MINING NEWS: December activity in Alaska leaves little time to catch breath; outstanding results will blur transition to New Year

Curt Freeman

For Mining News

In days gone by the Alaska mining industry thought of December as a time of decreased activity and a chance to catch your breath before the New Year started. Well, in case you have not noticed, those days are long gone! This month’s activities stretch from one side of Alaska to the other with metals of interest spanning the periodic table of elements. Results from a number of programs are still outstanding and likely will not be seen until the New Year, blurring transitions from “last year” to “this year.” If you need time for some extra breathing, you might consider hyper-ventilating, it may be your only chance to get air in 2008!

Western Alaska

The 2007 results from this area are nothing short of spectacular: DH-1556 intersected a total of 299 meters grading 5.26 grams of gold per tonne while DH-1564 intersected a total of 308 meters grading 4.60 grams of gold per tonne! These three intersections project beyond the current pit model boundaries and may represent potential to significantly expand the pit model to the southeast.

As exciting as this news was, the markets were less than enthusiastic about an earlier announcement by Barrick Gold that indicated that preliminary feasibility calculations suggested the capital costs at Donlin were likely to be in the range of $3.8 billion to $4 billion. This cost will be finalized when the feasibility study is completed in mid-2008 but suggests costs will be 80-90 percent higher than the previous estimate of $2 billion. As Bunker Hunt once said, “A billion dollars isn’t what it used to be!”

In late November the Association of ANCSA Regional Corp. Presidents and CEOs and the Alaska Federation of Natives joined to file a law suit to stop certification of two ballot initiatives, alleging that the initiatives, designed to stop development of the controversial Pebble project, violate the Alaska Constitution.

The plaintiffs allege, in part, that the initiatives violated federal law because they would prevent Alaska Native corporations from developing their mineral resources. The Council of Alaska Producers, a coalition of mining companies, filed a separate suit with the same purpose in mind. Stay tuned, sparks will continue to fly over this issue.

Liberty Star Uranium and Metals Corp. issued a news release that was perhaps the most disturbing news of the month. On one hand, the company expressed its confidence in the potential of its Big Chunk project land holdings in the Pebble Project area.

On the other hand, in commenting on the issues swirling around the Pebble project, Liberty Star said, “until it is clear that permits to mine the Pebble deposits will assuredly be awarded, we believe it is in the best interests of the (Liberty Star) and its shareholders that we preserve our capital and wait and see what happens.” This statement is as clear as it gets: until the Pebble issue is settled; no more investment in Alaska for this company.

Adding yet another dimension to the Pebble deposit conundrum were announcements by Full Metal Minerals Ltd. that it has optioned its Pebble South copper-gold project to a subsidiary of mining giant Freeport-McMoran Copper and Gold Inc. Under terms of the agreement, Freeport may earn an initial 60 percent interest in the property by funding $1.8 million in exploration expenditures over four years, including a minimum of 2,000 meters of drilling in the first year. Freeport may earn an additional 20 percent interest by, among other things, funding all expenditures related to the property through and including a decision to build a mine on the property with a minimum capacity of 30,000 metric tons per day of ore.

If a production decision is made, Freeport may fund Full Metal’s equity portion of construction financing to be repaid through future production. The companies are planning an initial minimum 2,000 meter drilling program to commence in the spring.

But wait, there’s more! Full Metal Minerals also announced that it optioned eight other copper-gold projects to a subsidiary of mining mega-giant BHP Billiton. Under terms of the agreement, BHP Billiton can earn an initial 60 percent interest in the properties by spending $2.5 million over 36 months, with an option to acquire a further 20 percent interest by spending another $3.5 million within the following 36 months. Full Metal retains the right to request that BHP Billiton finance its share of subsequent pre-development costs, subject to the two parties agreeing to acceptable financing terms. In the event that BHP Billiton does finance Full Metal’s share of pre-development costs, it would be entitled to a first call on 75 percent of Full Metal’s share of positive operating cash flow resulting from production.

During the spring and summer of 2007, Full Metal staked multiple copper-gold-molybdenum porphyry targets in Alaska, and conducted reconnaissance-scale mapping and sampling programs. During 2008, Full Metal and BHP Billiton will complete mapping and sampling programs as well as airborne and ground geophysics with the purpose of identifying drill targets.

