonds
In March Kinross added a jewel to its crown of gold projects, spending US$150 million to purchase 9 percent interest in the Diavik Diamond mine in Canada’s Northwest Territories.
In a two-part deal, the Toronto-based miner spent US$104.4 million to buy a 22.5 percent interest in the partnership that holds Harry Winston Diamond Corp.’s 40 percent interest in the Diavik diamond mine joint venture operated by Rio Tinto. Kinross also invested another US$45.6 million to buy 15.2 million shares of Harry Winston, giving it a 19.9 percent stake in the diamond miner.
Kinross may seek out other jewels to set in its crown. According to Harry Winston, the partners have agreed to consider other opportunities in the diamond mining industry.
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