Geoinformatics Exploration Inc. reported final drilling results from its Whistler project in southwestern Alaska. Highlights include 236 meters grading 0.65 grams per metric ton of gold and 0.12 percent copper in hole 6 at the southern end of the Main Zone, while hole 7 at the northern end of the Main Zone returned 15.5 meters grading 0.53 g/t of gold and 0.55 percent copper, and 162.0 meters grading 0.45 g/t of gold and 0.21 percent copper.

The Whistler system extends over an area measuring 750 meters by 460 meters and extends to a depth of at least 570 meters. Within this broadly mineralized envelope, the higher-grade Main Zone extends for 350 meters along strike, averaging more than 100 meters in width with mineralization confirmed from surface to depths between 200 and 570 meters. The company is conducting a resource estimate for the project, which it expects will be released in early 2008.

Alaska newcomer Goldmark Minerals Ltd. announced that it has acquired an option from Geocom Resources on the latter’s Iliamna copper-gold project, southwest of Iliamna. Under terms of the agreement, Goldmark will purchase Geocom’s interest, which comprises a 52.5 percent interest in the H claim section and a 38.5 percent interest in the D claim section of the project.

Goldmark will be the operator of the project and intends to conduct an exploration program commencing with a geophysical survey covering the entire target area with follow up drilling based on geophysical results. The property was staked primarily for its copper and gold potential, based on the aeromagnetic anomaly, and subsequent exploration work indicates a possibility of encountering skarn mineralization proximal to the contact of intrusives. Welcome to Alaska, Goldmark Minerals Ltd!

Eastern Interior

These intervals suggest continuity of mineralization between the two prospects. The company also said seasonal bulk sampling and processing were completed in late October. Final results from these programs are pending.

International Tower Hill Mines has reported additional results from its Coffee Dome project near Fairbanks. A total of 530 meters of trenching over the Main Target area in 2007 exposed veins with grades of up to 167 grams per metric ton of gold in outcrop (72 samples ranging from 0 to 168 g/t of gold). Soil surveys defined two large gold anomalies covering an area measuring 3 kilometers, or nearly 2 miles, long and 1 kilometer, or 0.62 miles, wide.

Two main mineralized fault trends exist on the property, a steeply dipping north-northeast trend and a low angle (20-30 degrees) east-northeast trend. Fault-hosted mineralization returned thin intervals grading up to 167 g/t of gold with associated anomalous arsenic, antimony, bismuth, tellurium and silver.

Full Metal Minerals Ltd. reports that step-out drilling at the LWM prospect on its Fortymile project has intersected 13.1 meters of massive sulfide mineralization averaging 13.3 percent zinc, 9.5 percent lead, 0.3 percent copper and 159.2 grams per metric ton of silver in hole LWM07-17. Hole LWM-11 encountered semi-massive mineralization grading 4.9 percent zinc, 7.5 percent lead, and 139.4 g/t of silver over 8.3 meters.

Drilling to date has encountered massive sphalerite, galena and chalcopyrite mineralization over 300 meters of strike length, more than 200 meters below surface and remains open for expansion in all directions.

Alaska Range

The drill hole was terminated in mineralization due to core recovery problems at 659 meters depth. Sulfide mineralization remains open at depth.

Previous drilling and recently completed electromagnetic and magnetic geophysical surveys had outlined a laterally continuous sulfide-bearing horizon that was the target of hole MAN-PNI-001. The 2007 drill hole confirmed this stratabound disseminated mineralization along strike for at least 370 meters and downdip for greater than 340 meters.

International Tower Hill Mines reports a recently completed airborne geophysical and geochemical sampling program has expanded its Chisna porphyry copper project to an area of at least 3 square kilometers, or 1.86 square miles. The target remains open to the south and east.

The average assay of 246 rock samples collected over a 7-square-kilometer, or 4.34-square-mile, area in and around the alteration cap on the Chisna SE prospect was 0.37 grams per metric ton of gold, 1.4 g/t of silver and 0.08 percent copper. The company indicated that the 2008 Chisna SE exploration program will include ground geophysics to define sulfide bodies for later drill testing.

MAX Resource Corp. announced assay results from the final two diamond drill holes on the Gold Hill molybdenum project. Drill hole DH-07-05 returned 0.0466 percent molybdenum disulfide over a core length of 822 feet, which included a higher grade intercept of 352 feet of .0706 percent molybdenum disulfide. Drill Hole DH-07-04 was a vertical hole. This hole reports good molybdenum values over the entire core length of 1000 feet, which included a 250 foot interval of 0.0603 percent molybdenum disulfide. Additional drilling is planned in 2008.

Full Metal Minerals Ltd. reported final assay results from the 2007 drill program at its Lucky Shot gold project north of Anchorage. The drill program tested three of the four known fault blocks on the Lucky Shot shear and has extended the continuous gold mineralization to over 2,400 meters along strike and 700 meters downdip. Highlights from the 2007 program include:

• Hole C07-92 which returned 54.6 grams of gold per tonne over 0.98 meters in Murphy Zone;

• Hole C07-105 which returned 17.3 grams of gold per tonne over 1.0 meters in Coleman Zone;

• Hole C07-110 which returned 71.6 grams of gold per tonne over 0.5 meters in Coleman Zone;

• Hole C07-112 which returned 1.3 grams of gold per tonne over 0.5 meters in Coleman Zone; and

• Hole C07-143 which returned 77.2 grams of gold per tonne over 0.5 meters in Lucky Shot Zone.

Based on results during the past 3 years, the company is considering whether to conduct additional surface exploration or combined underground and surface exploration or whether to make a positive construction decision. Metallurgical testing has been initiated, as well as underground development planning. The company will make a decision on a 2008 program at Lucky Shot during the first quarter of 2008.

Alaska-based Diamond Gold Corp. reports it has submitted a large mine permit to the State of Alaska for its Sable Elegance diamond and gemstone mine in the Yenlo Hills northwest of Willow.

Plans call for Phase 1 placer mining of 3 million carats of diamonds and gemstones followed by open pit hardrock mining on the Sable diamond pipe where a resource of 200 million tons of ore is being evaluated for future milling.

Northern Alaska

In addition, 39 separate massive sulfide zones were intercepted during the 2007 drill season, which average 6.82 meters thick over a strike length of 1,400 meters to a depth of 250 meters. Average grade was 1.5 percent copper, 1.0 percent lead, 3.85 percent zinc, 63.1 g/t of silver and 0.266 g/t of gold.

Little Squaw Gold Mines reported additional placer gold drilling results from its Chandalar gold project in the Brooks Range. Results from 60 of the 99 drill holes completed over the placer target on Little Squaw Creek in 2007 average $15.94 per cubic yard in gold over a thickness of 84 feet using a gold price of $600 per cubic yard (equiv. to 0.026 ounces of gold per cubic yard).

Additional drilling is planned to allow resource calculations to be completed. In addition, the company is planning to continue lode gold exploration elsewhere on the project.

Silverado Gold Mines Ltd. said it will begin underground exploration on its Nolan Creek project. Two areas have been targeted for possible underground lode exploration: Pingle Bench and Workman’s Bench, both of which lie along the Solomon shear zone.

Pingle Bench consists of a series of sub-parallel veins containing gold grades up to 179 grams per metric ton of gold and antimony grades ranging up to 64.76 percent. Veins are up to one foot, or 30.48 centimeters, in width and predominantly composed of massive stibnite (antimony sulfide).

Recent drilling at Workman’s Bench intersected an 80-foot-wide zone of mineralization containing numerous sub-parallel zones of gold-antimony quartz veins. The company plans to drive a tunnel sub-parallel to and below the 80-foot-wide mineralized zone. The tunnel is planned first to intersect a known placer gold channel where the company previously extracted coarse gold nuggets. The tunnel would then be extended to intersect the 80-foot-wide Workman’s Bench mineralized zone.

Southeast Alaska

Quaterra Resources announced an acquisition from Juneau-based JEDI Syndicate of the Herbert Glacier gold project north of Juneau. Mineralization is hosted in four main composite vein-fault structures that contain ribbon structure quartz-sulfide veins. The structures strike east-west and dip steeply, mostly to the north.

Only one of the four known vein systems was drilled in 1986 and 1988. A total of 199 rock chip samples were collected in 2007 with 94 samples returning values greater than 1 gram per metric ton of gold, 33 samples returning more than 10 g/t of gold and 12 samples returning more than 34 g/t of gold. A 1.5-foot banded quartz vein with visible gold assayed 81.9 g/t of gold.

Veins typically pinch and swell, but individual veins are as much as 14 feet thick and composite veins were found up to more than 20 feet across. The veins are competent, but occur within halos of altered quartz diorite, and are generally marked on surface by deep trenches eroded from the incompetent altered host rocks. Gold is accompanied by arsenopyrite, pyrite and galena with lesser amounts of scheelite, chalcopyrite and sphalerite.

Under terms of the agreement, Quaterra must make an initial payment of $12,000 and annual payments escalating from $12,000 to $30,000 over the first 11 years. Payments are an advance royalty calculated on a sliding scale of 3 percent to 5 percent net smelter return based on the gold price. Quaterra has a work commitment of at least $25,000 for the first year and $50,000 for each year thereafter. Quaterra is planning a 3,000-foot core drilling program on the project in 2008.

Altair Ventures Inc. and joint venture partner Full Metal Minerals Ltd. reported assay results from an eight-hole, 1,015-meter drilling program at the CJ gold project near Craig. The drilling program intersected gold mineralization in three locations, spanning more than 2,000 meters of strike length.

Several historic producing gold mines occur within a structural corridor that now has a strike length of 3,200 meters and spans 500 vertical meters. Highlights include hole CJ07-01 at the Crackerjack mine, which returned 3.21 meters grading 4.94 grams per metric ton of gold and 5.7 g/t of silver, including 0.71 meters grading 20.9 g/t of gold and 19.5 g/t of silver.

Eight hundred meters away at the Hollis tunnel, hole CJ07-05 intersected 1.07 meters grading 4.15 g/t of gold and 20 g/t of silver. Farther south at the old Dawson mine, drill hole CJ07-6 intersected 2.05 meters grading 9.56 g/t of gold and 76.7 g/t of silver.

Niblack Mining Corp. reported additional drill assays from its Niblack massive sulfide property near Ketchikan. In the Trio zone, drill hole LO-206 intersects 10.6 meters of massive sulfide and stockwork mineralization grading 3.35 grams per metric ton of gold, 49 g/t of silver, 3.46 percent copper, and 4.49 percent zinc. Drill hole LO-207, testing the sulfide horizon 40 meters downdip of LO-206, intersects 5.67 meters grading 4.06 g/t of gold, 55 g/t of silver, 2.52 percent copper and 5.31 percent zinc.

The company also said that underground tunneling has advanced 120 meters in from the portal entrance and that the first underground drill station had been constructed and underground drilling commenced. The 9,000-meter underground diamond drilling program is designed to test over two kilometers of massive sulfide hosting stratigraphy, including about 1,500 meters of unexplored stratigraphy between the Mammoth and Lookout zones (now known as the ‘North Limb’).

The program also will evaluate about 600 meters of depth extension at the Lookout zone.

Ucore Uranium Inc. has reported additional assay results from its nine-hole diamond drill program at the Bokan Mountain uranium project in southeast Alaska. Highlights of this drilling include hole LM07-01, which intersected 38.28 meters grading 0.569 percent U3O8 including 2.68 meters grading 1.238 percent U3O8 and 3.9 meters grading 2.43 percent U3O8 and hole LM07-02 which intersected 3.15 meters grading 0.622 percent U3O8.

The company also said a detailed airborne radiometric and magnetic survey was completed over the project. The survey confirmed and better defined previously known radiometric anomalies and outlined several new areas where mineralization had not been found previously.

Of particular interest is a zone of high radiometric values extending for over two kilometers to the southeast of, and on strike with, the high grade I&L Zone. This radiometric anomaly coincides with a series of quartz veins and pegmatite dikes.

Permitting for an expanded drill program in 2008 is now under way, with a plan to resume drilling in March.